Peru's Benavides worries too much regulation could hurt the mining industry

Peru's Benavides worries too much regulation could hurt the mining industry

Economy & Policy People Project & Infrastructure Finance Regulation Peru Interviews

Peru appears headed for another mining boom, with the economy and finance ministry estimating that potential investment in new projects could total $60 billion over the next decade. About $11 billion of the total has been committed to projects already underway, according to the ministry.

While miners agree with the government’s estimates, they worry whether that degree of investment will ever materialize. They blame a web of red tape and bureaucracy. “The simple truth is that there are too many regulations and too many institutions involved,” says Roque Benavides, chairman of Minas Buenaventura, Peru’s largest precious metal producer and the first Latin American company to list on the New York Stock Exchange. “All of this red tape has made it much harder to move ahead on projects.”

The dueling priorities between the need for investment and concerns over environmental consequences plays out across Latin America and the Caribbean as countries rich in natural resources weigh the economic advantages of mining against social implications. The debate intensified recently with the collapse of a damn owned by Brazilian mining company Vale in which more than 170 people died.

Benavides’s complaint about regulations is echoed across the mining industry in Peru. A study published in 2018 by Laub & Quijandría, a law firm specializing in extractive projects, found that the number of institutions involved in approving projects more than quadrupled from five in the 1990s to 22.

In addition to the environment ministry, the government has created the Environmental Evaluation and Assessment Agency and the National Environmental Certification Service for Sustainable Development. Many of the recent regulations were adopted in response to public concern that mining operations could pollute local water supplies.

The debate between miners and environmentalists intensified in 2011 when protests over water use and possible pollution halted the $5 billion gold and copper Minas Conga project, operated by Buenaventura and its US partner, Newmont Mining. The companies and government offered different solutions to resolve the impasse, but opposition to Conga remained. Newmont abandoned the project in 2016.

Benavides says the mining industry has changed a lot since the conflict over Conga. “Relations with communities, with land owners, is much better than it was before. Communities have also learned from the confrontations,” he says. “Development needs to be at the center and mining is one of the factors that allows for development. Shared values cannot exist if we do not have shared responsibility. It is about dialogue. Dialogue is the only way to reach consensus.” Benavides says miners are now more sensitive to environmental concerns. “I think it is clear that responsible, modern mining does not harm the environment and respects communities. The issue of water is the key,” he says.

Benavides says he is optimistic. “There is one thing to remember about Peru,” he says. “Peru has big deposits and there are bound to be others. There is still a great deal of potential for new projects.”