Grupo Mexico Project Set on Fire in Peru

Amid mounting tension between mining companies, artisanal miners and communities in Peru, Southern Copper Corporation’s Los Chancas Project of was set on fire by a rioting mob. The incident is expected to affect the performance and finances of Grupo México, Southern Copper’s parent company, especially if the drawbacks continue.

Last week, Southern Copper reported that around 300 people, "including unknown and suspected informal and illegal miners," attacked its mining camp in Apurímac, Peru, using explosives and firearms. Southern Copper stressed that threatened with physical violence, it began an immediate evacuation of all its personnel. As a result, no one was injured. However, four vans, generator sets, security booths, housing modules, a dining hall, laboratory tents, a warehouse and various fuel tanks were all lost.

The company stressed that the incident has already been reported to the National Police and the federal authorities for investigation. Southern Copper and Grupo México also requested the immediate intervention of the government to prevent the violence from going unpunished or repeating itself at other facilities or in the nearby communities of Pocohuanca and Tapirihua.

The Peruvian authorities reported that they have not yet identified those responsible. However, they was emphasized that the perpetrators could have been artisanal miners who have been extracting copper from the area for years and oppose to the development of the new mine. In addition, a month ago residents of the area also protested the alleged environmental and labor violations by Southern Copper.

Neither Southern Copper nor Grupo México have announced how the incident affected their plans for 2022. However, experts said that these incidents will increase operating expenses and temporarily paralyze mining activities. In addition, there will be further costs if the mine’s security approach needs to be strengthened. Ultimately, both companies will need stronger ESG campaigns as the complex risks being paralyzed by protests.

Grupo México’s Peru-based assets had already presented community problems that affected the company financially. In April 2022, the company reported a 7.2 percent year-over-year drop in profit and a 9.9 percent falled in production caused mainly by the blockade of the Cuajone complex. The mining giant was denied access on the back of a conflict caused by growing social unrest following the rising cost of living in Peru, which fueled protests against Southern Copper as demonstrators demanded a better distribution of profits. After the protesters took over facilities and blocked a railway, the Peruvian government declared a state of emergency in the region.

On April 30, the Peruvian government issued a resolution to establish a dialogue between members of the community, the authorities and company representatives. Currently, the Cuajone complex is once again operating at maximum capacity and expected to continue to do so in the coming quarters, reported Grupo México.