MMG to halt Las Bambas copper mine amid fresh blockade

MMG (HKG: 1208) said on Monday that it will have to halt production at its Las Bambas copper mine in Peru by February 20, following a new and ongoing blockade of the road used by the company, which has already forced the Chinese miner to curtail operations.

Residents of the Chumbivilcas province have been blocking the main access to Las Bambas on and off since November 20. They demand jobs and economic contributions from the company, a unit of state-owned China Minmetals, which they say has failed to benefit residents despite its great wealth.

Communities along the road asked for more logistics transport contracts, financial compensation for the land used to build the mining road and actions to reduce alleged damage to their crops caused by the large number of trucks on the road every day. 

They also wanted to set a fund with 8% of the mine’s annual profits to finance productive and social development projects, while the company offered financing for individual social projects.

RELATED: As Peru’s cabinet deals with new crisis, 10-day blockade against Las Bambas expected to go on

MMG believes it is the government’s responsibility to pave the route, but a long-term solution would be building a separate freight train link. Construction of the railway would take more than five years and cost $9.2 billion, according to Peru’s transport and communications ministry.

The new protest takes place less than a month after the lifting of a month-long blockade that forced the giant copper mine to shut down from December 18 to December 31, when it was able to restart after a series of negotiations.

Over 400 days lost

Las Bambas, Peru’s fourth-largest copper mine and the world’s ninth largest, has grappled with on-and-off protests and road blockades since the operation’s 2015-16 ramp-up. 

Operations at the mine were disrupted for more than 100 days in 2019, with 70 communities along the 450 km (280 mile) road to the Port of Matarani demanding action from MMG and the national government over emissions from trucks and reduction of their farmlands. 

A three-week-long roadblock protest staged at the end of 2020 prevented MMG from exporting 189,000 tonnes of copper concentrate worth $530 million from the mine.  

More interruptions in September last year forced the company to halt operations for a few days. MMG agreed in early October to integrate the communities into its value chain, though they are not within the asset’s area of influence.

Click here for an interactive chart of copper prices

Overall, operations at Las Bambas have been disrupted for over 400 days since 2016, according to company estimates. 

With production capacity of 400,000 tonnes of copper a year (and significant quantities of gold and silver) or some 2% of the total global primary output, yielded 339,682 tonnes of the red metal and 249,767 tonnes of zinc in 2021.

The mine employs more than 6,000 workers direct and indirectly, 25% of them residents from the Apurímac region.