Mining company MMG Ltd was forced to close Las Bambas copper mine due to community unrest triggered by the ousting of President Pedro Castillo late last year, putting its plant in Peru, the world’s second largest copper producing country, under maintenance.
Nationwide protests continued on Wednesday, in the eighth week of political crisis in the South American country, local news outlets reported. The wave of violent and intermittent demonstrations has already put 30% of the country’s copper production at risk, forcing the closure of the las Bambas copper mine.
According to Peru’s ombudsman’s office, 58 people have been killed and 1,792 injured in the protests since 7 December, when Congress removed President Castillo and arrested him.
Las Bambas has been operating at a reduced pace since then, but after warning on Monday that it might suspend the mine, MMG confirmed on Wednesday that it would begin a period of care and maintenance (read more ‘Copper: MMG suspends production forecast after Las Bambas protests’).
The copper mine, which produces two per cent of the world’s metal, has been facing critical supply shortages due to disruptions in inbound and outbound transport.
It currently has about 85,000 tonnes of copper stocks on site.
MMG stressed that it has made progress in dialogue processes and implementation of agreements during the fourth quarter among the six communities that participated in the 2022 protests, as well as with other locals living along the logistics corridor.
“Discussions with the Huancuire community resumed in January 2023 and dialogue forums were established to discuss the implementation of the agreements with the Fuerabamba community,” MMG stated in its fourth quarter report.
‘Unfortunately, all dialogue fora have been forced to stop due to security concerns related to national protests. We hope to continue these discussions once the social unrest has dissipated.”
Production disruptions in Peru threaten to block access to nearly $4 billion of the red metal. MMG’s CFO, Ross Carroll, said that in the past year the company lost 25,000 tonnes of copper production for every month the mine was suspended.
The shutdown of Las Bambas comes at a particularly precarious time for copper markets, as stocks are at historic lows and producers warn that demand is set to skyrocket with the increasing electrification of vehicles.
In addition to political reasons, the current unrest in Peru is fuelled by long-standing claims related to the high levels of poverty and discrimination suffered by many inhabitants of the country’s Andean and Amazon regions.
The south of the country is rich in copper, but inhabitants claim that the benefits of mining do not reach the communities living near the numerous operations.
At the moment (12:10 GMT+1), 3-month copper quoted in Londa shows a limited 0.82% rise to $9,127/mt, despite this morning’s opening in a gap up. Short-term settlements are assessed before the bullish momentum resumes.