Exclusive-Peru mines on power despite protests, though halt risk looms
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[February 08, 2023]
By Alexander Villegas and Adam Jourdan
ESPINAR, Peru (Reuters) - Peru's biggest copper mines have been able to
maintain production despite road blockades, attacks and protests that
have roiled the Andean nation for over two months and led to warnings of
production halts, an analysis showed on Wednesday.
The analysis of power usage data by Reuters at some of the key mines in
Peru, the world's no. 2 copper producer, indicates that activity at the
deposits remains near normal levels, although a source close to one
major mine said the risk of stoppages was rising.
The South American nation has been gripped by anti-government protests
since the Dec. 7 ouster of leftist President Pedro Castillo. Highways
have been blockaded throughout the copper-rich south, threatening
production and transport of the metal, hitting some company shares, and
boosting already high prices.
But the data suggests mining activity has been resilient, at least for
now.
This includes massive deposit Las Bambas, owned by China's MMG Ltd,
which previously said it would have to halt production from Feb. 1, and
Glencore's Antapaccay, which stopped production in mid-January but has
since resumed.
The power data from COES, which represents firms in Peru's energy
sector, shows that nearly all major mines are drawing normal or
near-normal levels of electricity. The data has traditionally been a
reliable indicator of mining activity.
A source close to Las Bambas said the mine, which previously said it
faced a production halt from Feb. 1 due to key provisions not reaching
the mine, said it had been able to keep operating at a minimum level
after getting "last minute supplies."
The mine, which normally supplies some 2% of global copper, has been hit
by regular blockades for years, usually causing its power use to fall
sharply during the periods of disruption. This has not yet happened this
time around, despite the protests.
The person added, however, that the mine risked fully running out of
supplies by Wednesday, which would force it to move into a "care and
maintenance" mode with its machinery that would use half the normal
level of power.
The data shows some mines experienced temporary dips in power use in
recent months, including Peru's largest mine Antamina, co-owned by
Glencore and BHP, and Glencore's Antapaccay around the middle of
January.
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Trucks remain stuck during a roadblock
caused due to a demonstration by anti-government protestors
demanding the resignation of Peru's President Dina Boluarte, in
Condoroma in Cusco region, Peru February 4, 2023. REUTERS/Pilar
Olivares
Antapaccay reopened on Jan. 31 after a temporary halt and has been
operating again at full capacity.
Hudbay Mineral Inc's Constancia mine has seen power use start to
decline recently. Others, like Freeport-McMoRan's Cerro Verde are at
normal or elevated levels. A combined index of six key mines is near
normal.
Freeport-McMoRan spokesperson Linda Hayes said: "We are continuing
to operate, but have limited our mill throughput by about 10% to
deal with intermittent supply disruptions."
The other firms did not immediately respond to requests for comment
about activity at their mines in Peru.
The mining activity is key to keeping global copper supply flowing.
Brokerage Jefferies said in a Jan. 31 note that some 30% of Peruvian
copper supply was at risk from the unrest, a "potential positive for
the copper price."
The protests - which have led to the deaths of 48 people and are the
worst violence Peru has seen in over 20 years - could of course soon
start to have a greater effect on mining operations. Demonstrators
are becoming more determined as lawmakers struggle to agree on
calling snap elections, a key protest demand.
This week, Peru's Buenaventura suspended operations at a key silver
mine after protesters invaded the site.
At a blockade on the "mining corridor" highway, protester Wilber
Toco Aragua Salcedo told Reuters that people felt like the mines
took all the wealth and left little for locals.
"The south is quite rich, but the mining concessions that we have
harm the people," he said, adding he had heard mines were stocking
up on supplies. "The people do not get tired, the people won't go
away, we will not take a step back."
(Reporting by Alex Villegas in Espinar and Adam Jourdan in Buenos
Aires; Additional reporting by Ernest Scheyder, Melanie Burton,
Valentine Hilaire and Fabian Cambero; Editing by Rosalba O'Brien and
Bernadette Baum)
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