Hochschild on the verge of collision with communities in Peru over mine closures after meeting

A protester waves a Peruvian flag during a demonstration against the government of President Pedro Castillo, in Lima, Peru, on October 8, 2021. REUTERS / Angela Ponce

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LIMA, Dec. 15 (Reuters) – Hochschild Mining (HOCM.L) is on a collision course with Peruvian communities near its main Inmaculada gold and silver mine, after local residents said on Wednesday that the national government had told them that it was possible to legally shut down in the mine, even as the company announced its intention to continue operations.

“We thought (the government) was going (…) to say that the closure was impossible, but they said it was possible to work there while respecting the law,” said Che Bernaola, a leader of the region. of Ayacucho in Peru, who pleaded for the closure of the mine following allegations that it polluted water sources.

Hochschild told Reuters ahead of the meeting that he expects to get approval to extend the life of his Inmaculada mine by another 20 years. He denies the pollution claims.

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The opposing expectations stem from what appear to be conflicting messages from the government of left-wing President Pedro Castillo.

Prime Minister Mirtha Vasquez last month said Peru would not support permit extensions for Hochschild’s Inmaculada and Pallancata mines, causing Hochschild shares to fall by more than 50%, as well as hitting smaller players Apumayo and Breapampa friend.

But later the government appeared to back down, saying mining companies could still apply for license extensions in accordance with regulations.

Activist Bernaola added that the government had agreed to start visits on January 13 to the four mining units to work on a closure plan.

“Regarding Apumayo and Breapampa, we should already start with the closure,” said Bernaola. “As far as Hochschild is concerned, we need to review all documents and we will obey the law because people’s health is at risk.”

The Peruvian Ministry of Mines declined to comment on the meeting.

Inmaculada is key to Hochschild, providing roughly 60% of its cash flow and the company has a $ 4.4 billion investment plan for the mine. Without a permit extension, it is expected to close by the end of 2023.

“But there is no agreement here, our lives come first,” Margarita Gutierrez, district chief in the province of Paucar del Sara Sara in Ayacucho, where the Hochschild mines are located, told Reuters.

The stalemate is a test for Castillo, who came to power in July thanks to strong backing from mining districts for his pledges to redistribute mining profits and give a stronger voice to indigenous communities near the mines.

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Hochschild’s vice president of legal and corporate affairs, Jose Augusto Palma, told Reuters the company “has no plans to shut down” Inmaculada or Pallancata and that it has provided all legal documents necessary to extend permits.

“We hope the government will explain to leaders the status of current and pending permits, and respect the legal order that governs permit renewal,” he said in emailed responses to Reuters. .

Immaculate produced approximately 129,000 ounces of gold and 4 million ounces of silver in 2020. Pallancata produced approximately 13,000 ounces of gold and 3.7 million ounces of silver.

Under Peruvian law, all mines have a scheduled closure date, which can be changed if more resources are found and regulators allow it. The four mines in question have closure dates ranging from 2022 to 2025.

Che Bernaola, representative of the Ayacucho Sur committee, said he expected the government to ratify the gradual closure of the mines.

“The only thing we can discuss at the table is the reasonable time they need to shut them down, there is nothing else,” Bernaola said by phone.

The Peruvian Environmental Assessment and Enforcement Agency (OEFA) performed 82 supervision tasks at the four mines between 2013 and 2021, according to government data. He identified shortcomings which led to minor fines.

Julio Guillermo Gutierrez, chairman of a group in the nearby town of Parinacochas, said the mines had to close.

“We reaffirm our objective of sticking to the mine closure process, within the legal framework,” he told Reuters.

“For many years we have been tolerant, reasonable in our complaints, and now it is in the hands of the executive; the state must understand that we are also Peruvians.”

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Report by Marco Aquino; Editing Adam Jourdan and Rosalba O’Brien

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