Project – On recordThis profile is no longer actively maintained, with the information now possibly out of date
Project – On recordThis profile is no longer actively maintained, with the information now possibly out of date
What must happen
Zijin and the government of Peru must:
- Respect community rights and the results of the 2007 referendum.
- Investigate human rights violations against community members, clarify exactly what happened, identify those who are responsible, and bring them to justice.
- Stop the persecution of community members under investigation for terrorism.
- Acknowledge the company has operated illegally while exploring without community permission, and compensate the communities.
Located in the mountainous Piura region of Northern Peru along the border with Ecuador, the Rio Blanco mine is a 6,473 hectare (about 16,000 acres) copper and molybdenum concession. With an estimated 1.257 billion tons of copper, this planned open pit mine will be amongst the 20 largest copper mines in the world, if developed. It is predicted to produce about USD 1 billion worth of copper per year for at least twenty years. Zijin-owned Monterrico Metals began exploration of the mine following purchase in April 2007, and production is expected to begin in 2011. Residents of the local community protested the development of the mine and Zijin's investment in it on the grounds that it is an illegal concession without the consent of local communities as required by Peruvian law, and that pollution from the mine is infiltrating the regions waterways (on which local people depend for organic farming) and destroying the fragile cloud forest ecosystem.
The concession was first established in 2002 by the British company Monterrico Metals, and 90 percent of the company was later acquired by a consortium of Chinese companies headed by Zijin Mining Group Ltd. Together these companies have formed Rio Blanco Copper SA.
Social and human rights impacts
Threat to local livelihoods
According to information from Oxfam America, the mine concession is in a forest region in the Huancabamba Mountains, which comprise a fragile biological corridor for endangered species such as tapirs and bears, and feeds major rivers running to the coast and into the Amazon River. Communities in this area rely mainly on farming for their livelihoods, and have successfully obtained organic certification so their avocado, banana, coffee and mango crops can be sold at a premium on the international markets. Many farmers also raise cattle and grow corn and other food crops to feed their families and sell on the local market. Pollution from the Rio Blanco Mine into the regions waterways puts at risk the organic certification that is the bread-and-butter for local farmers.
Local communities want to increase farming in the region, and have been working with Peru's Ministry of Agriculture to make more land available to them and boost production. As a result of their efforts they increased production of organic bananas by more than 40 percent in 2005. However, if the Rio Blanco mine goes forward it could open up additional areas of Piura to mining, and significantly change the entire region from one primarily oriented to farming, to an industrialized mining region.
Failure to obtain community authorization.
Under Peruvian law*, mining companies must obtain the two-thirds approval of local community assemblies before entering community land to do exploration or other activities. The owners of the mining concession failed to obtain this legal authorization when it entered the Rio Blanco project area in 2003. Further, a legal referendum held in September 2007 clearly displayed community members' strong opposition to the project. Thus its presence in the area does not comport with existing legal requirements, a point that has been sustained by Peru's national Public Defender's office.
The illegality of the company's presence in the project area is contributing to suspicion and resentment toward the company amongst the local population. The company has not taken action to address this issue despite repeated efforts by local stakeholders to raise this concern with company and government officials.
Torture and killing of local people: The Rio Blanco project has been the site of a number of violent incidents, including the killing of four community leaders and three company personnel, since 2004. In August 2005, 28 people were allegedly detained and tortured by the mine's security forces after protests at the project site. One person was killed in the incident. According to Peru's National Human Rights Coordinator and Peruvian human rights organization FEDEPAZ, members of the company's security force, private security contractors, and the Peruvian National Police (PNP) were involved in the torture.
Evidence of the torture was made public in early 2009 when photographs taken of the incident were released by a journalist who had also been tortured. These incidents could amount to a violation of the victims' rights to personal security and to not be subjected to torture as established in the UN Universal Declaration of Human Rights and the UN
Convention Against Torture, both of which Peru has ratified. Violations of these rights by contractors or police working directly for or at the behest of the company could implicate the company in the violations. In 2009, the UK High Court froze GBP 5 million in assets of Monterrico Metals, a subsidiary of Zijin, in response to torture allegations brought against the company by victims of the 2005 incidents. In July 2011, Monterrico settled with the victims out of court without admitting liability for an undisclosed amount.
Although Zijin was not involved in the Rio Blanco project when violent conflicts initially broke out in 2004, the company has not taken the appropriate steps to rectify complaints made by the communities and violence has continued. In November 2009, three company workers were killed in an attack on the project site by unidentified assailants.
In December, two more people were killed and eight injured in a conflict with local police as police tried to arrest a suspect in the November attack. In September 2008, members of a local civil association that had made false accusations of terrorism against 35 people, including local authorities, community leaders and environmental and human rights activists, stated to government prosecutors that they had received financing by Rio Blanco Copper for their activities.
Environmental and climate impacts
In February 2008, the Peruvian government fined Zijin US$100,000 for noncompliance with the Environmental Evaluation Study approved by the government for the initial phase of exploration. Among the issues cited by the government in assessing the fine were:
- Carrying out a greater number of drilling perforations than had been approved in the environmental assessment (129 vs. 60).
- Modifying its exploration project without having the necessary environmental studies required by the Ministry of Energy and Mines.
- Exceeding limits for liquid metallurgic effluents in its exploration activities.
- Improper disposal of waste material.
- Inadequate implementation of remediation measures, including erosion control and closing off of access roads no longer in use.
According to the 18 June 2011 edition of China Daily, Zijin International Finance Company Ltd, a unit of Zijin Mining Group, has hired Bank of China International Ltd. (Paris Branch) and BNP Paribas SA to help with the sale of US dollor bonds to raise capital for acquiring copper concentrates overseas for the 200,000 ton copper smelter project of Zijin Copper Co., Ltd., a wholly owned subsidiary of the Company, and for other overseas activities of the Group.
According to the 2 September 2008 edition of Central Asia & Caucasus Business Weekly, China Exim Bank, the government of Tajikistan and Zijin International Mining Co. Ltd. signed a Memorandum of Cooperation in August 2008.
In May 2008, Agricultural Bank of China and Zijin Mining signed an Agreement of Strategic Cooperation to provide Zijin Mining a line of credit of CNY 10 billion.
In January 2008, Bank of China and Zijin Mining signed a CNY 10 billion worth of Agreement of Strategic Cooperation that was reportedly to facilitate the mining company's forays into overseas markets as well as domestic developments.
According to China Metallurgy Daily, in December 2007 China Construction Bank signed a strategic cooperation agreement with Zijin Mining that made CCB a long-term partner and would allow Zijin priority treatment in securing financial services from the bank. Zijin also agreed to give CCB priority treatment as its financier.
In November 2007, Industrial and Commercial Bank of China signed an Agreement of Strategic Cooperation with Zijin Mining that would provide Zijin with various financial services from the bank, including financing.
According to the 11 March edition of China Metallurgy Weekly, in March 2008 Sinosure entered into a global project financing agreement with Zijin in which its branch office in Fujian would support the mining company's overseas investments, mergers & acquisitions and global sales.
Some of Zijin's major shareholders include Minxi Xinghang State Owned Assets Investment Co., Ltd. and to a lesser extent other Chinese businesses that are registered with and partially owned by provincial and local branches of the Chinese government. Major public shareholders include Gold Fields of South Africa (5.7%) and Merrill Lynch (According to Zijin's 2006 Annual Report, Merrill Lynch holds 20.97% of H shares and 6.39% of total registered capital).
2011-07-25 00:00:00 | Latest update
In July 2011, the case brought by Peruvian torture victims against Monterrico Metals in the UK High Court was settled when the company agreed to pay the claimants an undisclosed amount.
In March 2011, Friends of the Earth-US, in collaboration with Peru's CooperAccion and Fedepaz and Belgian solidarity organization CATAPA, petitioned the Hong Kong Stock Exchange to ensure that Zijin Mining Group (listed as 2899:HK) fully discloses material risks associated with the Rio Blanco Mine. The letter raised concern about specific conflicts between the Zijin-led consortium and local Peruvian communities, and environmental violations Zijin was faulted for by the Peruvian government during the mine's exploration stage. It also noted that Zijin had not disclosed any of these problems to its shareholders and the public. The groups called on the HKSE to use its state-of-the-art disclosure standards to ensure that Zijin adequately report non-financial risks.
In September 2010 several Peruvian organizations from northern Peru, along with international solidarity group Catapa, launched a campaign against the Rio Blanco mine project. The 'Mining in Paradise? No-go zones for mining' campaign, which was launched on the third anniversary of a community referendum that overwhelmingly opposed new mining concessions in the area, demands that mining companies and the government of Peru respect the communities' decision to keep mining off their land.
Despite the unresolved social conflicts and environmental violations, Chinese media announced in July 2010 that Zijin will seek to increase its investment in the Rio Blanco Mine.
The company faced harsh criticism from the media, civil society and financial analysts, in China because it has neglected internal management, risk management and the environment as it aggressively seeks to expand globally.