ICMM - International Council on Mining & Metals

CASE STUDY

Making mining count in Peru: case study

At a global multi-stakeholder workshop held in London in late 2004, Peru was identified as a mining country with mixed performance. Following a series of national-level reforms in the early 1990s, the country has experienced very substantial foreign direct investment in the mining sector and has performed well in macroeconomic terms. But it has done less well with respect to reducing poverty at the local level. Peru was selected for in-country work to identify how national-level success factors relate to sub-national challenges.

Work began in 2005 to assess the positive and negative impacts of mining both at the national, the sub-national and the project level. The in-country research was conducted using the analytical framework and tools developed in Phase 1 of the Resource Endowment Initiative. Phase 2 focused not just on understanding mining’s impact in Peru, but also in three other countries – Tanzania, Chile and Ghana.

The main conclusions of this research in Peru can be found in the country case study report on Peru, and are summarized in Spotlight 8. A surge in mining investment in the country since the early 1990s has brought macroeconomic and fiscal benefits to the national economy. Yet poverty and inequality have remained high and trickle-down benefits have been held back party by incomplete governance reforms. This has in turn intensified social tensions around mining.

The report digs into the causes for this finding. It points to national-level reforms that have not always been matched by equal improvements in institutional capacity and in political-administrative processes at the regional and local level. In this context the report also suggested room for improvement in the manner in which the companies are managing and delivering their broader economic contributions.

When the findings from the Phase 2 country case studies were taken together (see Synthesis Report), six broad areas for partnerships or institutional development were identified, which appeared to hold the greatest potential for enhancing the socio-economic returns from mining. It was on these six areas that attention was in turn focused in Phase 3.

• Enhanced management of mineral revenues
• Enhanced social and economic development in mining areas
• Poverty reduction in mining areas
• Increased local content used by mining projects
• Strengthened local and regional development planning
• Improved mechanisms for disputes resolution

A core finding across all four countries studied in Phase 2 was that more collaborative action and stronger partnerships between mining companies, government, civil society organizations and donors are needed to unlock the full potential benefits of mineral wealth.

The objective of Phase 2 in Peru, which began in the first half of 2007, was to explore and develop channels through which this could be achieved in practice. Mapping them against the six priority areas, a further in-country study was conducted over the summer 2007 to identify recent developments and a wide range of current initiatives and multi-stakeholders partnerships. This provided an overview of the various stakeholders from the industry, government, civil society and international organisations and their impact, influence and strategic interests in improving socio-economic conditions at the national and sub-national level.

Following this ‘mapping’ exercise, the Sociedad Nacional de Minería, Petróleo y Energía (SNMPE) organised a Natural Resources and Development Forum and Partnership Fair in Lima in May 2008, supported by ICMM. This event brought together stakeholders, particularly from local mayors and regional governors, to explore the range of multi-stakeholder initiatives available in relation to the six themes of the Resource Endowment initiative. The objective was to simulate further up-take of similar initiatives elsewhere in the country.

The forum was attended by over 300 participants. Some 22 organizations exhibited good practice sustainable development and capacity building initiatives at the fair, organised in parallel. With the presence of Peruvian Prime Minister Mr Jorge del Castillo and several other ministers the event also received high political attention.