July 16, 2012
The protests against the Minas Conga mining project, for many of the actual campesinos participating, are a primal cry against thousands of years of crushing poverty, subjugation, marginalization, discrimination, malnutrition and early death. They haven't seen much economic improvement during Peru’s decade-long economic boom, or more importantly during Newmont Gold's 20-year management of the Yanacocha gold mine near Cajamarca. They have legitimate gripes and justifiable reasons for not wanting this project to move forward.
For the big 3 nominal leaders of the protest, it is a political platform high enough to potentially jump out of the cul-de-sac of Cajamarca and blaze a path onto the national stage. Wilfredo Saavedra, the ex-Tupac Amaru revolutionary once imprisoned for terrorism, now leading a radical anti-mining “environmental” group, and with political aspirations. Marco Arana, the leftist ex-priest turned environmental advocate and political candidate, thinking about changing Peru's mining culture and economic paradigm from the big stage of Lima. Gregorio Santos, the small-time socialist president of the Cajamarca region, who wants to re-write the constitution and turn left towards Bolivia and Venezuela, with his eyes suddenly on the Presidential elections of 2016.
For president Ollanta Humala and the economic and political elites in Lima, it's a 5-billion dollar dagger aimed at the heart of the current system. Humala, who won with a big majority of the campesino vote and as a candidate came to Cajamarca and threatened to shut down the project himself, backs it now from his new perspective as a tied-in global player, and struggles to know how to respond. He variously does little or moves incrementally away from the protesters and towards militarized law and order, while his popularity ratings dive and protesters carry “Humala Traitor” signs in the Plazas de Armas of Cajamarca and Celendin.
For Newmont Gold, the American global mining powerhouse developing the Conga project along with a Peruvian minority partner, it is the bitter harvest of 20 years of failed community relations, mismanaged social programs, and an arrogant, alienating disrespect for the local people that has destroyed all trust. The Cerro Quillish Project, their last attempt to move beyond the declining Yanacocha property, failed due to massive paralyzing protests. Watching 20,000 Cajamarquinos fill the Plaza de Armas on a sunny September day in 2004 to defeat Quillish, I thought, “Newmont will have to make serious changes now.” 8 years later, watching the same leadership have the same result with Conga, I am awestruck at their ability to kill the golden coppery goose with their poisonous ineptitude.
For the small businesses and normal residents of Cajamarca, like me, it's an impending economic disaster which could leave Cajamarca city a smoking Detroit-like wreck. When your economy is 97% dependent on 1 product and industry, and you tell that industry to get lost, the result is likely to be a local deflationary depression. Newmont, planning to transition workers from Yanacocha to Conga, was carrying an inflated payroll, and is now trimming as much as 30% of its workforce and canceling equipment orders for Conga. The fired Yanacocha workers are the drivers of the local economy, taking out mortgages on new condos, buying cars on credit, eating out, buying goods from local merchants, and filling the shiny new El Quinde shopping mall, with its Radio Shack and multiplex.
The tourism industry in Cajamarca, always weak anyhow, is off 75%. Hotels are empty, tourist class restaurants are empty, arts and crafts stores are starting to close, tour companies on the Plaza are closing. While the town is still bustling as you walk the streets, a shadow of worry is creeping in. Taxi drivers are concerned, if you ask them. People are talking about it while they eat lunch. My wife, who works at Yanacocha and expects to lose her job in the next 3 months, says 3 coworkers have offered to sell her a condo or land in the last week. The mood at the mine is fatalistic; her description reminds me of being let go as the company I worked for imploded in the tech meltdown of 99-2000.
The real-world issues around Conga are so tangled and complex, they may not be solvable. The environmental issues are real – mining is ugly and dirty, heavily polluting and water intensive, and this mine would be at the head of a complex watershed. But some of the campesinos who live in areas directly affected by Conga want the investment. The current system has meant they live in mud-brick houses, often with no running water or electricity, and walk hours in the mud and rain, wearing re-purposed rubber tire sandals to reach inadequate medical and educational services, barely subsisting on on a tiny plot of potatoes or alfalfa and a couple of bone thin cows.
The people downhill from the mine fear contamination and interrupted water supplies and will not accept its presence. Yet they currently have insufficient water for the 5 or 6 months out of the year with no rainfall, and the project promises to build 2 dams that will provide year round water supplies for the traditional local dairy industry downstream. The protesters chant “agua si, oro no” (water yes, gold no), and often say that you can't eat gold. But you can't eat water either, and at 3,500 to 4,000 meters above sea level (11,000 to 13,000 feet) with poor soil and cold weather, the water does not nourish highly nutritional or valuable crops.
Anything Newmont says about the treatment of water or contamination control is dismissed out of hand as a lie. In 20 years they have never formed any bonds with the campesinos, never educated any campesinos to be engineers eligible for high end salaries, never trained a smart local kid to be able to participate in the environmental impact studies and sell them to his own people. When the anti-Conga protests hit, the government commissioned an international panel to re-work the water and contamination plans, making them more costly and supposedly stronger. Newmont accepted the revised conditions. The protesters rejected them out of hand and continued to insist that Newmont is untrustworthy and the project is not viable.
With the local and regional economy so dependent on mining, and high-value exportable crops unlikely, there is no convincing Plan B that anyone is aware of. The 3 protest leaders / politicians offer platitudes about agriculture, but the current system has only led to thousands of years of bone-crushing poverty for the campesinos. No one in Cajamarca really believes that any of them care about anything but their own futures, excpet that Arana could be considered a genuine green. It seems likely that the 3, currently uncomfortably allied, will turn their knives on each other when they have finished killing Conga. While Santos plays chicken with the feds, and regional business goes undone despite billions of dollars of Yanacocha mining taxes in the bank, the city of Cajamarca is a regional capital with 130,000 residents that offers no municipal water service from 8.30 p.m. to 4 a.m. and has frequent blackouts.
Many people here think another company will step in and run the project. But it seems unlikely that the protesters would accept that. And would any company trust the local government or people to the tune of a multi-billion dollar investment? Would any banks finance it? Most Cajamarca city residents, dependent on mining in one way or another, are not so much pro-mining as they are pro-development, which is to say pro-survival. Many have taken on debt to invest in small businesses that depend, in the end, on the Conga project's viability. If it doesn't go forward, what can possibly take the place of the largest ever private investment in the history of Peru?
As a long time resident of Cajamarca, former contractor at Yanacocha, spouse of a current Yanacocha worker, currently working and living part time with campesinos in another part of the Cajamarca region, I see nothing that indicates an imminent solution. I think Conga is dead and Cajamarca is about to enter a disastrous downward spiral. The Feria Fongal, basically the Cajamarca State Fair, which takes place every year during independence week, the last week of July, has been canceled. The protests, which began in November of 2011, hurt businesses badly during the all-important 2011 Christmas season. With the Yanacocha downsizing rippling through the economy over the next few months, Christmas 2012 should be awful.
2013 could end up being a vicious and desperate year. If thousands of already poor, mostly young male waiters, taxi drivers, construction workers and day laborers are unemployed and unable to feed their families, what will happen to the crime rate? Gun sales are up in Cajamarca in the last few months.
Detroit topped out in population in 1950 at 1.85 million people. In 2010 it had about 700,000, a loss of 62% and about the same population as it had in 1915. When the steel industry crashed Pittsburgh lost 50% of its population. Will Cajamarca, a one-industry town which has doubled from about 65,000 people to about 130,000 in 30 years, solely due to mining, suffer the same fate? As we await the loss of my wife's job at Yanacocha, and envision the economic and security situation that could happen in Cajamarca, we're making contingency plans to leave, and we're not alone. But we're rich by local standards. What about the small business people that will lose everything while their customer base slinks away? What about the campesinos and the urban poor? They will probably suffer the most, as they always have, while the politicians stuff their pockets and big mining moves on to friendlier regions of Peru.