Basic Information

Chinese Name:  特罗莫克矿山
Location: Morococha District, Junín Department, Peru 
Type of Project: Extractive
Project Developer(s): Minera Chinalco Peru S.A. (subsidiary of Aluminum Corporation of China Limited [Chinalco])
Main Contractor(s): CCCC Del Peru SAC (subsidiary of China Communications Construction Company, Ltd.), in charge of plant expansion.
Known Financiers: Export–Import Bank of China, China Development Bank 
Cost: 6 billion USD
Project Status: Operational

Project Outline

The Toromocho Project is located in the Junín Department in Central Peru, about 140 kilometers east of Lima, at an average elevation of 4,600 metres. Specifically, it sits in the historical mining district of Morococha where local livelihoods have always relied on mining activities.

The geological composition of the Toromocho mountain remained largely unknown until 2002, when Peru Copper Inc., a Canadian prospecting firm, acquired concession rights thanks to the sweeping neoliberal reforms launched in the 1990s by Alberto Fujimori (Peru’s president from 1990 to 2000). Until then, the area had been mined on small scales by companies of various origins. In 2007, Chinalco successfully offered 840 million CAD (789 million USD) for a cash takeover and established its local branch, Minera Chinalco Peru S.A., to execute the Project. To pass its Environmental Assessment Impact (EIA), a prerequisite for mining operations, Chinalco built the Kingsmill Tunnel Water Treatment Plant in 2011 and completed the community resettlement of Nueva Morococha in 2012. When the author conducted her fieldwork in the summer of 2019, approximately 40 families of house-owners still lived in Antigua Morococha, although more than 4,000 out of 5,000 residents had already resettled in Nueva Morococha. The mine went into production in December 2013. 

However, three months after its inauguration, the operation was suspended by Peru’s Environment Assessment and Enforcement Agency (OEFA) after it discovered illegal discharge of acid effluents in two nearby lakes. Chinalco quickly resolved this matter by building improved drainage and explained the incident as a result of unusual heavy rainfall which caused unexpected acid runoffs. 

Although Peru did not officially become a signatory of the Belt and Road Initiative (BRI) until April 2019, in 2017 a 1.3-billion-USD expansion project framed under the BRI was approved to increase the mine’s output by 45%. The expansion of the Toromocho Project was completed in 2020, successfully raising the mine’s annual production to over 300,000 tons of refined copper. With a 32-year life expectancy for the mine and a projected operating life of 36 years, the Toromocho mine is scheduled to close in 2049.

The Toromocho Project is wholly owned by Chinalco with loans primarily from China Development Bank and Export–Import Bank of China. As a major state-owned enterprise, Chinalco ‘answered the state’s call’ to seek strategic access to overseas copper production in response to China’s concerns about its limited domestic reserves of copper ore and its relatively low quality. Chinalco’s acquisition in Peru not only grants the Chinese state access to a steady and cost-efficient access to copper supply, but also helps the company diversify its investment portfolio to become internationally competitive. It was also the first overseas greenfield copper mine development by a Chinese company.

It is common for Chinese state-owned enterprises (SOEs) to contract their own subsidiaries to carry out work on their projects abroad. However, for the Toromocho Project, Chinalco hired CCCC Del Peru S.A.C, the subsidiary of another SOE, China Communications Construction Company, Ltd., to carry out the mine’s expansion. Similarly, Chinalco does not rely heavily on imported Chinese labourers but employs a workforce that is mostly Peruvian. Based on the author’s fieldwork, locals from the Toromocho Project’s directly impacted areas often work for Chinalco’s contractors in construction, transportation, or maintenance. Geographically these jobs are carried out in the mine or its adjacent areas and they tend to be more precarious because they are fixed-term (a few months or years) and underpaid. Meanwhile, professionals, usually with college degrees (not just geology or engineering, but also marketing, public relations, and accounting) from metropolitan Lima and Huancayo (the regional capital of the Junin Department), work either in the mine or at Chinalco’s headquarter in Lima. These professionals are under Chinalco’s direct payroll, which allows them access to comprehensive health care, insurance, and other benefits. The disparity between labour precarisation in Morococha and employment security in Lima has fuelled discontent and frustration towards Chinalco among workers. Only a handful of Chinalco’s employees in Peru are from China: some of them hold long-term contracts as company executives and others are posted as short-term engineers and translators. 

Morochocha is a historical mining district where local livelihoods have relied on the extractive industry since the early twentieth century. The community’s pro-mining attitude has discouraged both international NGOs and Peruvian civil society from actively getting involved in this project in spite of their common anti-extractive agenda motivated by concerns for the negative environmental and social impacts of mining. Against the backdrop of the global financial crisis of 2007 and 2008, the Peruvian governments at the national, regional, and local levels were all enthusiastic about the employment and tax income Chinalco’s acquisition would bring at this historical moment. Similarly, in the earliest stages of the project, residents of Antigua Morococha eagerly welcomed one the largests mining investments in Peru’s history, looking forward to the economic development even though it would require more than 5,000 locals to move to Nueva Morococha, a new settlement ten kilometres away which Chinalco financed.

Although Peru as a country might have benefitted from the project over the years, locals in Nueva Morococha found life to be increasingly difficult after resettlement, both socially and economically. The ‘urban’ planning and construction of Nueva Morococha was underpinned by a technocratic rationale which pursued efficient governance, ignoring the local ways of living and socialising. This has unfortunately resulted in a slow deterioration of intra-community relations. Based on the author’s fieldwork, residents who have resettled in Nueva Morococha also complained about the poor housing conditions in a humid, earthquake-prone zone. Economic conditions in Nueva Morococha did not improve significantly as locals wished. In fact, it became more difficult for less-skilled and unskilled locals to make a living in the open pit mine due to their lack of professional training and experience. Before Chinalco’s arrival, local Morocochans mainly worked for the Peruvian companies Volcán and Austria Duvaz, or for Argentum, a subsidiary of Pan American Silver from Canada. All three companies relied on underground tunnel mining, which was labour-intensive instead of skill demanding. When Chinalco acquired the project after Peru Copper Inc. conducted more research on the mine’s geological composition (Lowell 2014), the Chinese SOE decided to upgrade the mine to an open pit, which is more capital-intensive yet highly productive and efficient. This change was destructive to the local Morococha community because they suddenly became unqualified for skilled employment in the mine. Multiple protests have occurred, calling attention to the lack of employment and economic prospects in the resettlement.

Meanwhile, around 40 families, mostly house-owners, who chose to stay behind in Antigua Morococha suffered greatly. While some decided against the resettlement due to their attachment to the land and ways of living, others wanted to negotiate for better deals with Chinalco. Life in Antigua Morococha has become increasingly difficult since 2012 when the resettlement began. Based on the author’s fieldwork, shortly after people started moving, public services were withdrawn and transferred to the new city, including schools, clinics, police stations, and churches. In addition, as the number of residents in Antigua Morococha decreased, grocery shops, restaurants, tricycles, minivans, and other businesses suffered tremendous economic loss, and thus started migrating as well. The plight of Antigua Morococha forced the residents who stayed behind to commute more frequently to access public services and purchase basic necessities. Commuting not only posed an economic burden for all, but also physical hardship for the elders and those who were responsible for family errands such as grocery shopping. 

A power outage in 2013 and the termination of electricity service in November 2019 caused even more outrage among local residents. Although  the municipality intervened in a timely manner and restored the service in 2013, justifying it as its essential duty to provide basic necessities to its residents since most people still remained there, the second time  was not that fortunate because Chinalco had secured its registration of the 34 acres of land (for details, see the timeline of controversies below). In addition to power outage and water shortage, locals also complained about road maintenance in Antigua Morococha: whereas they were often watered to control dust in the past, nowadays, air in Antigua Morococha is filled with dust and toxic mineral particles. According to Red Muqui, a network of Peruvian institutions advocating for community rights, since 12 September 2020 Chinalco has  blocked the only road access for families in Antigua Morococha, making their life extremely precarious. In October, a few women and a minor were attacked by police officers when they went to negotiate with Chinalco. Although the community in a joint effort presented a Habeas Corpus against Chinalco in November 2020, by March 2021 no response had been given to them. As of March 2021, 25 families still remained in Antigua Morococha.

Project Impacts

• Employment & labour rights: Open pit mining provides a healthier and safer working environment compared to underground mining and employees receive better wages than the industry’s average. Chinalco’s workforce is highly Peruvianised, but tensions occasionally arise between local unskilled labourers and outside professionals due to their different access to employment. Based on surveys of 294 homes conducted by the Peruvian National University of the Centre (UNPC) in Nueva Morococha, the unemployment rate among the local population reached 52% in 2017. 
• Environment: The Kingsmill Tunnel Water Treatment Plant was completed in 2011 to treat wastewater before it is discharged into the Yauli River. This has significantly improved the regions’ underground water which had been contaminated by decades of irresponsible mining by a range of companies from Peru and North America (such as the Cerro de Pasco Corporation and Doe Run from the United States, and subsidiaries of Pan American Silver from Canada). An acid runoff was observed in 2014, leading to a short-term suspension of the project. Chinalco blamed it on heavy rainfalls and quickly resolved the issue by building a proper drainage system. When the author attended the July Dialogue Table of 2019 in Huancayo, officials from the Junín Ministry of Health reported that a high level of silver was also discovered in children’s blood. Further investigations are underway. 
• Land conflict and displacement: Roughly 5,000 residents of Antigua Morococha were required to resettle to make way for open pit mining. In order to accommodate the local community, Chinalco financed the construction of a resettlement town named Nueva Morococha ten kilometres away with improved infrastructure. The construction of the town began in 2010 and finished in 2012, the year when people started moving in. Based on the author’s fieldwork, by 2019 more than 4,000 people had relocated and around 40 families stayed back in Antigua Morococha wishing to strike a fair deal with Chinalco. However, locals found post-resettlement life difficult, both socially and economically. Another issue is a land conflict revolving around the 34 hectares of communal land which Chinalco now claims to be part of its concession. The local community has filed lawsuits against the company, seeking legal recognition and economic compensation.

• Local community: Intra-community relations in the resettled Nueva Morococha worsened as renters and homeowners turned against each other. Those who moved to the resettlement area early were also blamed as traitors by people who held out in their original homes. Distrust grew within the community as some became suspicious that others were Chinalco informants.
• Governance: Chinalco’s Environment Impact Assessment (EIA) was passed by the Ministry of Energy and Mines in December 2010. Locals protested against the speedy and nontransparent approval of EIA because they were denied court entrance for the hearing when it was passed. In addition, the local community only received the lengthy document a few days before the hearing, leaving them little time to develop a thorough understanding of the project and thus be adequately informed. It is important to note that locals are not against the mine’s development but they want the process to be transparent and responsible. In 2020, Chinalco presented its Modification of the Environmental Impact Study of the Toromocho to SENACE (National Secretary of Certification), as a result of its completion of the 1.3 billion expansion project. Locals in Antigua Morococha argue the process violated the principles of citizen participation, prior consultation and environmental impact, especially when the huge increase in water consumption.

Toromocho is an open-pit mine with state-of-the-art mining technologies. This requires its employees to have a high level of professional training and experience. Consequently, locals, who are mostly considered unskilled, only have access to short-term contracts in construction and maintenance while full-time payroll opportunities are taken by Peruvian professionals with university degrees. The denial of employment and precarisation of labour under the contracting system appear to be the major concerns for locals in Nueva Morococha. According to a 2018 study by UNPC, 80.6% of the inhabitants of New Morococha thought their economic situation was better in Antigua Morococha and 76.2% believe trade has dropped. A ‘Dialogue Table’ between government officials, Chinalco representatives, and the local community was proposed around 2012 to resolve post-resettlement issues. However, after nearly a decade of effort, little progress has been made. According to interviews by the author, locals consider the Dialogue Table a corporate tactic and bureaucratic mechanism aimed at delaying the process rather than genuinely solving their problems.

Although a new resettlement with improved infrastructure and public services was built in 2012 to accommodate the displaced people, locals felt socially alienated and economically disempowered. Intra-community relations deteriorated as some renters and homeowners turned against each other. Whereas some houseowners felt they were inadequately compensated and decided to stay and negotiate for better deals, renters who had little to lose moved gladly for the free housing. Chinalco took advantage of the split between these two groups and framed the project as a ‘voluntary resettlement’ since the majority of the local residents ended up renting houses in Antigua Morococha. Meanwhile, the early resettled residents were often treated as traitors and felt they were discriminated against in the new town. Based on the author’s fieldwork, communal interactions also decreased because the resettlement’s technocratic spatial planning made the town less dynamic and welcoming. Some residents also expressed distrust towards others, fearing that they were informants for Chinalco. Due to a lack of employment opportunity and scarce economic activities in Nueva Morococha, out-migration became a common solution, which in return deepened the social alienation. 

Another ongoing conflict centres around the 34 hectares of land in Antigua Morococha, which Chinalco claims to be part of its concession since February 2018. This land conflict has historical roots dating back to the early 2000s and is related to the city’s overall development. Morococha grew out of a mining camp of migrant workers, thus for decades no one really owned the land in Antigua Morococha. When the mine was privatised and sold to Peru Copper Inc. in the early 2000s, the state-owned mining corporation, Centromin, promised to transfer the 34 hectares of land back to the community and asked the municipal district to carry out title registration. However, such registration never materialised and the land remained a communal property under the municipal district of Morococha. According to Chinalco, the company first pledged for an easement right in 2014 (the right to use and/or enter Antigua Morococha without possessing it) and completed its registration in 2018. Meanwhile, other reports revealed that Chinalco became the owner of this piece of land with the assistance of various Peruvian state agencies through law-making, including the Ministry of Energy and Mines and the National Superintendency of Assets. Locals deem the transfer unjust and illegal and have filed several lawsuits against Chinalco but all of them have failed. As of March 2021, only 25 families remained in the old town awaiting an acceptable solution.

In-depth Sources 

• Chinalco Mining Corporation International Annual Report 2012. Link.
• Chinalco Mining Corporation International Annual Report 2013. Link.
• Chinalco Mining Corporation International Interim Report 2013. Link. 
• Chinalco Mining Corporation International Interim Report 2016. Link.
• Ng, Eric. 2007. ‘Chinalco in C$840m bid for Peru Copper.’ South China Morning Post, 12 June. Link.
• Sanborn, Cynthia and Victoria Chonn. 2015. ‘Chinese Investment in Peru’s Mining Industry: Blessing or Curse?’ Global Economic Governance Initiative at Boston University, Discussion Paper. Link.
• Torrico, Gonzalo. 2018. ‘The Chinese Mining Giant and the Ghost Town.’ Diálogo Chino, 18 December. Link.
• Zhu, Lin. 2020. ‘Displacement, Development and Capitalist Modernity: The Making and Unmaking of Morococha in Central Peru.’ MA dissertation, University of Colorado at Boulder. Link.