OCMAL August 2020
In recent years, various global phenomena have influenced the course of mining in Latin America. The climate crisis and the need to transform the energy matrix, based on the use of renewable or clean energies, and the impulse of the electromobility industry led to an increase in the price of some minerals considered strategic (lithium, copper, cobalt, earth rare).
This scenario was overtaken by the health crisis caused by COVID-19, which has triggered a context of uncertainty due to the impact that the pandemic will have in economic terms. This has been used by the global mining industry and by various governments in the region to legitimize mineral extraction, considering this sector as strategic for economic reactivation.
At the beginning of the pandemic, the prices of several of the basic metals dropped significantly due to the uncertainty of the short-term functioning of the economy; however, this trend was recently reversed in a context of imminent economic recovery at least from 2021 onwards. This puts pressure on undeveloped mining mega-projects with the usual consequences for communities and ecosystems.
Gold and silver prices have reached levels not seen since 2011 commodities super cycle when gold was quoted at USD 1,921 ounces . The new absolute maximum was $ 1,988.50 in August 2020 . This is a consequence of the financial uncertainty produced by the global health crisis and the conflicting relationship of economic and industrial powers such as the United States with Russia, but especially with China.
This has put gold in the sights of the mining companies specialized in this metal, opening up the possibility of exploiting lower-grade deposits that have been paralyzed due to their lack of competitiveness.
The figures
According to the S&P Global Market Intelligence , Latin America is the region with the largest mining exploration budget with 2,732 million dollars, equivalent to 28% of the total investment. Although it fell from the 30% reached in 2017, the region continues to be the main destination of world investment and the perspective indicates that investment will probably increase in the following years due to the recovery of the prices of some essential minerals. In this perspective, Peru ranked first in attracting mining investment with 616 million dollars, followed by Mexico, Chile, Brazil, Argentina and Ecuador, which together accounted for 90% of the region’s total budget.
According to ECLAC (2018) Brazil, Chile, Mexico and Peru account for 85% of exports and Mexico for almost half of mineral imports. This is because Chile is the world’s leading producer of copper (5,872 tons of fine copper), and second in lithium (18,053 tons) and molybdenum (60,284 tons); Brazil second in iron (490 million tons); Peru second in copper (2,400 tons), silver (4,300 tons) and zinc (1,600 tons), and third in lead (300 tons); while Mexico is the world’s leading producer of silver (6,100 tons) and second in mercury (200 tons). The extraction of cobalt, another important mineral for the electromobility industry used for the manufacture of electric batteries, is concentrated in the Democratic Republic of the Congo from where 90 thousand tons equivalent to 66.3% of the world total are extracted, Cuba occupies the third position with 4,900 tons and 3.6% of the total.
Copper (32%), iron and steel (24%) and precious metals (20%) represent 76% of the region’s mining exports, whose main destination in general terms is the Asian market, mainly China where in 2017 more than 25 billion dollars were exported (ECLAC, 2018). These data show the importance of LA in the global geopolitics of mining in a context of trade war and speculation between China and the United States, to which we must add the pressure exerted on minerals by the consensus of the energy transition and the COVID-19 health emergency.
- El Caribe
- Brasil
- Chile
- México
- Perú
- Argentina
- Resto América del Sur
- América Central
- Perú
- Argentina
- Resto Amércia del Sur
- América Central
- El Caribe
- Brasil
- Chile
- México
Source: ECLAC, 2018.
37% of the value of LA’s mineral exports is concentrated in primary products, which means that the weight of raw materials in mining exports is four times greater than that recorded in total world mining exports. LA remained in the extraction phase, while China advanced as a producer and consumer of refined products. Thus, the proportion of manufactured products in total regional exports is lower than that of the African continent, which accounts for 23% of LA (ECLAC, 2018).
The new mining scenario in Latin America
The transformation of the energy matrix as a response to the climate crisis caused by the excessive use of fossil fuels has two important aspects that involve the extraction of minerals with direct effects in Latin America. On the one hand, renewable energies (mainly solar and wind) require various minerals: copper, iron, tin, aluminum, nickel, among others; on the other hand, the electromobility industry for the manufacture of electric cars that adds copper, cobalt, molybdenum and lithium influencing the prices of these commodities.
This situation affects the region due to the large reserves of metallic minerals that LA has: lithium (61%), copper (39%), iron (15%), molybdenum (25%), gold (11%), silver (32%), nickel (32%) (see figure 4). Only Chile (21%), Peru (10%) and Mexico (6%) concentrate 37% of the world’s copper reserves; Brazil 14% of iron; and between Argentina (12.8%) and Chile (48.2%) more than 60% of lithium.
In this scenario, the reprimarization of the “mining economies” in the region is deepening, where exports of unprocessed natural resources have increased relative to the rest of the world.
One of the major concerns is that despite the speeches to implement the challenges posed by 2030 Agenda in terms of mining governance to improve the relationship between mining and its environmental and social settings, the various governments of the region have maintained policies that facilitate mineral extraction conditions or in other cases such policies have been relaxed.
This is in spite of the various disasters caused by the collapse of tailings dams, such as the Brumadinho catastrophe in Brazil, which in January 2019 left more than 270 dead, 11 still missing and a town buried under thousands of tons of toxic mud, for which the Vale Company was responsible. Together with the BHP Billiton (England-Australia), the company has recorded numerous mining accidents of this kind. The United Nations Environmental Program confirmed at least 104 tailings dam disasters during the period 1990-2016.
- Metales diversos
- Cobre
- Hierro y Acero
- Metales preciosos
- Bauxita y aluminio
- Zinc
- Plomo y uranio
- Estaño
- Niquel
- Minerales no metálicos
Source: ECLAC, 2018.
Source: ECLAC, 2018.
Another concern is that, although governments choose to apply the recommendations established in 2030 Agenda, the content is based on the green movement of environmentalism, which seeks to solve the problems already known by mining activity through technical and monetary measures. They do not consider who is responsible and who benefits, much less question the structural causes of a historical relationship of dependence and subordination, which will surely force local populations within Latin American countries to resort to resistance actions on their own account in the face of the loss of their heritage, since mistrust of institutions and governments is growing.
The articulation of networks between communities, organizations and other allies for the defense of territories and life, as represented by the Network of Churches and Mining, will be of great importance when defending the rights of communities against the tendency to deepen mining in the region.
Socio-environmental conflicts and criminalization
The LA region has the highest number of socio-environmental conflicts due to mining activities.
From the Observatory of Mining Conflicts in Latin America (OCMAL), 277 conflicts have been registered in 294 projects involved, of which 160 are water conflicts and 5 are transboundary. The countries with the most conflicts are Mexico (55), Chile (49), Peru (42), Argentina (28) and Brazil (26), although the OCMAL website indicates that in 20 countries in the region there is at least one conflict over mining, and at the regional level, there are 234 registered cases of criminalization for opposition to mining.
Experience with socio-environmental conflicts derived from mining in LA shows that such disputes are carried out under conditions of unequal power, and that companies form alliances with governments, which from an institutional level pave the way for the installation of extraction projects.
A recent report by the Global Witness agency confirms that the conflict and criminalization caused by mining activities in the LA region is on a growth trend, the most affected since 2012. By 2019, the aforementioned NGO reported that LA recorded two thirds of the murders of people defending land and life from extractive megaprojects, equivalent to more than 70 deaths out of 212 worldwide.
The most affected country on a global scale is Colombia (64), followed by the Philippines (43), Brazil (24) and Mexico (18). Overall, seven of the top ten countries with the most deaths are in Latin America, with Honduras, Colombia, Nicaragua and Guatemala topping the list in terms of the number of murders per capita. In an analysis where mining is the most lethal activity.
Source: ECLAC, 2018.
Global dynamics: climate change and the post-covid-19 scenario
The need to replace the energy matrix has generated the opening of new borders for the extraction and the increase in the global demand of some minerals (lithium, cobalt, copper, among others). The change in the energy matrix pushes towards a capitalist scenario with a green environmentalist approach that promotes the idea of a circular economy. That is, a context where it is possible to maintain the route of economic growth from the exploitation of natural resources trying to maintain an ecological balance.
This green orientation omits the possibility of slowing down the rate of natural resources extraction and only entails stricter regulation, which is not exercised in practice since companies are not willing to give up on obtaining maximum profits.
Another important consideration is that the COVID-19 crisis has had a greater effect on the most vulnerable social sectors. The OCMAL Surveillance Network on mining and COVID-19 reported in its recent publication that the pandemic context was not an impediment for mining companies to increase their extraction volume. In many cases, mining companies even prevailed over government determinations by refusing to suspend activities or by pressuring governments to keep mining as an essential activity.
This put the health of the workers at risk, especially subcontractors who lack greater social safeguards, but also that of their families and the communities of origin. The balance was at least 8,048 cases of infected mine workers, of which Chile has been the most affected with more than 5,000 cases, followed by Brazil (1,903) and Peru (903). The number of deceased miners is at least 79, with Brazil’s Vale Company recording the highest number of deaths with 61.
The most affected areas have been Antofagasta in Chile and Parauapebas in Brazil. Furthermore, in the Brazilian Amazon, the situation of the Yanomami people is alarming with more than 8,000 infections and 184 deaths.
In this sense, the pandemic has shown how companies diversify their strategies to occupy territories where violence is an increasingly used method. However, in the public wake, they used the context to strengthen their image washing through the delivery of medical supplies, trying to erase their history of contamination and criminalization of the communities.
Finally, we note with concern the narrative that some governments are promoting with great emphasis, that mining will help to reactivate economies that are entering into crisis during the pandemic, which has had an effect on global demand for minerals and their prices, and eventually on the expansion of projects and, therefore, on socio-territorial conflict in the Latin American region.
Source: Global Witness, 2020.
The challenges
The “return to normalcy” so hoped by many people faces the narrative that says that normality was the problem.
In mining, at least that is indisputable. Our region has been hit in recent years by socio-environmental crises, illustrated with situations such as Brumadinho and the growing risk of being a defender of the land and nature, as Global Witness affirms.
Two situations can be seen from two different paths. The first one emphasizes problems and the second one hopes. From the second path one can see the opportunity to put pressure on mining to recognize limits and not only issue announcements like the Mining Council … post-pandemic mining: “It will be greener, more inclusive and with dramatic changes in the way we work”.
It will be important to strengthen the narrative on the dangers of mining, its injustices, speculation, deception, corruption, violence, and human rights abuses, which places it among the least desirable economic activities for our region.
The great challenge will be to go beyond the green environmentalist schemes that are put forward to justify the continued use of nature and its resources, since they do not question the ways of producing and consuming, much less the possibility of transcending the dominant idea of economic growth.
Under this scenario, solidarity and common care will play an extremely important role in containing the coming pressure on Latin American territories. Where the multiple and growing resistances of communities that face diverse risks and the awareness of the need for alternatives, today more than ever, offer fundamental elements from their thinking and practices to collectively build a narrative of paradigm shift, towards a society that emphasizes the construction of true solutions to the socio-environmental and value crisis that we live today, appealing to equity through respect and care for human beings and nature.