'No deal here': Peru communities, Hochschild on collision path over mine closures

By Marco Aquino

LIMA, Dec 15 (Reuters) - Hochschild Mining is on a
collision path with Peruvian communities near its Inmaculada and
Pallancata mines, with the firm adamant it will not shut the
pits and local residents determined that it will not be granted
operation extensions.

Community leaders near four mines in the southern Andean
region of Ayacucho, including the two ran by Hochschild, said
they expected to be presented with a definitive plan to shut the
mines in a meeting scheduled for Wednesday with mining firms and
the government.

But Hochschild told Reuters it expected to be granted
approval https://www.reuters.com/markets/commodities/exclusive-hochschild-sees-perus-approval-early-next-year-silver-mine-extension-2021-12-14
to extend the life of the two gold and silver mines.

The opposing expectations stem from what appear to be
contradictory messages coming from the government of leftist
President Pedro Castillo.

Last month, Prime Minister Mirtha Vasquez had said Peru
would not https://www.reuters.com/world/americas/peru-pm-sparks-controversy-with-mining-sector-by-ruling-out-timeline-extensions-2021-11-20
back permit extensions for the Hochschild mines and two other
smaller mines facing community opposition, sending Hochschild
shares down over 50%.

But later, the government appeared to backtrack https://www.reuters.com/world/americas/perus-government-softens-stance-mining-permits-2021-11-24,
saying, without naming Hochschild specifically, that mining
firms could still request permit extensions in adherence with
regulations.

Inmaculada provides some 60% of the London-listed miner's
cash flow and the company has a $4.4 billion investment plan for
the mine that it wants to keep operating until 2042. Without a
permit extension, it is scheduled to close by the end of 2023.

"They are asking to modify their environmental impact to
expand their mine," Asuncion Margarita Gutierrez, a district
leader in Ayacucho's Paucar del Sara Sara province, where
Hochschild's mines are located, told Reuters by telephone.

"But there is no deal here, our lives comes first," she
said, repeating accusations that the mines polluted local water
sources. Hochschild has categorically denied the accusations.

The standoff is a test for Castillo, who rode to power in
July on the back of strong support in mining districts for his
pledges to redistribute mining profits and give indigenous
communities near mines a louder voice.

The mining ministry did not immediately reply to a request
for comment.

'NO PLANS TO CLOSE'

Hochschild's vice president of legal and corporate affairs,
Jose Augusto Palma, told Reuters the company "has no plans to
close" Inmaculada or Pallancata and that it had provided all the
legal documentation necessary to extend the permits.

"We trust that the government will explain to the leaders
the status of the current permits and those that are in process,
and that it will respect the legal order that regulates the
renewal of permits," he said in emailed replies to Reuters.

Inmaculada http://www.hochschildmining.com/en/our_operations/current_operations/inmaculada_peru
produced around 129,000 ounces of gold and 4 million ounces of
silver in 2020. Pallancata http://www.hochschildmining.com/en/our_operations/current_operations/peru/pallancata
produced around 13,000 ounces of gold and 3.7 million ounces of
silver.

Several communities in Ayacucho have threatened to protest
if the government fails to comply with what they consider a pact
signed with Vasquez in November to shutter the mines.

Under Peruvian law, all mines have a planned closure date,
which can be modified if more resources are found and if
regulators allow it. The four mines in questions have closure
dates ranging from 2022 to 2025.

Che Bernaola, representative of the Ayacucho Sur committee,
said he expected the government to ratify the gradual closure of
the mines.

"The only thing we can discuss at the table is how much
reasonable time they need to shut them down, there is nothing
else," Bernaola said by phone.

Peru's Environmental Assessment and Enforcement Agency
(OEFA) has carried out 82 supervision tasks at the four mines
between 2013 and 2021, government data show. It has identified
breaches that have led to minor fines.

Julio Guillermo Gutierrez, president of a group in nearby
Parinacochas, said the mines had to shut, but acknowledged the
government might say the closures would "take a little longer."

"We reaffirm our purpose to stick with the process of
closing the mines, within the legal framework," he told Reuters.

"For many years we have been tolerant, reasonable in our
complaints, and now it is in the hands of the Executive; the
state has to understand that we are also Peruvians."

(Reporting by Marco Aquino; Editing by Adam Jourdan and Rosalba
O'Brien)

Hochschild