Peru’s Robust Mining Economy is Closing the Gap for Rural Peruvians 25/10/18
Peru is the mining capital of the world, with impressive investment dollars to prove it. These investments translate into opportunities for Peru to increase its employment base, build a robust economy and improve the lives of its citizens.
A healthy national economy means that the government has more assets with which it can invest in healthcare, housing, education and infrastructure. A robust mining economy has been key to Peru’s successful climb out of poverty and to a seat among the world’s developed nations.
Mining Investments Continue to Grow Last September, government officials held a press conference to share the good news related to mining investments. Francisco Ismodes, Minister of Energy and Mines announced that Peru is currently home to 49 mining projects, holding a combined worth of $58 billion. And this represents only those mining projects already on the ground and operating. Minister Ismodes said that more projects are in the stage of exploration. Strategies to lure companies to invest in mining in Peru is of paramount importance to Peruvian policymakers, as they look to mining as a way to close the gap for rural residents. Facilitating a vigorous mining economy has become an important component of the country’s strategic plan. Globally, Peru is ranked 5th in terms of mining investments. The country succeeded in attracting 7% of the world’s exploration budget, which translates into a $524 million infusion of economic benefits for the country. Minister Ismodes predicts continued growth, reaching 20 billion in mining investments and prospecting by 2022.
Balancing the Challenges of a Successful Mining Industry Minister Ismodes told attendees at the press conference that the government is mindful of the challenge of developing mining as an economic engine while also protecting Peru’s fragile environment. Policymakers and stakeholders are tasked with developing protective parameters that allow for Peru’s environment and society to prosper.
Peru is Serious about Preventing Corruption In addition to significant annual growth, Peru’s mining industry proves that the industry does not have to be plagued by corruption or lead to economic stagnation. In fact, getting serious about corruption, Peru joined the Extractive Industries Transparency Initiative in 2010, the first country in the Americas to do so. The Initiative commits mining companies to publicize all tax and royalty payments they make to the government.
Mining has Always Been an Economic Anchor For more than 14 years, Peru has been making a slow climb to become an economic leader among the developing nations. Mining has been one of the primary engines driving its success. Peru survived a bump in the road during the years 2014 to 2017, as its economic growth slowed considerably due to a falloff in commodities prices. However, because the government had established a strong economic foundation during previous years, it was able to weather the decline in fiscal revenues without a corresponding reduction in national spending.
Earlier investments in mining paid off during this period too. Projects that were developed during the previous years of prosperity, came to maturity and dumped more revenues into the national economy.
Looking Beyond Workers As Peru’s mining sector gained traction company executives began to look beyond the basics of building production facilities and hiring employees. In addition to adopting policies designed to foster natural resource protection, community development initiatives began to work their way into corporate strategic plans. Neighborhood improvement efforts began in an organic way. Mines opened, attracting a small migration of Peruvians from the surrounding area. This necessitated at least minimum housing and basic facilities. But mining companies wanted to do more for the growing communities that mining operations were anchoring. Peruvian mining executives began to see a role for themselves as change agents in the overall social movement, reaching out to local stakeholders and municipalities to join the effort.
New collaborations between mining companies, local government officials and community leaders gave birth to important community development projects that would address the full package of issues facing local and regional populations. Projects included addressing chronic childhood malnutrition, improving education achievement, enhancing access to healthcare, and upgrading local infrastructure. Special initiatives have been developed that focus on women to help them gain the skills they need to become entrepreneurs.
Public-Private Sector Initiatives are Working Policymakers have been able to translate mining revenues into significant improvements in delivery of services, especially for Peru’s poorer populations. According to an article in Harvard Review of Latin America published in 2014, Peru reduced by 50 percent the total number of Peruvians living in poverty. The Inter-American Development Bank reported that more than half of the Peruvian population had joined the middle class. With strong leadership at the top of the Peruvian government combined with a genuine commitment on the part of mining industry leaders, we can expect that more Peruvians will be able to join the mainstream of society.
Peru Takes the Lead on Climate Change 11/10/2018
Peru became the first country in South America to pass a comprehensive law to address climate change. The “Law for Climate Change” was approved by the Peruvian legislature in mid-March and signed by the President on April 17, 2018.
The Law’s passage signals the government’s commitment to a sustainable future for the Peruvian people. We now have a framework with which to seriously implement policies that will reduce the impacts of global warming across the Peruvian environment.
Peru’s Law for Climate Change establishes a set of requirements that follow the 17 objectives of the United Nations Climate Change Agreement. The Ministry of the Environment is tasked with the job of developing and implementing new regulations and special projects. Ministry staff is responsible for assessing progress and outcomes.
Former Minister of the Environment Esla Galarza, in an interview with ExitosasNoticias, expressed considerable optimism over the new law, noting that “a country which is environmentally responsible is a country that grows, that has a vision of the future.”
A Legacy for the Future
Peruvian President Martin Vizcarra said there is no denying that negative changes are occurring throughout the world due to climate change. “We must be responsible to leave a legacy to our children and the future generations of Peru.”
According to President Vizcarra, the Law for Climate Change will facilitate increased public spending on research and development of clean technologies, public awareness campaigns, and new partnerships between the private and public sector focused on environmental issues.
President Vizcarra observed that the Law will “reduce the country’s vulnerability to climate change and take advantage of growth opportunities with lower carbon emissions.”
Peru is Particularly Vulnerable to Climate Change
In addressing passage of this landmark Law, congressional leaders note that Peru is the third most vulnerable country in South America to the damaging effects of climate change. In fact, a 2013 UNEP report identified Peru as one of the most vulnerable countries in the world to the effects of global warming.
Seventy-one percent of the world’s tropical glaciers are in Peru. But, 22% of Peru’s glaciers have melted away over the past 35 years. More than one-third of Peru’s ice caps have vanished. Unless strong measures are employed, environmentalists predict that all glaciers below 5500 meters will completely disappear by 2025.
Living in the Flood Plain
A striking example of Peru’s vulnerability can be seen at Lake Palcacocha, a beautiful glacial lake in the Cordillera Blanca Mountains. The Lake appears to be healthy and inviting, but its waters are swelling due to run-off from melting glaciers.
The rising lake waters threaten 50,000 people who live in the direct path of what will be dangerous flood waters. Officials are applying intermediate measures, such as water pumps, but a long-term solution is the only way to ensure that thousands of people do not lose their lives.
The Law for Climate Change will enable long-term mitigation efforts to reverse the effects of climate change in Peru, such as what is happening at Lake Palcacocha.
Alpaca Breeders Suffer from Income Losses On the other side of the equation, rising temperatures have caused Peru’s grazing fields to dry up. This has created a devastating situation for Peru’s Alpaca breeders, a mainstay of the Peruvian rural economy. Diminishing grazing lands causes a deterioration in the quality of Alpaca wool and meat. The result is that breeders must sell for lower prices. Less income translates into less ability to maintain or even grow their operations, something that ultimately hurts the entire Peruvian economy.
Peru Needs Multi-faceted Strategies to Fight Climate Change
The Law for Climate Change facilitates a diverse strategy incorporating energy development projects and public awareness. Climate change educational programs will be implemented in schools throughout Peru. The objective is to develop an early awareness about the fragility of the environment and man’s impact on it. Leaders envision future generations of Peruvians who will be committed to protecting the natural resources of their country.
Further, the Law for Climate Change requires the establishment of environmental research and studies programs at universities that will focus on extrapolating new data about the impacts of climate change on the Peruvian environment.
The Law for Climate Change Facilitates Clean Energy Development
In early October 2018, Peru was appointed to serve as Vice President of the International Solar Alliance for Latin America and the Caribbean. The ISA is one of the most critical global players in the fight against climate change. Based in India, the ISA, has a membership of 68 countries who have the greatest potential for producing solar energy. The initiative was launched at the 2015 Climate Change Conference at the United Nations. Peru joined the Alliance in 2017.
Peru offers great potential for wind and solar energy. It has established defined goals for the installation of solar panels and wind turbines. A target of 200,000 solar panels, for instance, is expected to satisfy most of Peru’s electricity needs.
Clean energy development, such as wind and solar power are important components of any climate change strategy. However, it impossible to move completely away from liquid fuels. Investment in biofuels, which are carbon-neutral, is another key component of Peru’s long-term clean energy development plan. As Peru takes its leadership position among the developed nations of the world, the challenge of overcoming the destruction caused by climate change no longer appears insurmountable.