LMN together with member groups TerraJusta and Global Justice Now have written to BHP with a critique of its replies to questions raised about its operations in Peru at its online shareholder engagement session last September.
4 February 2021
BHP is an Anglo-Australian mining and petroleum company headquartered in Melbourne, Australia, and listed on the London Stock Exchange. It is the world ‘s largest mining company with a value of almost $130 billion in 2020. It has 33 operations in 15 different countries around the world, including coal, copper, iron ore, nickel, petroleum and potash. In South America it has operations in Brazil, Colombia, Chile and Peru.
Certainly, BHP has a long history of environmental disasters and displaced communities around its operations, which is why there is opposition to its presence in many parts of the world. One of these cases was the Samarco dam collapse (BHP, Vale) in Brazil in November 2015, that resulted in 20 people being killed and the degradation of 637 kilometres of the river basin with severe knock-on effects. Another case is in Colombia, where the giant open-pit Cerrejon coal mine (BHP, Anglo American, Glencore) is located. This mine has displaced indigenous Wayuu and African descent communities and destroyed many local watercourses over a period of decades (For a more extensive list of controversies and issues surrounding BHP operations, as well as BHP’s dark past, please click in the London Mining Network´s 2020 report on BHP).
These are some reasons why we are concerned about other BHP operations in the region, including the Antamina mine in Peru.
Antamina is the seventh largest mining operation in the world based on the extraction of copper and zinc, accounting for 2% of all copper produced in the world. BHP is 33.75% shareholder through RALCayman Inc. The operation is currently in the expansion phase preparing the extension of the mine until 2036. The company started operations in the late 1990s, and since its inception it has been characterized by trying to work with “social licence”. However, Antamina is considered an operation of “latent conflict” according to Peruvian experts.
In its web site, in the section on “Minerals Americas”, BHP says:
“BHP owns 33.75 percent of Antamina, a large, low-cost copper and zinc mine in north central Peru. Antamina is a joint venture between BHP (33.75 per cent), Glencore (33.75 per cent), Teck Resources (22.5 per cent) and Mitsubishi Corporation (10 per cent), and is operated independently by Compañía Minera Antamina S.A. Antamina by-products include molybdenum and silver.”
Without a doubt, one of the issues that most concerns communities in relation to mining operations is the use of water. We know Antamina won the first prize in the National Water Authority’s category “good practices in the management of water resources”. However, reviewing company documentation, TerraJusta found information that led us to formulate some questions related to use of water, and that we asked BHP at its last ‘shareholder engagement session’, carried out online on 23rd September, 2020. The consultations says:
“Antamina says that 100% of the water used in its operations comes from the rain and that 99% of the water used is recycled. However, there are 10 resolutions that give Antamina rights to freshwater sources including streams, a river and a lagoon in Ancash, and an aquifer in Barranca, Lima. In order to understand the impact of the mine on the local hydrological cycle more generally, we need to know more about the extent to which the company is using these fresh water sources and the criteria used to determine the use of rainwater and its consequences for local streams and aquifers. Could BHP confirm how many concessions for use of fresh water sources the company has in relation to the Antamina mine?”
BHP responded to our inquiries, as follows:
“We do not operate Antamina. We have sought their input into your question, and they have provided the following details:
100% of the fresh water that Antamina uses comes from the rain. The rain water is collected in the main water collection system. From the water that is used in the process plant, about 99% of the make-up is recycled water pumped from the tailings pond.
Throughout all of its years of operation, Antamina has obtained a total of 12 resolutions related to Water Use Licenses. This does not mean that 12 water sources are currently used or that there are 12 different permits. They represent various resolutions that are the product of specifications, rectifications or updates of the Water Use Licenses over time. Since 2013, Antamina only has maintained two 2 Water Use Licenses, one for Surface Water and the other for Groundwater.”
Although we appreciate that BHP has asked Antamina to resolve our doubts, we regret to inform you that we still have doubts that we hope the company can resolve. We express these doubts below, along with other concerns about how BHP responds to inquiries about its operations.
Response to BHP
Water is a valuable and scarce good in many regions of Peru. Unfortunately large-scale mining uses large amounts of water and has the potential to pollute nearby water sources. Furthermore, mining operations compete for water use with communities that require clean water for domestic and agricultural use. The current climate crisis and the global Covid 19 pandemic have shown that water is a common good that we must protect. These are some of the reasons why we are concerned about the use of water at the Antamina mine in Peru.
The answer from Antamina provided by BHP about the concessions for the use of freshwater held by the Antamina mine says that 100% of the freshwater that Antamina uses comes from the rain. At the same time, it states that since 2013, the mine has maintained two Water Use Licenses, one for Surface Waters and the other for Ground Waters. If this is so, maybe BHP and Antamina could clarify for us how exactly these Licenses are used?
Now, regarding the use of rainwater, we understand that one of the water concessions is for the use of rainwater through reservoirs that the company has built.Antamina’s 2014 sustainability report says:
“During 2014, Antamina used 20.25 million cubic meters of surface water out of a total authorized of 31 million cubic meters in accordance with our Authorization for the Use of Surface Water RD 848-2013 ANA-AAA. It should be noted that our company does not extract water from bodies of water such as lagoons or rivers, but rather collects rain through dams. In this way, Antamina does not compete with other water users ”.
We feel it is necessary to consult Antamina and BHP as to whether or not they have considered that the use of those 20 million cubic metres of rainwater that they collect could affect the hydrological cycle of the local and regional ecosystem and the replenishment of natural surface and underground water sources that exist in the area. We also wonder what the scientific evidence is to say that its rainwater collection system does not lead to competition for water use with communities that depend on rainwater reaching their rivers and lakes in order to survive.
Regarding groundwater, in thesame sustainability report, Antamina states that:
“In 2014, Antamina used 3.2 million cubic meters of groundwater out of an authorized total of 7.6 million cubic meters according to our Authorization for the Use of Groundwater RD 322-2013-ANA-AAA-M.”
On this same topic,Antamina’s 2016 sustainability report mentions something that catches our attention, as they refer to “pumping groundwater”:
“This pumping amounted to 62,357 m3, which is in compliance with what was approved by our Groundwater Use License No. 001-2001-ANCASH-DR.AG-ATDR / AT, modified by Directorial Resolution No. 322-2013-ANA-AAA.M and rectified by the RDN ° 669-2013-ANA.M”
This of course leads us to think that their second source of water for the mine is groundwater. We think that this is something else that BHP should clarify, since in itssustainability report for 2019, Antamina no longer talks about pumping groundwater.
BHP must understand civil society concerns about mining water use and its potential to contaminate clean water sources. Water is a common good and source of life for communities, while for mining companies, water is just another resource for exploiting minerals.
Another thing that worries us in BHP’s responses is that it often evades responsibility for its operations. They say that they do not operate the mines or that they are minority shareholders. We have seen this type of response in the past when they have been asked about the Cerrejón coal mine, in the Guajira region of Colombia – a mine where they own 33% of shares, the same percentage as Glencore and Anglo American. Now, this year, in our query on Antamina – even though BHP owns 33.75% of the shares, a similar percentage to Glencore in the company – it responds in a similar way saying: “We do not operate Antamina.” We know that BHP does not directly operate the Antamina mine – which is a company legally incorporated under Peruvian laws. But we also know that Antamina shareholders cannot evade their responsibilities from what the local company does.
We understand that in joint venture operations such as Antamina and Cerrejón, the companies that make up the strategic partnership to exploit the resources share the benefits of the activity and international recognition for their “corporate responsibility”. But we ask ourselves, don’t the companies that join forces ultimately share responsibility for what mining companies like Cerrejón or Antamina do?, Who is responsible for Antamina if environmental or social impacts occur? What is BHP’s investment policy in situations like this? How do the decision making processes work and what are the levels of responsibility of the partners? We ask these questions publicly of BHP, based on the assumption that if a company finances a mining operation and benefits from it, it must have the ethical and legal responsibility for what happens there.
Useful resources used for this report:
About BHP https://londonminingnetwork.org/bhp/
BHP – Fine Words, Foul Play https://londonminingnetwork.org/2020/09/bhp-fine-words-foul-play/
BHP is not very engaging https://londonminingnetwork.org/2020/09/bhp-is-not-very-engaging/