What’s going on with China MMG’s copper mine at Las Bambas, Peru?

The People’s Republic of China (PRC) has tremendous political and economic interests to maintain the strong momentum of the copper industry both now and in the future. With copper prices hitting an all-time high in 2020 the world’s largest consumer of copper raised the level of its production activity to its highest levels since 2011, while importing 656,483 tonnes in June 2020.

These numbers are generally going to get higher and higher as the world turns to “future facing commodities” as a result of growing demand for Energy Transition and Electric Vehicles (EVs).

In addition to the expansion of its domestic copper production, China’s international influence over metals can be seen from in Africa (cobalt and lithium), Southeast Asia (nickel) and South America (copper).

The Las Bambas mine in Peru is a case in point. Already this year China’s MMG is facing restraint from the local indigenous population in Las Bambas.

The history of this relationship between the People’s Republic of China (PRC) and Peru’s indigenous groups is very relevant to the copper industry.

Ever since China’s MMG bought the Las Bambas mine from Glencore for $5.85 billion in April 2014 the mining company has faced continuous opposition from Peruvian indigenous groups over the control status of the mine’s production — e.g. force majeure declared in 2019 and roadblock obstruction in 2021 — that has devestated output for a country who consumes over half of the world’s copper.

There have been many reasons cited for why Las Bambas’ indigenous groups have put up a struggle against China’s mining activities and businesses, such as labor and payment concerns; environmental issues and local grievances toward the destruction of the mine itself.

But China’s MMG has stated that it wants to take this opportunity to contribute to Peru’s economy. They have strived to give the indigenous groups ample reasons to cooperate. They were consequently invited to have talks with the company on May 6, 2022.

Domestically, most of the copper is being dug out of extremely politically sensitive areas on the Chinese Mainland — Tibet, Xinjiang, Inner Mongolia — so the political costs to the Chinese Communist Party (CCP) are tremendous. Not to mention the cobalt and lithium being extracted out of risky countries in the Democractic Republic of Congo (DRC).

If you’re a geopolitical expert or global business strategist, then you should view China’s activities in the metals space very carefully. That’s because the PRC keeps, and will keep, the future of global metals production and markets in their pockets for the foreseeable future.

Deep pockets come with high political costs. The PRC also doesn’t want to give this advantage up to the USA or any other country. But the backlash we’ve seen from the oil and gas industry against Russia’s actions in Ukraine, prompts a new discussion about global metal miners and producers and to what extent the PRC has influence over the global metals market.