OBG talks to Pedro Martínez Carlevarino, President, National Society of Mining, Petroleum and Energy (SNMPE)

 Pedro Martínez Carlevarino, President, National Society of Mining, Petroleum and Energy

Interview: Pedro Martínez Carlevarino

What investments are needed to mitigate any dip in global commodity prices?

PEDRO MARTÍNEZ CARLEVARINO: We first need to develop the portfolio of projects to be established over the next 10 years, which involve $52bn of investment. Production in recent years has fallen, so countering decreases in global commodity prices means we need higher levels of production. There are many industries that are complementary to the mining sector and which generate value in addition to our metals and raw materials.

The mining and energy sectors are going to need more professional and technical expertise as the economy continues to grow, and here we see an opportunity for many students at the universities to develop careers in line with market needs. We are employing many foreigners in the sector, but this is unsustainable, so we need to highlight these opportunities and encourage our students to seek employment in the sector.

Since the windfall tax legislation and the Law on Prior Consultation (LPC), investments have bounced back. How do you think this will be handled?

MARTÍNEZ: There was a lot of uncertainty among investors over how this tax would be implemented but when we sat down with the authorities and found a solution and consensus acceptable to both sides, this uncertainty lifted and investors began to develop their plans again. The portfolio of investments in mining at the beginning of 2011 reached $42bn, according to the Ministry of Energy and Mines. In September of that year this figure rose to $52bn, a clear signal of investor confidence in the sector and over the windfall tax.

The LPC is a complex issue because the law and its implementation must be used as an opportunity to develop relations and strengthen dialogue with local communities, not as an obstacle to investment. It is therefore important that this is enacted with great care and that the processes and procedures are clearly defined so that we know who to consult, how to consult and how much time it will take. It is necessary that this legislation is used to promote, rather than hinder, further investment in the sector.

How are the SNMPE and the ministry promoting corporate environmental responsibility?

MARTÍNEZ: Today there are strict regulations in place to promote environmentally conscious practices. We need to adopt these high standards in order to manage the environment and social relations. We also must ask the state to create clear norms for companies and businesses themselves must develop internal structures to deal with corporate governance and high environmental standards. This creates an imitation effect where local companies want to copy these structures.

All our members have a code of conduct and we recently ousted two companies for not fulfilling the code. We need to strengthen dialogue and we know that many companies have made a number of efforts in terms of workshops and public hearings to explain the benefits of certain projects. However, the communities are concerned about the impact of mining activities. We need to show these communities that current practices using modern technology are much better for the environment than the practices used 40 years ago.

What can be done to tackle the problem of the informal mining sector in the country?

MARTÍNEZ: This is a major issue for us to address and we have unfortunately allowed the problem to grow in recent years. In the majority of cases, this has involved a combination of illegal activities that are present in 13 regions and have grown in an uncontrolled manner.

We first need to develop a programme that will incorporate these smaller operations into the formal mining sector. Cooperation across various ministries will also be necessary to attack the problem across a number of fronts. Most of the estimated 100,000 people employed in the illegal mining sector just want to earn a living. We should be going after the organisers of these activities, not targeting the workers who perform them.

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Pedro Martínez Carlevarino

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The Report: Peru 2012

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