A Chinese mining company relocated a whole Peruvian town. Now, they are struggling to survive

Both Old and New Morochocha offer significant drawbacks

Originally published on Global Voices

In 2013, Chinese mining company Chinalco (中国铝业集团有限公司) sparked an international conversation about extractive impacts with the news it had successfully relocated an entire Peruvian town of 5,000 residents to clear space for a copper mine. At the time, the relocation project in Morococha, central Peru, was touted as a solution to protect villagers from pollution and environmental degradation as a result of mining practices, and as a potential template for Chinese overseas investment in Latin America. 

Ten years later, experts describe the move as a “tragedy.” 

Joselyn Jaua, a Peruvian journalist who covers the environment and communities in the region, explained to Global Voices that Chinalco’s policies have deeply impacted both Old Morococha and New Morococha: “The rise of poverty is notorious for relocated and non-relocated people alike.” 

The relocation project was perceived as a pioneering approach by Chinese mining companies in managing relationships with communities abroad. Chinalco, the state-owned company that acquired Peru’s biggest copper mine in 2007, which has invested USD 4.476 billion in the megaproject, promised on paper to provide local job opportunities, consult representatives from the communities, and prioritize environmental and social problems raised by the inhabitants of Morococha. 

Raúl Las Madrid, Legal Affairs Manager for Chinalco Peru Mining, said in a video of ProInversion, a Peruvian government agency, earlier this year.

En la actualidad, esta población ha sido reasentada a una nueva ciudad que nosotros construimos desde cero. Fue parte de nuestro compromiso y responsabilidad social. Lógicamente, tienen agua, desagüe, luz permanente, tienen diversas iglesias para todos los credos, centros educativos y hospital.

Today the population has been resettled to a new city that we built from scratch. It was part of our commitment and social responsibility. Logically, they have water, drainage, permanent light. There are educational centers, a hospital, and various churches for all faiths.

However, many residents and environmental activists argue that the company has failed to honor its promises. A 2019 study by the National University of Central Peru revealed that most of the population of New Morococha believes their economy, job stability, and access to social benefits promised by Chinalco have not been fulfilled.

Jaime Borda, a Peruvian activist with Red Muqui, a local network advocating for the rights of communities impacted by mining projects, told Global Voices.

Actualmente el distrito de Morococha se encuentra en situación de pobreza y extrema pobreza. Muchas familias han tenido que migrar a otras ciudades en busca de mejores oportunidades dado que la nueva ciudad de Morococha no garantiza una vida digna o un movimiento económico.

Currently, the district of Morococha is in a situation of poverty and extreme poverty. Many families have had to migrate to other towns in search of better opportunities since the new town of Morococha does not guarantee a decent life or economic movement.

Instead, Chinalco has relied on subcontracting and outsourcing labor, leading to low wages, according to Borda.  

Since 2013, 96 percent of the residents in Old Morococha have been compelled to relocate to a flood-prone wetland area, which is also isolated from the central highway. The situation is even worse for some 20 families who have refused to resettle. 

“The remaining families in Old Morococha are facing daily harassment from the Chinese mining company Chinalco,”  Borda said. “Every day, they are destroying the few houses of the settlers, until the last brick disappears.”

According to him, these families are cut off from electricity and clean water, living in conditions “like in the times of the cavemen.” They have also been blocked from key access routes, restricting their ability to meet basic needs like work, food, and healthcare. 

A 2018 report released by the United Nations concluded that four Chinese-owned mining companies, including Chinalco, violated the human rights of Peruvians. The report said the Toromocho copper mining project of Chinalco has generated conflicts with the population in Morococha, and the resettlement process of the community members has been incomplete and dangerous.

Anatomy of a relocation

Chinaclo didn't initially plan to relocate the town. The town of Morococha, now known as Old Morococha, is situated in the province of Yauli, about 140 kilometers east of the capital Lima. It is known as the birthplace of the Peruvian mining boom of the 1930s. After decades of poorly regulated mining around Old Morococha, the town was left with a dangerous and unpredictable legacy: A toxic, uncovered mine tailings deposit in the middle of the city. The town also lacked a proper sewage system and residents used communal latrines before the relocation.

In 2006, Peru Copper Inc., a Canadian mining company that had acquired concession rights to the Toromocho project, sought approval from the Peruvian government to convert the underground mine into an open-pit mine. The company hired Social Capital Group, a Peruvian mining consultancy, to conduct environmental and feasibility analysis for the project. The report highlighted that relocating the town was the only feasible and sustainable solution, given the deteriorating conditions in Morococha and its proximity to the Toromocho mining site.

Although the majority of the local population was in favor of the resettlement at the time, the unprecedented scale of relocating such a large town posed a significant challenge. When Peru Copper invited bids for the concession, only one company expressed interest: Chinalco. “No other company was willing to invest USD 50 million in a social project without any guarantee of return,” Cynthia Sanborn, a political scientist focusing on China and Latin America at the University of Pacific in Peru, explained to Dialogue Earth in 2013. 

Chinalco, the world's third-largest aluminum producer, has played a significant role in expanding China’s influence in Latin America's mining sector. As a state-owned company, Chinalco is integral to China’s national strategy of securing mineral resources both domestically and abroad. The Toromocho project, which Chinalco acquired from the Canadian company with a total investment of USD 860 million in 2007, was the first greenfield copper mine developed by a Chinese corporation abroad. 

In 2018, the company invested another USD 1.3 billion dollars in the expansion. Despite delays in development during the pandemic, Toromocho remains the fifth-largest copper producer in the country. Peru is the second-largest copper producer in the world. 

The Chinese company stated that it has “brought earth-shaking changes to the lives of the local residents” (“这些举措给矿区居民的生活带来了翻天覆地的变化”) in the Yauli province. The efforts that the company championed include building a sewage treatment plant, facilitating the relocation of 1,050 households from the mining area, and investing in local healthcare infrastructure. Chinalco also promised to hold a “round table” (“La Mesa de Diálogo”) with communities and committed to hiring local staff to make major decisions for the future of the community. By 2023, the company claimed that it had hired 1,500 employees for the Toromocho project, with only 20 Chinese staff. 

Borda argued that while the new town has basic services, economic activities in Morococha remain stagnant because the company outsources low-wage jobs. The company also failed to establish a promised camp for mining workers, a settlement designed to house laborers involved in mining operations. It typically features basic accommodations, communal facilities, and necessary amenities to support the workforce. The camp is also expected to boost the local economy. Spaces for dialogue promised by the company have also shrunk in the past few years, Borda said, and the non-settled families were excluded from it. 

In 2022, miners protested against Chinalco with a strike and blockade after the company laid off almost 1,000 workers, among other environmental and social conflicts.

Chinalco did not respond to a request for comment from Global Voices. 

Chinalco’s failed promises and residents’ dissatisfaction

To understand Chinalco’s responsibility to the population of Morococha, two basic agreements must be understood: The Marco Deal, a contract between the company and the population of Morococha that addresses poverty, basic health services, and housing and drafts a strategy to boost the local economy; and the environmental impact study, which defines the impact of the Toromocho project on the community and the environment. To date, the Marco Deal has not been signed, and the Environmental Impact Study has not been implemented. 

According to the Geological, Mining, and Metallurgical Institute of Perú (INGEMMET) 2017 report, the city of Old Morococha faces an “imminent, non-mitigable danger” due to severe risks, including visible structural damage, proximity to mining waste and tailings, and ongoing seismic hazards exacerbated by active mining operations. The combination of these factors renders any mitigation efforts ineffective, underscoring the extreme vulnerability of the area.

Those who have moved to New Morococha are also exposed to some environmental risks. 

The new town, which is also called Carhuacoto, was built in the middle of two lagoons and on what was previously a swamp, so the humidity not only affects the buildings but also the health of the residents. In a 2015 investigation, a woman and her family were given a small 50-square-meter unit in New Morococha, but humidity from the swamp caused her serious health issues, forcing them to return to Old Morococha. Now, they live in an overcrowded former school, sharing the space and one bathroom with several families.

The INGEMMET report concluded that frequent floods and liquefaction of soils caused by earthquakes may affect the safety of residents living in buildings of New Morococha, where most urban facilities, including schools, religious temples, and health centers, were built within 26 months between 2010 and 2012. The report said the company has not yet informed residents of what they would do to mitigate those risks. 

Furthermore, the residents who have not yet moved are reluctant to accept Chinalco’s offers. They claimed that the company only offered USD 9 for each square meter of their homes, hardly enough for them to buy a new house in New Morococha. 

While Chinalco claims that “all risks have been resolved,” their report also acknowledges that Peruvians, who have endured a history of colonization and resource exploitation, harbor deep concerns about mining development. This apprehension is especially pronounced among Indigenous communities living in the Andes, who are particularly sensitive to these issues.

Borda emphasized that the Peruvian authorities share responsibility for the failure of the resettlement project. They neglected their role as protectors of the population’s rights, amending laws to favor mining companies over local communities. They also approved the company’s Environmental Impact Study, despite ongoing concerns about environmental and water issues that can affect the local population. Similar cases happen not only in Morococha but also in other mining towns in Peru.

Written by Gabriela Mesones Rojo, Alicia Chen