An election in Peru and a copper plant in Tamil Nadu
What connects a new president in Lima, a smelter in Thoothukudi, China, Pakistan and Balochistan? Copper.
Officials at a copper mine in Peru.
The school-teacher Pedro Castillo has won the election in Peru narrowly defeating his rival Keiko Fujimori by barely 44,000 votes in the south American country. It would be wrong to pigeonhole Castillo and Fujimori into Western, especially American, mainstream media boxes of ‘socialist’ and ‘conservative’, as explained here by Alonso Gurmendi, Professor of International Law at Universidad del Pacífico Law School, in Lima, Peru.
Fujimori, daughter of former Peruvian strongman president Alberto Fujimori who is now serving a 25-year jail term for violent excesses of his militia during his time in power when he was both credited for ending the Shining Path insurgency and stabilizing the economy, but also ruling almost as a dictator. Keiko Fujimori faces corruption charges herself which is said to be one of the main reasons why she is challenging the results of the election.
For his supporters Castillo represents a moment of revolutionary victory – a rural school-teacher and rural farmer from the Andes and representing the indigenous people defeating Fujimori who emblemizes the Lima metropolitan elite. But his detractors point out that Castillo is the candidate of a highly problematic party led founded by a man called Vladimir Cerrón who own dubious financial dealings and corruption means that he is barred for contesting for the presidential post. Many believe, in power, Castillo will merely be Cerrón’s puppet, and that he will apply his extreme Marxist views (shared by his mentor) which were bandied about in the early stage of the campaign.
These ideas include the nationalisation and/or heavy taxation of one of Peru’s most important revenue sources – copper. In recent days as is victory came nearer, Team Castillo has tried to backtrack on such issues.
Concerns remain high because Peru is the second-largest producer of copper in the world after world leader and fellow South American, Chile. There are few industrial activities where copper is not used in some form or the other. Demand for copper is expected to rise by ten-fold according to a 2017 World Bank report called The Growing Role of Minerals and Metals for a Low-Carbon Future. Its use in the power and construction industries is ever expanding and is set to balloon further with the proliferation of electric vehicles (EVs).
Countries hoping to transition to mass use of EVs, like India which recently increased governmental subsidies on the manufacture of two-wheeler EVs, are going to need even greater amounts of copper in the future than they currently consume. Between 2017-20, India’s refined copper imports have grown three times, and exports crashed by 90 per cent. This information was given as a written response to a question in parliament by the Minister of Mines, Coal and Parliamentary Affairs in March 2021.
But how did this happen? Does India have copper reserves? Yes, it does. According to The Indian Minerals Yearbook 2017 published by the Ministry of Mines, India’s “total reserves/resources of copper ore as on 1.4.2015… are estimated at 1.51 billion tonnes. Of these, 207.77 million tonnes (13.74%) fall under 'reserves category' while the balance 1.30 billion tonnes (86.25%) are 'remaining resources' category”. This is only around two per cent of global reserves, but it ensured that until 2017-18, India remained a major copper exporter. One of key reasons was a copper smelting plant at Thoothukudi operated by the Sterlite company of the metals and mineral giant Vedanta group. At its peak, this plant delivered 35 per cent of the copper demands in the country and exported to China, another country with rapidly growing copper needs. Some of the copper it processed came from other parts of the country.
The Sterlite plant came up at Thoothukudi in 1995 and after repeated protests on environmental grounds, and especially after the death of several protestors in police firing, it was shut in 2018.
At the time it was shut, the plant was trying to expand to double its capacity to produce 800,000 tonnes a year. As supplies from India, fell some of the Chinese demand was met by Pakistan which has copper deposits of its own in the disputed region of Balochistan where rebels demanding often attack the writ of the Pakistani state. For instance, the Reko Diq mines in the region are some of the largest unexplored copper and gold mines in the world. China’s Belt and Road project in Pakistan cuts through Balochistan, and some of the work has already been attacked by rebel groups opposed to Pakistani and Chinese presence in the area.
If the new Peruvian government starts to more stringently tax or nationalise copper production in the country, it is bound to have an impact on global copper supply. It will also further force India (and China) to ask tough questions about its (their) own supply chain resilience as far as copper is concerned. It would also push up pressure for more mining in Balochistan and could trigger many-a geostrategic domino effect.
Therefore, in the weeks and months to come, the decisions of the new Peruvian government are deeply intertwined with mineral security in large swathes of Asia and strategic impulses linked to that security.