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RUEHBO/AMEMBASSY BOGOTA PRIORITY 5996
RUEHBR/AMEMBASSY BRASILIA PRIORITY 7933
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RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC PRIORITY
RUMIAAA/USCINCSO MIAMI FL PRIORITY

C O N F I D E N T I A L LIMA 001552 
 
SIPDIS 
 
E.O. 12958: DECL: 09/23/2018 
TAGS: PGOV SNAR EMIN PREL PINR PE
SUBJECT: IMPOVERISHED APURIMAC REGION: ON BRINK OF MINING 
BOOM? 
 
REF: A. LIMA 3075 
     ¶B. LIMA 3217 
 
Classified By: Amb. P ...

id: 170946
date: 9/22/2008 15:03
refid: 08LIMA1552
origin: Embassy Lima
classification: CONFIDENTIAL
destination: 08LIMA3075|08LIMA3217
header:
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INFO RUEHAC/AMEMBASSY ASUNCION PRIORITY 2028
RUEHBO/AMEMBASSY BOGOTA PRIORITY 5996
RUEHBR/AMEMBASSY BRASILIA PRIORITY 7933
RUEHBU/AMEMBASSY BUENOS AIRES PRIORITY 3470
RUEHCV/AMEMBASSY CARACAS PRIORITY 1224
RUEHLP/AMEMBASSY LA PAZ SEP 4978
RUEHMN/AMEMBASSY MONTEVIDEO PRIORITY 9578
RUEHQT/AMEMBASSY QUITO PRIORITY 2071
RUEHSG/AMEMBASSY SANTIAGO PRIORITY 2003
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC PRIORITY
RUMIAAA/USCINCSO MIAMI FL PRIORITY


----------------- header ends ----------------

C O N F I D E N T I A L LIMA 001552 

SIPDIS 

E.O. 12958: DECL: 09/23/2018 
TAGS: PGOV SNAR EMIN PREL PINR PE
SUBJECT: IMPOVERISHED APURIMAC REGION: ON BRINK OF MINING 
BOOM? 

REF: A. LIMA 3075 
     ¶B. LIMA 3217 

Classified By: Amb. P Michael McKinley for reasons 1.4b and d. 

¶1.  (C) Summary: Apurimac ranks as Peru's second most 
impoverished region and is best known to the outside world 
for its periodic political turbulence.  Two mega-mining 
projects could transform this predominantly agricultural 
region with massive, multi-billion dollar investments.  The 
prospect of these investments in poor communities has raised 
concerns about socio-economic "distortions" and future social 
conflicts like those seen in other mining areas in Peru. 
Regional opposition leaders have sought to stoke and exploit 
these tensions to build support for future elections. 
Apurimac also suffers from the presence from armed groups -- 
allegedly Shining Path -- linked to narcotraffickers that 
transit the region en route from the Apurimac and Ene River 
Valley (VRAE) coca-production zone. End Summary. 

Impoverished, Politically Turbulent Region 
------------------------------------------ 
¶2.  (SBU) Apurimac has an official poverty rate of about 
69.5% and ranks as Peru's second most impoverished region 
after nearby Huancavelica.  The region lacks significant 
mining revenues and as a result receives one of the smallest 
investment budgets per capita of any Peruvian region -- $130 
million for a population of just over 400,000 people.  (By 
contrast, Tacna Region receives twice as much per capita for 
investment thanks to plentiful mining revenues.)  Apurimac's 
woeful infrastructure reflects its poverty and isolation: the 
region's two main cities, Abancay and Apurimac, are connected 
by a rutted, dirt road that requires half a day to navigate 
and features dangerous hairpin curves that overlook drops of 
thousands of feet.  Along the way, one passes through 
isolated villages with almost no basic services. 

¶3.  (SBU) Apurimac is perhaps best known by the outside world 
for the "Andahuaylazo" rebellion launched in January 2005 by 
Antauro Humala, brother of opposition leader Ollanta Humala. 
In the event, Antauro and some 160 of his followers captured 
the police station in Andahuaylas and called for 
then-President Alejandro Toledo to resign.  Six died in 
ensuing clashes before the rebels surrendered.  Apurimac 
returned to national and international headlines in December 
2006 when 4,000 protestors in the regional capital Abancay 
demanded the Regional President's resignation for favoring 
Andahuaylas in an ongoing intra-city dispute over resources. 
Police quelled the protests but left over 80 injured. 
Apurimac residents have participated vigorously in various 
national and local protests since 2006.  The region voted 
overwhelmingly for Ollanta Humala over Alan Garcia -- about 
74% to 26% -- in the second round of the 2006 presidential 
election. 

On the Cusp of a Mining Boom 
---------------------------- 
¶4.  (U) Apurimac has two mega-mining projects currently under 
development that could have a dramatic impact on this 
predominantly agrarian region.  The Las Bambas copper 
project, operated by the Swiss company Xstrata Copper, is 
located on remote land in southeastern Apurimac, far from 
major population centers.  Xstrata executives told Emboffs 
that the project is in the exploration phase and that they 
expect to earn some $200 million in revenue per year once 
they begin production in 2010 or 2011.  The second project, 
controlled by the consortium Apurimac Ferrum, would focus on 
mining Andahuaylas province's vast iron ore deposits. 
Although the consortium is just beginning to develop 
community relations and has not yet begun exploration, local 
leaders expect investors to pour in $2.4 billion and 
construct a railroad to the coast to ship the metals. 

Looming Social Conflicts Near Mining Sites 
------------------------------------------ 
¶5.  (C) While the mining projects would bring sorely needed 
resources to region, the prospect of massive investments in 
impoverished communities is causing fear among some locals of 
socioeconomic distortions -- such as village displacement, 
environmental degredation, an influx of outsiders, and an 
increase in alcohol consumption and prostitution -- and 

threatens to provoke social conflicts like those seen in 
other parts of Peru (Refs A & B).  The Mayor of Andahuaylas 
told Poloff that Apurimac Ferrum representatives launched its 
dialogue with local communities poorly, causing local leaders 
to dig in their heals.  The mayor emphasized the conflictive 
nature of the local populace and said the company now has 
extra groundwork to do before the communities will allow them 
to do business.  Xstrata, by contrast, has handled community 
relations effectively, according to a cross-section of local 
observers, with early and frequent communication with 
affected populations.  A mining industry expert at the NGO 
Oxfam, which is often critical of international mining 
operations in Peru, cited Xstrata's work in Apurimac as an 
example of positive community outreach. 

Opposition Leaders Exploit Tensions 
----------------------------------- 
¶6.  (C) Regional opposition leaders have sought to stoke and 
exploit social tensions in Apurimac in the hopes of building 
support for future elections.  Soon after the 2006 regional 
elections, key opposition figure and former Union for Peru 
(UPP) Congressman Michel Martinez launched a campaign to 
recall Regional President David Salazar.  Although the recall 
campaign ultimately failed, one of Salazar's advisors told 
Poloff it distracted Salazar from focusing on his job for 
nearly a year.  (Note: Recall campaigns and other opposition 
attacks have weakened Regional Presidents and localQeaders 
across Peru. End Note.)  Several peasant leaders and Martinez 
followers in Andahuaylas told Poloff that the Mayor and 
Regional President had abandoned the poor, and they 
threatened to launch new protests in coming weeks.  Other 
observers noted that Nelson Palomino -- a prominent 
coca-grower leader that reportedly coordinates with Martinez 
and other leftist leaders around Peru -- has appeared 
recently in Apurimac to deliver anti-mining speeches and 
organize peasants.  (Note: Michel Martinez is infamous for 
having invited Ollanta Humala in 2006 to run for President 
under the UPP banner after Humala's own party failed to 
qualify.  Martinez reportedly expected tQgain a Vice 
Presidential nomination in return, but Humala instead blocked 
him entirely from running for office.  Martinez now describes 
Humala as a danger to Peru. End Note.) 

Presence of Armed Groups 
------------------------ 
¶7.  (C) Apurimac also suffers from the presence from armed 
groups -- allegedly Shining Path -- linked by most observers 
to narcotraffickers who transit the region en route from the 
VRAE coca-production zone.  Several officials said that 
locals regularly spot small armed groups of two to five 
fighters circulating in Andahuaylas province.  The Mayor of 
one small town told Poloff that a group of Shining Path came 
to his town to seek a meeting, but thankfully he (the mayor) 
was traveling.  The town's police chief said that the Shining 
Path no longer uses force to terrorize and recruit locals, 
but instead relies on persuasion.  Another political leader 
in Andahuaylas said that he had observed a group of 32 armed 
fighters based near the border with Ayacucho region that 
locals told him had plans "to seize power".  He did not know 
who they were or who financed them. 
MCKINLEY 

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