Displaced by mining, Peru villagers spurn shiny new town

By Mitra Taj

NUEVA FUERABAMBA, Peru (Reuters) - This remote town in Peru's southern Andes was supposed to serve as a model for how companies can help communities uprooted by mining.

Named Nueva Fuerabamba, it was built to house around 1,600 people who gave up their village and farmland to make room for a massive, open-pit copper mine.

The new hamlet boasts paved streets and tidy houses with electricity and indoor plumbing, once luxuries to the indigenous Quechua-speaking people who now call this place home.

The mine's operator, MMG Ltd, the Melbourne-based unit of state-owned China Minmetals Corp, threw in jobs and enough cash so that some villagers no longer work.

But the high-profile deal has not brought the harmony sought by villagers or MMG, a testament to the difficulty in averting mining disputes in this mineral-rich nation.

Resource battles are common in Latin America, but tensions are particularly high in Peru, the world's No. 2 producer of copper, zinc and silver. Peasant farmers have revolted against an industry that many see as damaging their land and livelihoods while denying them a fair share of the wealth. Peru is home to 167 social conflicts, most related to mining, according to the national ombudsman's office, whose mission includes defusing hostilities.

Nueva Fuerabamba was the centerpiece of one of the most generous mining settlements ever negotiated in Peru. But three years after moving in, many transplants are struggling amid their suburban-style conveniences, Reuters interviews with two dozen residents showed. Many miss their old lives growing potatoes and raising livestock. Some have squandered their cash settlements. Idleness and isolation have dulled the spirits of a people whose ancestors were feared cattle rustlers.

"It is like we are trapped in a jail, in a cage where little animals are kept," said Cipriano Lima, 43, a former farmer.

Meanwhile, the mine, known as Las Bambas, has remained a magnet for discontent. Clashes between demonstrators and authorities in 2015 and 2016 left four area men dead.

Nueva Fuerabamba residents have blocked copper transport roads to press for more financial help from MMG.

The company acknowledged the transition has been difficult for some villagers, but said most have benefited from improved housing, healthcare and education.

"Nueva Fuerabamba has experienced significant positive change," Troy Hey, MMG's executive general manager of stakeholder relations, said in an email to Reuters. MMG said it spent "hundreds of millions" on the relocation effort.

Mining is the driver of Peru's economy, which has averaged 5.5 percent annual growth over the past decade. Still, pitched conflicts have derailed billions of dollars worth of investment in recent years, including projects by Newmont Mining Corp and Southern Copper Corp.

To defuse opposition, President Pablo Kuczynski has vowed to boost social services in rural highland areas, where nearly half of residents live in poverty.

But moving from conflict to cooperation is not easy after centuries of mistrust. Relocations are particularly fraught, according to Camilo Leon, a mining resettlement specialist at the Pontifical Catholic University of Peru.

Subsistence farmers have struggled to adapt to the loss of their traditions and the "very urban, very organized" layout of planned towns, Leon said.

"It is generally a shock for rural communities," Leon said.

At least six proposed mines have required relocations in Peru in the past decade, Leon said. Later this month, Peru will tender a $2-billion copper project, Michiquillay, which would require moving yet another village.

'EVERYTHING IS MONEY'

MMG inherited the Nueva Fuerabamba project when it bought Las Bambas from Switzerland's Glencore Plc in 2014 for $7 billion.

Under terms of a deal struck in 2009 and reviewed by Reuters, villagers voted to trade their existing homes and farmland for houses in a new community. Heads of each household, about 500 in all, were promised mining jobs. University scholarships would be given to their children. Residents were to receive new land for farming and grazing, albeit in a parcel four hours away by car.

Cash was an added sweetener. Villagers say each household got 400,000 soles ($120,000), which amounts to a lifetime's earnings for a minimum-wage worker in Peru.

MMG declined to confirm the payments, saying its agreements are confidential.

Built into a hillside 15 miles from the Las Bambas mine, Nueva Fuerabamba was the product of extensive community input, MMG said. Amenities include a hospital, soccer fields and a cement bull ring for festivals.

But some residents say the deal has not been the windfall they hoped. Their new two-and-three story houses, made of drywall, are drafty and appear flimsy compared to their old thatched-roof adobe cottages heated by wood-fired stoves, some said.

Many no longer plant crops or tend livestock because their replacement plots are too far away. Jobs provided by MMG mostly involve maintaining the town because most residents lack the skills to work in a modern mine.

Many villagers spent their settlements unwisely, said community president Alfonso Vargas. "Some invested in businesses but others did not. They went drinking," he said.

Now basics like water, food and fuel - once wrested from the land - must be paid for.

"Everything is money," Margot Portilla, 20, said as she cooked rice on a gas stove in her sister-in-law's bright-yellow home. "Before we could make a fire for cooking with cow dung. Now we have to buy gas."

GHOST TOWN

Some residents said they have benefited from the move.

The new town is cleaner than the old village, said Betsabe Mendoza, 25. She invested her settlement in a metalworking business in a bigger town.

Portilla, the young mom, says her younger sisters are getting a better education than she did.

Still, the streets of Nueva Fuerabamba were virtually deserted on a recent weekday. Vargas, the community leader, said many residents have returned to the countryside or sought work elsewhere. Alcoholism, fueled by idle time and settlement money, is on the rise, he said.

Some villagers have committed suicide. Over the 12 months through July, four residents killed themselves by taking farming chemicals, according to the provincial district attorney's office. It could not provide data on suicides in the old village of Fuerabamba.

MMG, citing an "independent" study done prior to the relocation, said the community previously suffered from high rates of domestic violence, alcoholism, illiteracy and poverty.

While the company considers the new town a success, it acknowledged the transition has not been easy for all.

"Connection to land, livelihood restoration and simple adaptation to new living conditions remain a challenge," MMG said.

Nueva Fuerabamba residents continue pressuring the company for additional assistance. Demands include more jobs and deeds to their houses, which have yet to be delivered because of bureaucratic delays, said Godofredo Huamani, the community's lawyer.

MMG said it stays apace of community needs through town hall meetings and has representatives on hand to field complaints.

While villagers fret about the future, many cling to the past. Flora Huamani, 39, a mother of four girls, recalled how women used to get together to weave wool from their own sheep into the embroidered black dresses they wear.

"Those were our traditions," said Huamani from a bench in her walled front yard. "Now our tradition is meeting after meeting after meeting" to discuss the community's problems.

Graphic: 'Relocating a village' click http://tmsnrt.rs/2AwftBU

(Reporting by Mitra Taj; Editing by Marla Dickerson)

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