Extracting from the Extractors: The Politics of Private Welfare in the Peruvian Mining Industry By Cecilia Perla B.A. Economics, Universidad Católica del Perú, 2001 M.A. Economics of Development, Institute of Social Studies, Holland, 2004 M.A. Political Science, Brown University, 2007 A Dissertation Submitted in Partial Fulfillment of the Requirements for the Degree of Doctor of Philosophy in the Department of Political Science at Brown University Providence, Rhode Island May 2012 © Copyright 2012 by Cecilia Perla All Rights Reserved ii This dissertation by Cecilia Perla has been accepted in its present form by the Department of Political Science as satisfying the dissertation requirements for the degree of Doctor of Philosophy Date ____________ ________________________ Pauline Jones Luong, Advisor Date ____________ ________________________ Melani Cammett, Reader Date ____________ ________________________ Patrick Heller, Reader Date ____________ ________________________ Barbara Stallings, Reader Approved by the Graduate Council Date ____________ _____________________________________ Peter M. Weber, Dean of the Graduate School iii Curriculum Vitae Cecilia Perla was born in Lima, Perú on June 4, 1978. She received her B.A. in Economics from Universidad Católica del Perú in 2001. After a few years of working for the public and nonprofit sectors, Cecilia pursued graduate studies at the Institute of Social Studies in The Hague, Holland, earning an MA in Economics of Development in 2004. Later on, she moved to the US to continue her education. During her graduate studies in the Department of Political Science at Brown University, Cecilia presented her work in diverse academic forums such as the Latin American Studies Association Conference, the Political Science Studies Association Conference, the University of Lausanne in Switzerland and King’s College, London. She received her MA in Political Science in 2007. Cecilia has been granted a number of scholarships, conference funding and travel grants to pursue her graduate studies, including a fellowship from The Netherlands Fellowship Programme (NFP), a GPD fellowship from Brown University and an Inter American Foundation Fellowship. iv Acknowledgements Whoever said that research is a solitary enterprise? Writing this dissertation has showed me that it is very much a collective process, a work that is indebted to numerous friends, colleagues, associates and strangers through its conception, transformation and execution1. Many people and institutions are behind the final version of this project. First of all, I would like to thank Pauline Jones Luong, for chairing my committee and providing me with constant encouragement and insightful feedback, as well as endless professional and personal advice. Melani Cammett, Patrick Heller and Barbara Stallings completed a fantastic committee and each in their own way improved my drafts with their expertise. At an early stage of the project, the support and advice of Richard Snyder was extremely valuable. I am also very grateful to my peers at Brown, both at the Department of Political Science and at the Department of Sociology, who gave me feedback at different stages of the process and doubled-up as vital support group when I felt stuck. I am extremely grateful to the institutions that made this project financially viable. Financial support for this project came from Brown University’s Graduate School Grants and the Center for Latin American Studies at the Watson Institute for International Studies, which provided pre-dissertation fieldwork grants and travel grants in the summer of 2006 and 2007. A Grassroots Development Fellowship from the Inter American Foundation allowed me to carry out 14 months of fieldwork in Peru between March 2009 and May 2010. In the field, many residents and authorities of the four mining localities I visited kindly gave up their time to answer my questions and pointed me to interesting and unexpected issues. The cooperation of Southern Copper Corporation and Minera Barrick Misquichilca, which hosted me at their operations and allowed me to interview their employees and participate in the activities of their Community Relations teams, was indispensable for this research. While in Lima, I learned a lot from interviews and informal conversations with many academics, development practitioners and graduate students doing research on extractive industries in Peru and other Latin American countries. My whole family has been fantastically supportive through this long process. My mother’s encouragement has been fundamental during all these years living abroad. My grandfather has been an inspiration to me – beyond this project – and it is always a treat to listen to his early memories of living in a company town as a mining engineer. Finally, my husband’s unlimited supply of love, patience and kindness helped me overcome the low points and sharpened my enjoyment of the high points along the way, and was always by my side to remind me of the important things in life. 1 The writing process is pretty lonely, truth be told. v Table of Contents 1. Mining and Development: A New Political Economy 2. Companies as Welfare Providers in Local Spaces: Theoretical Lenses 3. The Transformation of Mining Companies’ Public Duties in Peru 4. Patterns of Allocation of Mining Companies’ Discretionary Funds 5. Explaining Social Investments of Mining Companies: Corporate-Level Factors 6. Explaining Social Investments of Mining Companies: Local-Level Factors 7. Summary of Findings and Agenda for Further Research 8. References vi List of Tables Table 1.1 Variation in the distribution of mining companies’ discretionary funds Table 1.2 Determinants of the distribution of mining companies’ discretionary funds Table 2.1 Corporate giving, selected countries 1994-2004 Table 2.2 Measuring local success of adopting global frames: three conditions Table 3.1 Landmark environmental and social regulations in the Peruvian mining sector Table 3.2 Social Funds currently in operation in the Peruvian mining industry Table 4.1 Community Relations Operating Budget, annual average by company Table 4.2 Most different cases: MBM and SCC Table 4.3 Variation in the distribution of mining companies’ discretionary funds Table 4.4 SCC – CROB by operation (in US$ millions and percentages) Table 4.5 Cuajone – SCC, CROB by type of investment (in US$ millions and percentages) Table 4.6 Cuajone – SCC, CROB by geographical area (in US$ millions and percentages) Table 4.7 Total SCC Solidarity Mining Fund (accumulated 2007-2009), Committed funds by operation Table 4.8 Cuajone - SCC Solidarity Mining Fund (accumulated 2007-2009), Committed funds by type of investment Table 4.9 Cuajone – SCC Solidarity Mining Fund (accumulated 2007-2009), Committed funds by geographic location Table 4.10 MBM – CROB by operation, (US$ millions and percentages) Table 4.11 Pierina – MBM, CROB by type of investment (US$ millions and percentages) Table 4.12 Pierina – MBM, CROB by geographical location Table 4.13 Total MBM Solidarity Mining Fund (accumulated 2007-2009) Committed funds by operation Table 4.14 Pierina – MBM, Solidarity Mining Fund (accumulated 2007-2009) Committed funds by type of investment Table 4.15 Pierina – MBM, Solidarity Mining Fund (accumulated 2007-2009) Committed funds by geographic location vii Table 4.16 Lagunas Norte – MBM, CROB by type of investment (US$ millions and percentages) Table 4.17 Lagunas Norte – MBM, CROB by geographical location (US$ millions and percentages) Table 4.18 Lagunas Norte – MBM Solidarity Mining Fund (accumulated 2007-2009) Committed funds by type of investment Table 4.19 Lagunas Norte – MBM Solidarity Mining Fund (accumulated 2007-2009) Committed funds by geographic location Table 4.20 Toquepala – SCC, CROB by type of investment (US$ millions and percentages) Table 4.21 Toquepala – SCC, CROB by geographical location (US$ millions and percentages) Table 4.22 Toquepala – SCC, Solidarity Mining Fund (accumulated 2007-2009) Committed funds by geographic location Table 4.23 Toquepala – SCC Solidarity Mining Fund (accumulated 2007-2009) Committed funds by type of investment Table 5.1 SCC – Main statistics Table 5.2 SCC: Company commitment to CSR on the ground Table 5.3 MBM – Main statistics Table 5.4 MBM: Company commitment to CSR on the ground Table 6.1 Pierina: Land surface rights bought for the operation Table 6.2 Pierina: Local success in adopting global frames Table 6.3 Cuajone: Local success in adopting global frames Table 6.4 Lagunas Norte: Local success in adopting global frames Table 6.5 Populations in the area of influence of Toquepala: Ilabaya and Candarave Table 6.6 Toquepala: Local success in adopting global frames viii List of Figures Figure 1.1 Two decades of publications on mining and development in Peru, by mine Figure 2.1 Corporate-level factors: Company’s implementation of CSR practices Figure 2.2 Local-level factors: Successful local adoption of globally relevant frames Figure 4.1 Mining companies’ discretionary funds CROB and SMP (US$ millions) Figure 4.2 SMP: Ratio Committed/Deposited funds - Selected companies, 2008 (US$ millions) Figure 4.3 CROB and SMP - Selected companies, 2008 (US$ millions) Figure 4.4 CROB 2008 by type of investment – Selected companies (US$ millions) Figure 4.5 Geographical distribution of SMP funds, 2007 (percentage of committed funds) Figure 4.6 Geographical location of the case studies Figure 4.7 SCC – Solidarity Mining Program Funds deposited and committed (US$ millions) Figure 4.8 MBM – Solidarity Mining