Peruvian communities begin 72-hour strike protesting Hudbay’s Constancia Mine as company’s stock price hits record low

Peruvian communities near Hudbay Minerals’ Constancia Mine on Monday began a 72-hour strike protesting the company’s refusal to negotiate over a host of economic, social and environmental issues.

The action comes on the same day that Hudbay’s stock closed at a record low $1.65 a share on the New York Stock Exchange.

Residents of communities in the district of Velille in the province of Chumbivilcas called the strike after Hudbay refused repeated requests for meetings, according to a press release issued by MiningWatch Canada. The strike comes 14 months after residents in nearby Uchucarco staged a protest march at Hudbay’s Constancia mine site. Protesters later seized and occupied the Constancia open pit site in Nov. 2014.

Velille Mayor, Sergio Valencia Salcedo, and the President of the Velille Defence Front, Guider Puma, have indicated that invitations and letters they sent to Hudbay and the government requesting dialogue have not received a response, the MiningWatch press release states.

“The people of Velille demand that HudBay Peru S.A.C. strictly comply with their social and environmental responsibilities, which should be clearly outlined in a contract with clear rules to guarantee mutual respect and governance in the district of Velille,” community leaders stated. “If these demands are not met, protests will intensify at the inter-provincial level.”

Social unrest in Peru reducing production from Hudbay’s largest mine will only compound the company’s rapidly deteriorating financial condition. Hudbay’s stock has plummeted 74 percent in the last six months as copper prices continue to sag pressured by waning Chinese demand for the red metal. Hudbay’s market capitalization has fallen to $388 million.

Falling copper prices, interest payments on $1.2 billion in debt and relatively high capital expenditures that are projected to absorb any excess cash generated at Constancia throughout 2016 are putting downward pressure on the stock.

Hudbay has previously stated (page 23) it intends to use free cash flow generated at the Constancia Mine to pay for construction of the proposed $1.5 billion Rosemont copper mine in the Santa Rita Mountains on the Coronado National Forest southeast of Tucson.

Hudbay’s financial crisis in the face of a worldwide copper surplus casts doubt on the company’s continued public statements that it intends to begin construction on Rosemont next year once the permitting process is completed.

Hudbay still faces significant permitting hurdles and likely legal challenges before it could begin construction of the mine on the northeast slope of the Santa Rita Mountains.