Dueños del agua

The entrepreneurial power behind water access

28 Ago 2018
Ojo-publico.com analyzed all water use rights granted by the state over the last five decades and identified the 43 private companies holding the most permits to capture and control this public resource. Heading the list are mining, bottling, and agro-export companies which operate in areas where water is scarce or where social conflicts exist over lack of access to the resource.

Three days before Christmas 2017, businessmen linked to water management across the world came together in Spain’s Roca Madrid Gallery for the iAgua Awards, an event that recognizes the best communication practices in the water sector. That night, Peru’s National Water Authority (ANA), the organization responsible for properly using and distributing the resource across the country, won the award for Best Latin American Public Administration.

“Information administration is a fundamental aspect of water management in Peru. We are trying to systematize information in such a way that it is accessible to all users,” said the then head of ANA, Abelardo de la Torre. The news, which was highlighted as an achievement by the government, stood in stark contrast to the fact that in the months leading up to the awards ceremony ANA had refused to provide Ojo.publico.com with information we were seeking about water resource management.

Also, iAgua is a digital space that presents articles about services and training programs, all written by professionals and public and private sector companies. According to its own website, iAgua prize winners are chosen based on the popularity that their texts achieve in the portal and on social networks.

ACCESS. The main function of ANA is the management of water sources, and to decide who is authorized to use them.
Photo: Andina

In the last year alone, ANA has denied Ojo-publico.com four requests for information submitted under Law No. 27806 seeking details about water rights granted to 43 companies. The requests aimed to discover how ANA regulates these companies, how much water the companies claim to consume as part of their activities, and how much they have paid to the state in return for using a public good. But ANA has opted to remain silent. It has also rejected all requests interviews and information made by Ojo-publico.com.

 

Licensed owners

As part of its research series “ The Owners of Water", Ojo-publico.com used ANA’s authorization resolutions to construct a database consisting of 492,360 extraction rights for water delivered to 231,000 users by the state during the last five decades to.

By analyzing these records, we identified the 43 private companies that hold the most permits to capture and control this public resource. Concentrating water use permits in certain regions, these companies include agro-exporters, sugar producers, mining companies, bottling companies, and companies defined by the licensing system as industrial—fishing companies, textile companies, food companies, and paper producers.

Each of the 231,000 registered users, including individuals and companies, hold between one and eight rights to extract water from the rivers, gorges, and aquifers across the country. But, the 43 companies on our list hold 5,460 instruments that enable them to exploit this public good. These range from temporary permits, through to biannual authorizations, and even indefinite licenses. The companies operate in drought-prone areas and near population centers that have witnessed conflicts over water.

 

 

 

The data analysis breaks down the rights granted to the mining, agricultural, and industrial sectors, whilst excluding the activities of domestic users; of state-owned companies; of hydroelectric enterprises that return used water; of construction companies holding temporary licenses; and of providers of sanitation services to the general public, such as SEDAPAL.

Water licenses for agricultural purposes represent 93% of all authorizations approved by the state over the five decades and were provided to 216,000 users. However, contrary to what one might expect, it is not farmers who hold the greatest number. Nor is it irrigation boards, or peasant communities. Instead, it is eight agro-exporters and sugar producers which head the select group of 43 companies that Ojo-Publico.com has identified.

This group consists of the fruit and vegetable exporters ProAgro, Cayaltí, Laredo, Agrícola Rapel, and Complejo Agroindustrial Beta, and the sugar companies Paramonga (part of the Wong Group), San Jacinto, and Casa Grande (both of the Gloria Group). They control water at 3,828 capture points along Peru’s desert coast from Ica to Piura. Some 60% of these capture points tap into the local population’s only remaining source of potable water: the aquifers. 

 

 

These companies have the technology and resources to sink bores on average 10 meters underground and to construct open pit wells. They operate along the coast, at Ica, El Santa, Morropón, Barranca, and Chiclayo. In Ica the groundwater is on the verge of disappearing. The water crisis here forced the state to ban the excavation of new wells in 2006. However, according to the data we analyzed, another 138 water rights resolutions have subsequently been issued.

EXPORTERS. The licenses for agricultural use are destined, mostly, for grow groceries to sport.
Photo: Andina

According the Ministry of Housing, there are 63,475 people in Ica who lack access to drinking water. Yet the two main agro-exporting companies on Ojo-Publico’s list—Agroindustrial Beta and ProAgro—hold authorizations to extract 53.58 billion liters of water every year to irrigate their crops. Just four percent of this volume would be sufficient to meet the basic needs of the population living in the desert.

We sought interviews with spokespeople from Agroindustrial Beta and Agroindustrial Processes (ProAgro), but were unsuccessful.

The remaining water rights granted by the state over the last five decades have gone principally to providers of sanitation services for domestic and public use, such as municipalities and administration boards (4.6%). Industrial users (0.6%) and mining companies (0.3%) also figure in the statistics.

 

 

For Jorge Benites, agricultural engineer and former ANA director of water resources conservation and planning, water access in Peru is unequal not just because of its inefficient and informal use, but also because of two factors that have been little analyzed: the intensity of the extraction and the location of the water capture points:

“The official figures show that water use is concentrated in agricultural exports, and only a very small part is used by industry. But this may be misleading, since although the impact of the agro-export sector derives from the huge volume it consumes, it is also important to analyze the locations from where the mining and oil sectors extract their share of the resource. Mining and oil concessions encroach on the headwaters of the basins and so whatever happens there will have consequences for all those who depend on the resource downstream.”

 

Mining monopoly

Miners rank second among the 43 companies with the highest number of extraction licenses. According to the ranking prepared by Ojo-publico.com, some 20 mining companies hold rights to 980 points of water capture for uses that include the processing of their minerals, the suppression of dust from the roads they use, and the supply of water to the camps for their workers.

Of these, 141 are for capture points that directly access aquifers. These are in the hands of the Las Bambas, Yanacoha, Southern Perú, and Antapaccay mining companies operating in Cajamarca, Cusco, Áncash, Apurímac, and Moquegua. Environmental conflicts are present in each of these regions. The National Institute of Civil Defense (INDECI) reports that each is also at continual risk of water scarcity.

NEXT TO MINE. A boy returns from school in Chuicuni, a town in Apurímac, region located next to Las Bambas pit.
Photo: Leslie Searles

Some 50% of the licenses granted to these 20 mining companies permit extraction from gorges, rivers, and lagoons in Cusco, Apurímac, and Cajamarca, departments which have long histories of conflict with the extractive industry.

According to the Ombudsman's Office, these departments currently register 23 socio-environmental conflicts motivated by inadequate access to and quality of water sources, the curtailment of communal rights, the reduction of communal lands, and the failure of companies to comply with undertakings made by during the exploration phase.

The region in which the state has issued the greatest number of mining use licenses is Cajamarca. And here the company which holds the most licenses is Yanacocha, owned by the US company Newmont and the Peruvian company Buenaventura, whose president is Roque Benavides. Some 195 extraction rights have been issued in Cajamarca. Of these Yanacocha holds 142, some 73 of which allow access to underground water.

 

 

 

The multinational was forced to suspend its Conga project in 2011 following clashes between members of the local community and police which left five people dead and 129 injured. There are 250 thousand rural inhabitants in Cajamarca without access to drinking water.

According to Yanacocha’s Water Management Report, each year the mine uses 2 billion liters of water to service the operations of its 13 open pits, all located near the headwaters of the Honda basin and the Chonta, Mashcón, and Rejo rivers.

It currently produces 500 thousand ounces of gold per year and it has just announced the expansion of its operations with the Quecher Main project, a gold and copper deposit to be exploited until 2027 that will focus on extracting the remaining oxide mineral in Yanacocha.

The region in which the state has issued the greatest number of mining use licenses is Cajamarca

Two more mining companies are able to use water in Cajamarca: the Anglo-Australian Rio Tinto, with its La Granja copper project currently in the exploration phase, and; Gold Fields La Cima, a subsidiary of the eponymous South African company and a producer of gold at the Cerro Corona mine since 2008. These companies hold 36 and 14 licenses respectively.

This pattern is repeated in the south of the country, in particular in Cusco and Apurímac. Some 11 mining companies have licenses to extract water in one or other of these regions and one company, Las Bambas, is a water user in both. Some 108 water rights have been issued to Las Bambas for use in Cusco and 60 for Apurímac. A further 42 were obtained by the Antapaccay and Xtrata Tintaya companies. The Las Bambas, Antapaccay, and Tintaya projects are all linked to the Anglo-Swiss giant Glencore. 

TEMPORARY RIGHTS. Antapaccay, mining operation of the Glencore group, uses temporary authorizations to extract the water that it uses for its activities in Cusco.
Photo: Nelly Luna

In 2013 Xstrata Copper owned Las Bambas (in Apurímac), and Antapaccay and Tintaya (both in Cusco). That year Glencore absorbed Xstrata and was then forced to divest itself of Las Bambas so as not to be accused of controlling the world's production and sale of copper. The mine was bought by the Chinese company MMG Limited. The sale of a mine does not necessarily did not alter the ownership of any associated water licenses, since Water Resources Law allows the previous owner to retain possession, or the new owner to have it transferred. It is simply a question of completing an ANA administrative procedure.

Las Bambas has informed Ojo-publico.com in writing that the consortium holds four water licenses for mining use in the district of Challhuahuacho (Cotabambas Province) in Apurimac. However, it did not indicate if these were obtained by the current parent company (MMG) or if they had been transferred by Glencore.

Additional information obtained by Ojo-publico.com from ANA itself indicates that the Medio Apurimac Pachacaca Local Water Authority alone has issued Las Bambas with 11 administrative resolutions that provide access to at least the same number of water extraction points in the basin. The historical information in our database indicates that the basin is subject to 74 licenses, authorizations and permits.

According to the company: “In the operations of Las Bambas, the quantity and quality of the water used is monitored periodically, without jeopardizing the supply from water sources that are intended for family consumption or that are necessary for neighboring communities or environments. It should be noted that the copper processing plant recovers up to 95% of the water, which is then reused.”

SHARED WATER. In the regions where Buenaventura and Southern develop their mining activities, the population coexists with the risk of water scarcity.
Photo: Leslie Moreno

Last April, the Cotabambas Defense Front, the Apurímac Regional Council, and the NGO Cooperacción presented a set of comments on changes to the project that MMG Limited has proposed to the Environmental Impact Assessment. The group argues that the current calculation of the impact of the operations on water is based on outdated information. The company disputes this, claiming that the data used is from the period 2006 to 2017.

Buenaventura, the aforementioned shareholder in Yanacocha, is one of the companies on Ojo-publico’s ranking of the 43 owners of water. Our analysis shows that Buenaventura holds 86 water use licenses for six mineral extraction projects (gold in Moquegua; zinc and silver in Pasco; copper in Apurímac, Piura and Cajamarca) and ten productive units (in Lima, Pasco, Arequipa, Cajamarca, and Huancavelica).

Southern Perú is also on the list. A subsidiary of the giant Grupo México, it holds 64 authorizations to extract water.

The company’s exploration activities for its Gaby project in Arequipa have recently brought it into conflict with the local population. Community members fear the headwaters that are sourced from Mount Surihuiri will be affected.

Southern Perú is also on the list. A subsidiary of the giant Grupo México, it holds 64 authorizations to extract water in Moquegua, Tacna, and Apurímac. Twelve of these permit extraction from aquifers and a further three permit extraction from the sea and are related to the suspended Tia Maria project.

 

Most of the company’s remaining permits are for its Cuajone and Toquepala copper mines. On 20 February, Southern Perú won the Michiquillay (Cajamarca) tender, a project expected to product 225 thousand tons of copper per year. The company is yet to obtain licenses or authorizations.

The regions of Arequipa, Huancavelica, Tacna, and Moquegua—where both Buenaventura and Southern Perú undertake their activities—face the risk of water shortage. According to a study by the National Meteorology and Hydrology Service, the availability of water in the rivers and basins of these regions will decline by 48% between now and 2015.

 

Hidden figures

The remaining sector is the industrial. These companies hold 434 rights to surface and underground water. They include the water, soft drink, and beer bottling companies Backus, Lindley, and Ajeper. These hold a total of 43 rights to capture underground water from wells located primarily in Lima and Maynas.

The list also includes subsidiaries of the energy company Pluspetrol; CFG Investment, owned by Pacific Andes; Austral Group, part of Norway’s Austevoll Seafood ASA; Hayduk, belonging to the Peruvian Martínez family; Exalmar (fish), held by the company that also owns Agroindustrial Beta, and; the Romero Group’s TASA (fish), Alicorp (food), and Palmas del Shanusi (palm oil).

 

 

 

According the Hydrological Resources Law, a company may obtain rights for uses that fall outside its core business. An agro-exporter, for example, can obtain a license for industrial use, whilst a miner can do so for domestic use, and an industrial company for agricultural use. Ojo-publico.com’s data includes the total number of rights obtained by each of the 43 companies on the list and shows those instruments which cover uses unrelated to the company’s main business activity.

However, it is more difficult to identify the volume of water that is hidden by this array of permits, licenses, and authorizations. ANA’s reports are incomplete and in some cases do not specify the quantity of liters the company can extract.

As the data reveals, 80% of all rights held by the 43 companies on our list were issued prior to 2010. At that time no national study of water availability existed to identify overexploitation or water insufficiency in the country’s rivers, aquifers and streams. Even today, ANA’s water management plans do not cover all Peru’s basins.

WITHOUT WATER. On the coast, access to water is shared with agro-exporters and industries. Water does not supply all households through a public network.
Photo: Andina

Julio Jesús Salazar, an agricultural engineer and a former ANA official of 10 years standing, confirms that the procedure for the provision of water licenses is purely administrative and does not consider issues of equity for all users.

“The Water Resources Law should be modified to improve the distribution of water. I would go so far as to say that the current system is generating serious conflicts because it concentrates the water sources in the hands of groups with economic power. The procedure is purely administrative, not technical. The water supply and demand studies are not real, they are based on statistical calculations,” says Salazar.

For his part, the engineer Jorge Benites also considers it essential that the state promote a water security policy that includes a real analysis of the pressure to which the water sources are subjected, that allows aquifers to be declared intangible, and that promotes the use of desalinated water by industry and mining.

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