Elsa Del Castillo
Universidad del Pacífico Perú
Compañía Minera Antamina S. A. (CMA) is a Peruvian mining company that was awarded field exploitation rights in 1996 after a long privatization process. Its mining operations’ exploration and construction phases were completed between 1997 and 2001, when the company started production. CMA manages a huge mining complex that produces copper, zinc, silver, molybdenum, and bismuth and is located in Ancash Department’s San Marcos district, at 4,200 to 4,700 meters (13,789 to 15,420 feet) above sea level. Its construction called for a total investment to the tune of US$ 2.26 billion made by foreign consortium including BHP Billiton (Australia-UK), Noranda Inc. (Canada), Teck-Cominco Limited (Canada), and Mitsubishi Corporation (Japan).
CMA’s relevance does not only lie in the heavy economic and social weight of mining in the Andean region but also in its operations’ scale (CMA is the world’s third zinc producer and seventh copper producer, plus it owns the largest combined operation on both metals) and its positioning a leader in environmental and social issues. In its rather short existence, CMA has faced a number of complex challenges in order to become an economically viable as well as socially and environmentally responsible organization. This goal has pushed CMA to develop unique institutional capabilities (conflict resolution, management of adverse social settings, cultural diversity, self-learning, and innovation) that are usually found in more mature corporations.
This case describes some of the typical challenges faced by managers in a venture of this size. In a short time and in a high-risk setting characterized by ongoing social pressures, CMA executives were forced to make quick decisions that bore significant, long-term consequences, as they largely determined the company’s relationship with several stakeholders. Additionally, in order to make those decisions, CMA managers had to set their priorities in three separate areas: i) mining construction and production, where tight deadlines, engineering criteria, and cost reductions normally prevail; ii) environmental care, a realm where caution, impact evaluation and an active international stakeholders’ community all play a significant role, and iii) community relations, as the company needed to come to terms with the indigenous, poor communities directly affected by its project in order to secure its “social license.” It should also be noted that CMA juggled these concerns as it struggled to secure financial support from international banks.
Against this backdrop, CMA officials had to identify and understand a number of stakeholders, negotiating with multiple, opposing actors, formulating different plans and strategies to address each groups’ demands, and communicating these plans clearly. To rise to these challenges, CMA’s staff had to learn new skills along the way –that is, at the same time the problems arose. The company enjoyed significant success in some areas and made mistakes in others, but its managers consistently proved to have a remarkable ability to learn.
This case will help students to understand the complex tangle of decisions and steps taken by a startup, as a company manages to build its social responsibility vision and practices.
The case unfolds in March 1999, when CMA officials heatedly debated a number decisions to be made, as their impact would largely determine the company’s relationships with its stakeholders around two strategic issues. First, CMA was confronted by environmentalists on account of the road to the mine and concentrates’ transportation. Second, the company had to address the problem of farming families’ relocation.
To illustrate how complex this institutional learning process was, a second document (Epilogue) describes how the case dilemmas were sorted out and presents a new social challenge that emerges as a result of the decisions made in the mining project’s construction phase. Indeed, the construction of a concentrate pipeline soon became a new source of conflicts that the company had not anticipated.