Peru's Informal Mining Blockades: A Supply Chain Crossroads for Global Copper Markets

The recent surge in informal mining blockades in Peru's copper belt has thrust the Andean nation into the center of a global supply chain dilemma. At the heart of the conflict is the Las Bambas mine, a critical copper producer operated by China's MMG Ltd., which has seen its operations repeatedly disrupted by protests from indigenous communities such as the Pamputa and Huancuire groups. These blockades, now entering their third year, underscore the fragility of Peru's status as the world's second-largest copper producer—and the growing strategic importance of traders like Trafigura and Glencore, who are navigating this chaos to secure supply. For investors, the takeaway is clear: diversify exposure to copper equities while favoring firms with flexible sourcing, as Peru's informal mining wars may reshape global copper markets for years.

The Disruption Dynamics: Las Bambas and the Reinfo Registry

The Las Bambas mine, capable of producing up to 400,000 metric tons of copper annually, has been a flashpoint for Peru's informal mining tensions. Since October 2023, blockades by communities like Pamputa—which operates the Reinfo-registered Apu Chunta mine—have slashed Las Bambas' output by as much as 20% during peak disruptions. The Reinfo program, which legalizes informal mining activities provided they avoid formal concessions, has created a paradox: while Apu Chunta generates $300 million annually for the Pamputa community, it operates on land where mineral rights are held by MMG. This clash has led to over 100 legal complaints by MMG and over 700 days of cumulative blockades since 2023, with recent protests in Q2 2025 shutting key highways near Cusco and Sicuani.

The stakes are global: Peru accounts for 10% of global copper production, and Las Bambas alone supplies 4% of the world's refined copper. reveal a steady decline, with output falling to 56 kilotonnes in early 2024—a 4% drop from 2023 levels—due to blockades and lower ore grades. Meanwhile, Peru's total copper output grew only 0.6% in 2024, driven by non-Las Bambas mines like Quellaveco. The mine's planned expansion into Phase 8 by 2027 now hangs in the balance, as communities demand environmental concessions and land rights.

Supply Chain Risks: The Fragility of Formal Mining

The Las Bambas saga illustrates a systemic vulnerability: formal mines in contested regions face escalating social and logistical risks. For investors, this means exposure to Peruvian projects carries heightened operational and financial uncertainty. MMG's $6.96 billion investment in Las Bambas—backed by Chinese banks—relies on uninterrupted access to global markets. Yet, disruptions like those in Q2 2025 risk pushing the mine's costs higher or forcing it to curtail production, squeezing margins.

The problem extends beyond Las Bambas. Southern Copper Corp. and First Quantum Minerals have faced similar community-led blockades, while the government's delayed resolution of Reinfo's future (now extended to 2025) fuels further instability. For miners in Peru, the calculus is grim: high capital costs, regulatory hurdles, and social conflicts make new projects risky bets.

The Traders' Advantage: Flexibility in Chaos

While formal miners struggle, traders like Trafigura and Glencore are capitalizing on Peru's regulatory gray zones. By sourcing copper from Reinfo-registered processors in Nazca, they can tap into informal supply streams—estimated at 30,000 metric tons annually from Apu Chunta alone—without relying on MMG's faltering logistics. This diversification has paid off: shows both firms outperformed industry averages, with Trafigura's copper-related revenue rising 22% since 2020 despite global supply constraints.

The traders' edge lies in their ability to blend legal and informal supply. While Apu Chunta's output is technically legal under Reinfo, its legitimacy hinges on MMG's mineral rights—a loophole that could close if the registry expires. Yet, the political will to revoke Reinfo remains weak, given its role in sustaining local economies. For now, traders are treating Peru's informal mines as a buffer against global shortages, particularly as EV and renewable energy demand for copper soars.

Investment Strategy: Diversify, but Avoid Peruvian Overhang

The takeaway for investors is twofold:

1. Avoid concentrated Peruvian exposure: MMG's shares, already down 28% since 2021, face further pressure as blockades persist. Similarly, miners with heavy stakes in contested regions—like Southern Copper—should be approached cautiously.

2. Favor diversified copper equities and flexible traders: Firms like Freeport-McMoRan (with mines in North America and Indonesia) and BHP (diversified global portfolio) offer safer exposure to copper's structural demand. Meanwhile, traders like Glencore and Trafigura benefit from their ability to navigate supply chain disruptions, making their stocks a hedge against Peruvian instability.

The long-term outlook is equally instructive. Peru's copper output growth is projected to stagnate until 2028, when projects like Canariaco Norte may come online—assuming social conflicts are resolved. Until then, informal mining will remain a disruptive force, favoring traders and miners with supply chain resilience.

Conclusion: A New Era of Supply Chain Fragmentation

Peru's informal mining wars are a microcosm of a broader trend: global commodity markets are fracturing into formal and informal streams, with traders acting as arbitrageurs. For investors, this means prioritizing companies that can navigate this complexity. While Las Bambas' blockades are a near-term headache, the real opportunity lies in firms that thrive in fragmented markets. In the race to secure copper for the clean energy transition, flexibility—not scale—is the new king.

As prices rise and supply tightens, the ability to source from both formal and informal channels will separate winners from losers. For now, Peru's miners are the canaries in the coal mine—and investors would be wise to heed their warnings.