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High in the Andes mountain range, a Chinese mining company is now in the housing construction and demolition business as it works to relocate a Peruvian town that sits in the way of its $2.2-billion (U.S.) Toromocho copper mine.

By late July, state-owned miner Chinalco says it will finish building a new city of paved roads and multistorey homes for 5,000 people currently living on the side of a giant red mountain of copper 4,500 metres above sea level.

Residents from the poor, ramshackle town of Morococha, where children attend school steps away from discarded mine tailings, will get access to amenities they currently lack, like modern water, sewage and electrical systems. They will all also own their homes and no one will need to pay rent.

Chinalco calls the new $50-million town the biggest privately funded social project in Peru's mining history and it may help the company avoid community opposition that has stalled other major projects.

If Chinalco persuades residents to move to Nueva Morococha, or "New Morococha," 15 minutes away by car – a feat that is still not certain – it could change ideas about corporate responsibility as President Ollanta Humala struggles to resolve hundreds of conflicts over natural resources that threaten $50-billion in pledged private investments.

"A project of this size has generated very high hopes," said Pedro Salazar, Chinalco's representative in Nueva Morococha, standing in front of rows of homogeneous homes with white walls and red roofs. "Other mining firms are looking at this as a point of reference."

Toromocho is expected to open in late 2013, operate for 35 years, and produce 250,000 tonnes of copper a year – nearly a quarter of Peru's 2011 output. A free-trade agreement with China will ease exports of the red metal to the world's second largest economy.

The town of Nueva Morococha, if successful, could improve the reputation of Chinese companies operating far from home. Many have been accused of running roughshod over workers and residents in Peru and other developing countries in the past.

Chinalco says 75 per cent of Morococha residents support the move. It says residents were consulted about the new town's layout – which will have a central plaza, a school, a hospital and churches. It looks a bit like a Peruvian version of Levittown, the suburban towns built in the United States in the 1940s and 1950s.

"Some want to move to the new city because now they live in rented rooms. Others don't want to go because the company hasn't taken account of all of our needs," said Rebeca Antonio. She sells trinkets and sodas from a stall and worries there won't be enough foot traffic in the new town for her to make a living.

Residents in favour of the move said they would prefer to have homes with new kitchens and to live at a slightly lower altitude in a new place that isn't surrounded by mine tailings. They say Chinalco does more for them than their mayor in the town 149 kilometres east of Lima, Peru's capital.

In rugged areas like Morococha where government-run social programs are scarce and residents chew coca leaves to ward off hunger and altitude sickness, companies say they are forced to play the role of the state and build schools, roads and medical facilities, or face bouts of unrest.

Chinese firms have at times been flashpoints.

The stalled Rio Blanco copper project in northern Peru was stymied by bouts of violence before and after it was bought in 2007 by Zijin of China. A Peruvian iron ore mine owned by China's Shougang Group has been dogged by labour and safety tensions since it was bought in 1992.

Chinalco and other firms say they are trying to chart a different course, responding to pressure from the government and communities to be more socially responsible.