Peru's biggest mining project suspended - for time being

Published by MAC on 2011-11-08
Source: Reuters

Newmont expresses fear of "violence"

Newmont stops activities at Minas Conga project on fear of violence - Peru

Business News Americas

3 November 2011

US-based Newmont Mining has stopped development of its 51.35%-controlled Minas Conga gold-copper project in Peru's Cajamarca region due to community opposition, local press reported.

Minas Conga will cost US$4bn-4.8bn to develop, making it the biggest investment project in Peru's mining portfolio. Local miner Buenaventura has a 43.65% stake in the project to be developed through Yanacocha, which has the same ownership structure.

The decision is a preventive measure against the threat of violence as the deadline to remove equipment and personnel from the mine camp - set by local communities opposed to the project - expired on Thursday.

Opposition is mainly focused on concerns over water use.

Onsite Visit

On November 2, mines and energy (MEM) minister Carlos Herrera Descalzi visited the Minas Conga site together with environment minister Ricardo Giesecke and agriculture minister Miguel Caillaux. Regional and local authorities also participated in the visit, which attracted 2,500 people that are in favor of the project, Yanacocha said on its website.

"We accept responsible mining that respects the environment and social rights, represents inclusion and brings benefits for everyone," Herrera said.

Authorities went to the site to listen to the concerns of local communities and look for solutions, state news agency Andina reported.

Meanwhile the environment ministry will review the project's environmental impact study (EIS), which was approved by authorities in October 2010, Giesecke said.

The government has the obligation to ensure that the project is carried out in the best possible way and with the least amount of opposition, the minister was reported as saying by Andina.

Environmental Process

As part of the environmental permitting process, more than 3,000 people participated in public hearings, Yanacocha said in an earlier statement. The 32 villages that fall within the project's direct area of influence support its development and, to date, the company has signed contracts with locals worth around US$50mn.

One of the recommendations made by authorities after evaluating the EIS was to carry out a hydrological study, which is ongoing and will be presented in March, the company added.

As part of the project, Yanacocha will build four reservoirs before operations at Minas Conga begin. Three of these will be used exclusively to supply water to the local population.

The dispute over Minas Conga follows recent protests that forced Yanacocha to suspend operations temporarily at its nearby open pit mine.

Protesters set up roadblocks to demand contracts and investments from Yanacocha. MEM set up a roundtable to resolve the dispute between residents and the company and meetings are ongoing.

Yanacocha is South America's largest gold producer, with output of 1.3Moz last year. The goal is to increase output to 2.5Moz by 2017.

Minas Conga was approved by the boards of Newmont and Buenaventura in late July and production is scheduled to start in 2015.

Average output at Minas Conga over the first five years is estimated at 650,000-750,000oz/y gold and 160M-210Mlb/y (72,575-95,254t) copper at cash costs of US$300-400/oz and US$0.95-1.25/lb, respectively.

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Newmont halts $4.8 bln Peru mine work over protest

By Patricia Velez

Reuters

3 November 2011

Newmont Mining Corp removed some workers and halted earth-moving work at its Conga project in Peru on Thursday because of fears protesters would invade it, an internal company email obtained by Reuters showed.

At least 1,000 residents gathered in Pampa Verde, about 12 miles (20 km) down the road from the Conga site, to demand the company abandon its $4.8 billion gold project, but there were no reports by police of any clashes in the area.

Local community and political leaders worry Newmont's project, which would be the biggest investment in the history of Peruvian mining, would cause pollution and sap water supplies used by farmers.

Protesters are also urging the government to issue a decree that would ban the project, which appears unlikely as the new gold mine would generate hundreds of millions of dollars in taxes and royalties for the central government.

Solving the Conga dispute is a crucial test for President Ollanta Humala, who campaigned on promises to end widespread conflicts over natural resources that have delayed billions of dollars in mining and oil investment nationwide.

"We aren't violent. We are peaceful, but when our rights are ignored we must raise our voices to be heard," Gregorio Santos, president of the region of Cajamarca, told Reuters in the town of Pampa Verde, 13,800 feet (4,200 meters) high in the Andes.

But the U.S. company's deputy project director for Conga, Daniel Gignac, said some staff and equipment were being relocated as a precaution "due to the serious risk of violence by local political activists." Despite the temporary move, other work would continue normally at the Conga mining camp, Gignac said in an email to staff viewed by Reuters.

An effort by three of Humala's cabinet officials on Wednesday to broker a truce between the local community and the company failed, according to local leaders who participated in the talks.

Humala, a center-leftist, urged more dialogue to solve the conflict.

"We plea for calm in Cajamarca because we are going to come up with a solution that addresses the issue of environmental conservation," Humala told reporters in Lima on Thursday.

Newmont and its partner in Conga, Peruvian precious metals miner Buenaventura , have expressed confidence the project will eventually proceed.

But residents have shown little willingness to negotiate and said they planned a massive protest against the project in Cajamarca next Wednesday.

"Mining around here has never brought development and it's hurt the environment," said Guillermo Huaman, 30, who raises livestock near Pampa Verde.

Trying to Avert Clashes of Previous Government

Agriculture Minister Miguel Caillaux said the project, which had its environmental impact study approved a year ago, would not hurt local water supplies used by farmers.

Still, Newmont's nearby gold mine Yanacocha, which produced 1.5 million ounces of gold last year, suffered a mercury spill in 2000 that still angers some local residents even though the mine says it has strict environmental controls and runs extensive community development programs.

In 2004 Newmont halted exploration to expand Yanacocha to include Cerro Quilish, a nearby mountain, because of community protests over water supplies. Conga would produce 580,000 to 680,000 ounces of gold a year.

Humala has sought to avert conflicts over resources by promising to steer more social spending to rural towns and emphasizing mediation efforts between local communities and companies, instead of relying on the police to repress protests after disputes spiral out of control.

Dozens of people died in clashes over mining and oil projects during former President Alan Garcia's term in office.

Three months into his term, Humala has temporarily settled a vexing conflict over one of Southern Copper's projects.

And despite a lingering strike at Freeport-McMoRan's Cerro Verde copper mine, Humala has won the support of the country's largest labor confederation, which has stopped issuing threats for general strikes that nagged Garcia.

But the Conga project is his biggest challenge yet and is so large that a failure to see it open could become a major setback for his government.

It is too soon to know whether Humala will manage conflicts better than his predecessor or if his welfare programs will be effective, though some business leaders have praised him for emphasizing that economic growth must include the one third of Peruvians mired in poverty.

His goal of spreading the wealth from the country's decade-long economic boom does not seem to have discouraged investors. Since Humala took office, foreign firms have pledged about $15 billion in investments, equivalent to about 10 percent of gross domestic product, mainly in mining and oil.

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Peru tries to broker a truce between Newmont, locals as protests turn violent

By Patricia Velez

Reuters

3 November 2011

CAJAMARCA, Peru - Peru's government tried on Wednesday to broker a truce with angry protesters who are opposed to Newmont Mining's $4.8 billion Conga project, the biggest mining investment in the country's history.

The new gold mine would generate hundreds of millions of dollars in taxes and royalties for the government, but Mines and Energy Minister Carlos Herrera said to be built it must win the approval of the local community, which is worried the mine would cause pollution and sap water supplies.

President Ollanta Humala, who campaigned on promises to end hundreds of conflicts over natural resources that have delayed mining and oil projects, sent Herrera and two other cabinet members to the Andean city of Cajamarca to hold a formal dialogue between the company and the local community.

"Violence isn't the way to resolve disagreements. All opinions will be heard and respected, that's why we are here," Herrera told reporters.

"Peru needs wealth but with inclusion ... we all want mining that is done responsibly, that respects the environment and social needs."

Protests last month at the mine turned violent and some local residents have threatened to invade Newmont's mining camp in the Andean region of Cajamarca on Thursday unless the U.S. company abandons its project -- an outcome that appears highly unlikely.

Though Herrera said the project needs community support to proceed, he also criticized local community groups for waiting until now to voice opposition to the project, a full year after its environmental impact study was approved.

"It doesn't leave a good impression when people don't fulfill their promises or disregard them a year after making them," he said earlier on Wednesday before flying to Cajamarca.

Newmont owns the Conga project with Peruvian precious metals miner Buenaventura. Both companies have said they are confident the project will proceed.

At least 200 communities nationwide in Peru have organized to stop mining or oil projects, usually over environmental concerns or to demand direct economic benefits in rural towns.

Critics say former President Alan Garcia did too little to prevent the conflicts, which often turned violent. More than three dozen people have died in clashes with police over the last few years during protests over natural resources projects.

Humala, who took office in July, is trying to steer more social spending to poor towns, financed by higher taxes and royalties on mining companies.

The conflicts over natural resource projects threaten to hold up about $50 billion in investments expected over the next decade in Peru, a leading global minerals exporter.

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Protests against Yanacocha's Minas Conga project unfounded, company says - Peru

Business News Americas staff reporters

26 October 2011

The protests in Peru's Cajamarca region in opposition to Minera Yanacocha's Minas Conga project have no foundation in reality, the company said in a statement.

Residents in the region are calling for the suspension of the project due to concerns over water use, local press reported.

"We have gathered here to tell government authorities and Yanacocha that we do not want mining activity and we are calling for an immediate halt to the Conga project," community leader Milton Sánchez was quoted as saying by paper La República.

Minas Conga will cost US$4bn-4.8bn to develop, making it the biggest investment project in Peru's portfolio. It is being developed by US-based Newmont Mining (51.35%) and local miner Buenaventura (43.65%) through Yanacocha.

The remainder is owned by the World Bank's International Finance Corporation.

As part of the environmental permitting process, more than 3,000 people participated in public hearings, Yanacocha said. The 32 villages that fall within the project's direct area of influence support its development and, to date, the company has signed contracts with locals worth around US$50mn.

In addition, the project's environmental impact study (EIS) was approved by authorities in October 2010. One of the recommendations was to carry out a hydrological study which is ongoing and will be presented in March next year, the company added.

As part of the project, Yanacocha will build four water reservoirs before operations at Minas Conga begin. Three of these will be used exclusively to supply water to the local population.

The dispute over Minas Conga follows recent protests that forced Yanacocha to suspend operations temporarily at its nearby open pit mine.

Protesters set up roadblocks to demand contracts and investments from Yanacocha. The mines and energy ministry (MEM) set up a roundtable to resolve a dispute between residents and the company and meetings are ongoing.

Yanacocha is South America's largest gold producer, with output of 1.3Moz last year. The goal is to increase output to 2.5Moz by 2017.

Minas Conga was approved by the boards of Newmont and Buenaventura in late July and production is scheduled to start in 2015.

Average output at Minas Conga over the first five years is estimated at 650,000-750,000oz/y gold and 160M-210Mlb/y (72,575-95,254t) copper at cash costs of US$300-400/oz and US$0.95-1.25/lb, respectively.

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Newmont project in Peru faces community protest

Reuters

25 October 2011

LIMA - Townspeople in northern Peru are demanding an end to construction of the $4.8 billion Minas Conga gold mine because they fear it will threaten local water supplies, residents said on Tuesday.

Newmont Mining is developing Minas Conga, which would be the largest investment in Peru's mining history, through its local affiliate Yanacocha, along with Peruvian precious metals miner Buenaventura.

"We reject the presence of Yanacocha's Conga mining project because it is located at the start of a water basin," said Milton Sanchez, head of a civic group that has organized community assemblies in the area.

Yanacocha officials said they rejected the "violent attitude" of the townspeople who were allowed to enter the mine on Monday to complete an inspection. The company said three workers were injured during protests.

The protests came just a week after locals blocked access to Newmont's Yanacocha gold mine. Anti-mining protests could test leftist President Ollanta Humala, who took office in July promising to better spread the benefits of a commodities-fueled economic boom to Peru's poor rural hinterlands.

Minas Conga is expected to produce between 580,000 and 680,000 ounces of gold per year starting in 2014. Peru is the world's No. 6 gold producer and the second largest copper producer.

"We will give the company eight days to evacuate from the site," said Sanchez, saying locals would block roads to prevent workers from entering the Minas Congas site.

(Reporting by Patricia Velez; editing by Jim Marshall)