Peru's Highest Court Sides With Central Government In Conga Case

Published by MAC on 2012-04-24
Source: Dow Jones, Reuters, Peruvian Times

But Auditors demand Newmont improve project proposal

Peru's Highest Court Sides With Central Government In Minas Conga Mine Case

Dow Jones

17 April 2012

LIMA - Peru's highest court, the Constitutional Tribunal, on Tuesday sided with the central government and said the regional government of Cajamarca overstepped its bounds by declaring inviable the Minas Conga copper and gold project.

The administration of President Ollanta Humala had asked the tribunal to declare invalid the regional government's declaration that would ban work on the $4.8 billion Minas Conga project in northern Peru.

The nation's attorney general argued that the regional government of Cajamarca overstepped its boundaries when it passed a law banning the Minas Conga project.

Constitutional lawyers had argued that the nation's constitution doesn't assign regional governments the power to overturn rulings made by the central government.

The court ruling came out the same day as three international experts turned over a long-awaited report on water use in the project.

Prime Minister Oscar Valdes said at a press conference that no decision has yet been taken on whether to proceed with the project.

Opponents of the project say it will hurt water supplies, although the central government already approved an environmental impact study for the project.

Minera Yanacocha, which is developing the deposit, says it will be able to build reservoirs to ensure improved access to water.

Newmont Mining Corp. (NEM) and the government late last year suspended work on the project following violent protests.

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Newmont should improve Peru mine plan-auditors

Reuters

17 April 2012

LIMA - A team of independent environmental auditors said on Tuesday U.S.-based Newmont Mining Corp should make "substantive improvements" to its $4.8 billion Conga project in Peru, which has been stalled by community opposition.

The proposed gold mine, the biggest investment in the history of Peruvian mining, would replace a string of alpine lakes with reservoirs. Local protesters, led by the president of the northern Andean region of Cajamarca, say it would bring pollution or hurt scarce water supplies.

The Conga dispute has the highest profile of the more than 200 environmental conflicts that President Ollanta Humala is trying to solve to avert delays on Peru's $50 billion pipeline of mining and energy projects.

"There's no such thing as zero environmental impact. You need to find a balance between economics, the environmental, social needs and technical ones," said Rafael Fernandez Rubio, one of three European environmental experts hired by Peru's government to review Newmont's mitigation plan for the mine.

Newmont has indicated it is willing to fine-tune its mitigation plan for the project.

It has also said the reservoirs would provide steadier supplies of water.

"Conga's reservoirs would more than double the current water storage capacity and would provide a reliable, year-round water supply to downstream users, something they don't currently have as a result of the dry season," the company said.

Prime Minister Oscar Valdes, who the president promoted from interior minister in December and charged with quashing local opposition to the mine, told reporters the government will now review the 260-page report from the auditors, who analyzed the water component of Newmont's 7,000-page mitigation plan.

Some of the recommendations by the auditors could drive up the costs of the project.

"It's not our mission to say if the project is viable or not ... we've just tried to improve its technical aspects," said another auditor, Luis Lopez Garcia. "Some measures could be implemented quite easily but others would require economic studies to see if they make sense."

Mines and Energy Minister Jorge Merino Tafur said the independent review showed Peru was paying more attention to environmental concerns after centuries of mining that often went unchecked.

"I hope everyone understands that investments are very important but only when you take into account factors like water and sustainable development," he said.

Gregorio Santos, the left-wing president of the region of Cajamarca, who has defied Humala's calls to let the mine be built, reiterated his opposition to the project.

"The private sector in Peru must understand that you can't cause enormous damage to ecosystems in the pursuit of big profits," he said.

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Peru's Humala Says Newmont Mine Project Needs Work

By Terry Wade

Reuters

23 April 2012

Peruvian President Ollanta Humala said on Friday that U.S.-based Newmont Mining should carry out a more ambitious environmental mitigation plan if it hopes to build its $4.8 billion Conga gold mine project.

Humala, who urged community activists to stop protesting against the stalled mine's construction, said the government would make sure the company adheres to strict social, environmental and labor goals.

His comments to end a months-long impasse came two days after independent environmental auditors encouraged the company to build larger reservoirs to guarantee even more water supplies.

They also said the company should preserve two lakes that would be displaced under the company's original plan.

"The company should meet the environmental and social recommendations made by auditors. And the capacity of the reservoirs should be at least four times greater than originally proposed by the company so as to benefit more townspeople," Humala said in a televised address.

Newmont's plan to replace four alpine lakes with artificial reservoirs fueled protests in the northern Cajamarca region late last year as some townspeople feared the most expensive mine ever attempted in Peru would leave local farmers without sufficient water supplies and cause pollution. The mine's construction has since been halted.

In a bid to gain confidence from locals, Humala's government asked three European auditors to issue an evaluation of the mine's environmental impact study, which was approved by the previous government.

Newmont has not yet responded to Humala's latest comments but has indicated it is willing to fine tune its mitigation plan. It has also said the reservoirs as planned would guarantee a year-round water supply for Cajamarca, whereas currently there is a lack of water during the dry season.

Peru's environment minister has said some of recommendations made by auditors would be relatively more costly and that the company would have to decide if it still wants to proceed after the government's recommendations.

Gregorio Santos, the president of the region of Cajamarca who has opposed construction of the mine even though it would generate some 10,000 jobs, said he was unmoved by Humala's comments - which also included a promise that the government would invest $1.9 billion in the region.

"No position has changed here," he said by radio from Cajamarca. "The Conga project isn't viable."

(Editing by Bob Burgdorfer)

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Minas Conga Opponents Hold Protest Awaiting Environmental Review

Andean Air Mail & Peruvian Times

12 April 2012

Opponents of the huge Minas Conga copper and gold project in Cajamarca region held a 24-hour protest on Wednesday, only days ahead of when the government is expected to make public a review by three independent consultants on the project's environmental viability. The review was handed in to the government at the end of last week.

Premier Oscar Valdes said the government would respect the right to protest, but that acts of violence would not be tolerated. "What we aren't going to allow are acts of violence that threaten the freedom of transit for other Peruvians who are not participating in the demonstration," Radio Programas reported Valdes as saying.

The Minas Conga project was suspended in November amid protests against the project. Opponents, who include the regional president of Cajamarca, Gregorio Santos, say the mine would harm local water supplies and have said they will not allow the project to go ahead.

The project includes the draining of three lakes and channelling the water further downstream to new reservoirs. The environmental impact study was approved by the Ministry of Energy and Mines at the end of the Garcia administration but observations were made to it last year by the Ministry of the Environment, observations that then-Minister Ricardo Giesecke said were perfectible - a key issue being that farms and villages above the reservoir line would continue to have access to quality and quantity of water as they have until now.

Negotiations by Giesecke and then-Premier Salomon Lerner Ghitis with the Cajamarca protesters came to a sudden halt, however, when President Humala chose to take a harder line, calling a state of emergency in Cajamarca and appointing then-Interior Minister Oscar Valdes as his new Premier in a major cabinet shuffle. The harder line on the protesters, however, has not borne any successful outcome.

"Conga is not going to go ahead, it is not viable," Santos said in televised remarks on Wednesday. Environmental activist and former priest Marco Arana has also said there can be no dialogue if the government insists on imposing the Conga project.

Giesecke, however, still believes that the Conga project can be developed, "but not just anyhow," particularly in technical social, economic, financial and cultural terms. The problem, he says, should not be viewed only from the perspective of water sources but from a broader environmental perspective that includes looking at what real long-term benefits can be gleaned by communities in the area.

Minas Conga is being developed by gold producer Yanacocha, which is majority owned by Newmont Mining, with Peruvian miner Buenaventura holding a 43.65% stake and the International Finance Corporation 5%. The project , which would expand the Yanacocha gold site in the region, would require an investment of approximately $4.8 billion, the highest figure ever invested in Peru in a single project.

In the first five years, annual average production would be between 580,000 and 680,000 ounces of gold, and between 155 million and 235 million pounds of copper. Peru is the second largest gold producer in the world, and Yanacocha is the world's second largest gold mine.

Although the independent assessment of the project has not yet been made public, opponents of Minas Conga have already rejected the report, saying that it is an attempt by the government to "justify" the development.

"They aren't revising [the environmental impact study] from an ecosystem viewpoint," said Wilfredo Saavedra, the president of Cajamarca's Environmental Defense Front, and one of the main opponents of Minas Conga.