Peru Mine Closed By Farmer Protests

PERU

Peru mine closed by farmer protests

CARLA SALAZAR, Associated Press

26th August 2006

LIMA, Peru - A U.S.-controlled gold mining operation ceased activities on Friday at a con- struction project in northern Peru because of protests by farmers.

Yanacocha, which is majority owned by U.S. investors and runs Latin America's largest gold mine, has faced protests at its various sites repeatedly in recent years.

The shutdown at the Carachugo site, which was set to start production at the end of the year, is the latest setback for Yanacocha. The company said Friday that ongoing talks with comm- unity groups in the Combayo area of northern Peru had failed to result in an agreement.

The protesters fear contamination of water supplies but also were demanding jobs at the pro -ject. They also want clarification of the death of ademonstrator killed during a protest in early August.

''Yanacocha has paralyzed all activities in the Carachugo project for an indefinite time frame and as a consequence it will have to suspend all social programs in the zone'' and lay off over 1,000 contracted workers, the company said.

The Carachugo project was set to begin production at the end of this year. Protests have not disrupted the mine's production, a company executive said.

Denver-based Newmont Mining has a 51.35 percent stake in Yanacocha, while Buenaventura, a Peruvian company, holds a 43.65 percent share.

The paralyzation of the project comes after a series of clashes between police and protesters, who have blocked the highway leading to the mine during the last two days.

''Regrettably, as a direct result of safety and security threats posed by the roadblocks, more than 1,000 contracted workers will be laid off until normal operations can resume without en- dangering the employees, contractors and community members in the area,'' Randy Engel, Newmont's vice president of communications and investor relations, said in a statement.

The mayor of Combayo, Luciano Llanos, said Friday that protesters were seeking to protect local water supplies.

''This project has not brought us benefits,'' he said. ''We have demonstrated how our lagoons, our springs are being destroyed by this project.''

The Carachuga project involves the expansion of a leach pad,, on which gold would be sep- arated 2rom the soil using toxic chemicals.

Yanacocha was forced in 2004 to shelve exploration plans on the nearby mountain known as Cerro Quilish after violent protests by farmers who believed the project threatened water supplies.

It is estimated that there are 3.7 million ounces of gold in Cerro Quilish. Newmont shares closed up 80 cents, or 1.55 percent, at $52.51 on the New York Stock Exchange.