Residents Block Scc Smelter In Peru

PERU

Residents block SCC smelter in Peru

21st September 2006

Source: Reuters

LIMA, Peru, Sept 20 (Reuters) - Residents in southern Peru blocked the railway supplying a Southern Copper Corp. smelter on Wednesday, demanding $400 million in compensation for environmental harm, but the company said production was unaffected. "The people are angry and have agreed to block the rail line, demanding that Southern show more social responsibility and higher standards to compensate for so much harm," the president of the Moquegua region, Cristala Constantinides, told Reuters via telephone.

Southern Copper (SCC), one of the world's top producers of the red metal, said in a statement that concentrates from the Toquepala and Cuajone mines could not be sent to its smelter due to the protest. But an official told Reuters earlier in the day that stocks could sustain output for several weeks.

"They have occupied a rail line and because of that violent act, other authorities must participate to establish who is responsible for any physical damage that could occur," Energy and Mines Minister Juan Valdivia told local television. Valdivia said government officials would mediate to try to resolve the conflict.

This was the latest protest by Peruvians demanding that big, mostly foreign-owned mines invest more money in surrounding areas. Many peasant farmers fear the mines contaminate their water and threaten their livelihoods.

Peru's new president, Alan Garcia, won a pledge by miners last month to make a $774 million payment to improve the lives of the half of Peruvians who live on $1 a day or less -- on top of a record $800 million that mining regions will receive this year from royalties and mine income tax.

But more specific demands persist.

Constantinides said the $400 million being sought from SCC "would be invested in several projects to compensate for problems in people's health, agriculture and the fishing industry."

But SCC responded that "the concentrate-processing plant complies with current legislation and industrial emissions are within the allowed limits." It attributed the blockade to political motives ahead of regional elections in November.

SCC, which is 75-percent owned by Mexico City-based Grupo Mexico, has mines in Peru and Mexico. The company reported a 41 percent rise in second-quarter earnings to $439.3 million, driven by high copper prices.

Southern Copper's stock price fell 2.6 percent to $87.63 in Lima and ended 3 percent lower at $87.31 a share in New York.