Newmont scales back at blockaded Peru gold mine

Newmont scales back at blockaded Peru gold mine

Reuters New Service

September 17, 2004

New York- Newmont Mining Corp. said this week it began to scale back operations at its Yanacocha gold mine in northern Peru, because of a blockade by farmers who allege mining is polluting local water.

Denver-based Newmont said the decision was made after careful consideration of safety and operational concerns resulting from the blockade of the access road to the Yanacocha mine near the town of Cajamarca.

"Minera Yanacocha believes that the only responsible and prudent decision is for it to begin scaling back its operations, so that the company can increase its focus on safety and environmental protection," Newmont said in a statement.

"A blockade of the road leading to the mine and sporadic acts of violence have created a situation that has led to increased concerns, which have been heightened by a general strike that has been called in the entire Cajamarca province today."

Thousands of farmers held a one-day strike this week to call for an end to a gold exploration project they say is polluting their water, intensifying local resistance.

Farmers across Cajamarca province joined residents already on strike in the town of Cajamarca, 535 miles (850 km) northeast of Lima, who say gold exploration by Latin America's largest gold mine at the rich Cerro Quilish deposit is contaminating and drying up water needed for dairy farming.

Yanacocha, which is controlled by Newmont with Peru's Buenaventura (BUEv.LM.: Quote, Profile, Research) (BVN.N: Quote, Profile, Research) as partner, says a regional drought is to blame for a shortfall in water, not mining.

Carlos Santa Cruz, Newmont's vice president of South American operations, said: "We will not compromise safety standards, nor risk any harm to the environment."

Since Sept. 2, a group of people have blocked the road to the mine to protest exploration drilling, which Newmont said is conducted in accordance with the relevant permit. On Sept. 7, Minera Yanacocha agreed to suspend exploratory drilling in an effort to calm the situation and restore order.

"We have been working and will continue to work for a peaceful resolution based on the rule of law, the right to work and stability in the city of Cajamarca," said Roque Benavides, president and chief executive of Buenaventura.

Minera Yanacocha will resume normal operations when it can do so safely, he said.

Quilish, one of a cluster of deposits that are all part of Yanacocha's 600-square-mile (1,500-sq-km) site, has proven and provable reserves of 3.7 million ounces of gold, and Yanacocha hopes production can begin as early as 2007.

Demonstrations by farmers have delayed the Quilish gold search since 2002, but exploration restarted in August after the government granted Yanacocha a new permit.