Peru officials look to restart controversial mining projects

LIMA, Peru – Peruvian government officials plan to restart several large mining projects stalled by mass protests, a move bound to draw renewed resistance.

President Ollanta Humala last year was forced to suspend the development of the $4.8-billion Conga gold mining project proposed by Colorado-based Newmont Mining and declare a state of emergency after residents in northern Peru’s Cajamarca region blocked roads and clashed with police at the site.

The $1-billion Tia Maria copper mining project proposed near Arequipa by Arizona-based Southern Copper was halted in 2011 after clashes between residents and police left three dead.

But at a mining convention in Arequipa this week, Jorge Merino, the country’s minister of energy and mines, said both projects would soon resume.

Merino said officials with Newmont, which for decades has operated the Yanacocha gold mine near Cajamarca, and members of local communities were cooperating on the construction of reservoirs. Residents’ fears that Yanacocha had contaminated the local water supply, which Newmont denies, had sparked the protests.

“Relations between [Newmont] and local communities are getting better,” Merino said.

The two projects and others on the drawing board are important for the royalties and taxes they could generate for the government and the estimated 1 million new jobs they would create during the next three years, he said.

Mining opponent and former presidential candidate Marco Arana said Thursday in an interview that many members of the communities near the two projects remained opposed. The government was exhibiting a “police-military mentality” in a campaign to impose the projects on unwilling communities, he said.

“We all know that neither Conga nor Tia Maria have obtained social licenses nor the sufficient environmental basis with which to proceed,” Arana said. Imposing the projects will lead to “more social conflict,” he said.

The Humala government considers mining vital to the prosperity of Peru, one of South America’s economic success stories.

Economy and finance minister Luis Miguel Castilla said that since the global commodities boom began a decade ago, foreign investment in Peru mining projects has multiplied by a factor of 10. Annual economic growth has exceeded 5%, he said.

Perumin, the mining trade association, said that one-third of Peru’s 30 million people depend directly or indirectly on the mining economy. Mining also accounts for 57% of Peru’s exports, according to the government.

Another trade group of miners and energy firms said member firms pay $7.6 billion in taxes and royalties to the government, a figure that could climb to $12 billion in 2024 if new mining projects go through.

But delays caused by environmental concerns are putting projects in jeopardy. Peruvian media reported during the summer that Newmont was considering a “reallocation” of the $4.8 billion planned for the Conga project to more mining-friendly countries such as Australia.

Although the left-leaning Humala ran a populist campaign to win the presidency in 2011, his pro-mining policies have cost him significant support among the poor and blue-collar workers who backed him. A recent poll put his approval rating at 27%, down from 54% in March.

Among the 200 anti-mining leaders attending an alternative mining conference this week, also in Arequipa, was Wilfredo Saavedra, an environmental activist from Cajamarca, who said opponents of Conga were ready to demonstrate if the project advanced.

“There are studies that the government cannot refute showing mining is contaminating the lakes,” Saavedra said. “If necessary, the people of Cajamarca will return to the streets to protest.”

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Special correspondents Leon and Kraul reported from Lima and Bogota, Colombia, respectively.