Peru could revive talks with foes of Newmont mine

Reuters News
Posted: Dec 15, 2011 10:59 AM
Peru could revive talks with foes of Newmont mine

By Marco Aquino

LIMA (Reuters) - Peru said on Wednesday it could reopen negotiations with foes of Newmont Mining's $4.8 billion Conga project, a sign a solution to the month long impasse could be found, after a crackdown coerced protesters to call off their rallies.

A detente might vindicate the harsh strategy of new Prime Minister Oscar Valdes, who froze the assets of regional leaders in Cajamarca, detained high-profile protesters, and imposed a state of emergency to show the government would not tolerate protests against projects.

Valdes, a former army officer, had pushed the strategy while interior minister. He was promoted in a weekend Cabinet shakeup by President Ollanta Humala that critics said would lead to law-and-order crackdowns on protesters and less willingness to use dialogue to solve hundreds of environmental disputes nationwide.

On Tuesday, the governor of Cajamarca, Gregorio Santos, wrote a letter to Valdes inviting him to hold talks, but also calling on him to unfreeze the local government's assets and end the state of emergency.

Valdes responded late on Wednesday in a letter to Santos obtained by Reuters. He recognized the end of the protests and said the government was willing to reopen talks with local authorities to promote regional development, but he did not mention the frozen assets.

"We are hoping dialogue can be restored," Valdes said in the

letter. He said only Humala could decide to end the state of emergency, and reiterated the project's environmental impact study would be reviewed by international experts in an audit.

Protesters who feared the Conga gold mine would disrupt their source of water, a string of alpine lakes, caused Newmont and its Peruvian partner Buenaventura to temporarily halt work last month on the project that would be the largest investment in Peru's mining history.

Newmont has said its environment plan for the mine, which was approved a year ago by the previous government, meets the highest standards in the mining industry and calls for the construction of reservoirs to replace the lakes.

The standoff over Conga has challenged Humala's young presidency as he was supported largely by the rural poor in a June election and promised to hold miners to better social and environmental standards in a country with a high 30 percent poverty rate.

But the Cabinet shuffle on Sunday underscored the one-time leftist's swift move toward the right. He kept investor favorite Luis Miguel Castilla as finance minister and appointed fellow former army officer Valdes to run the government.

Miners consulted by Reuters in recent days have said despite Conga's troubles they are still committed to investing in Peru, a top metals producer, with the majority of its potential untapped and where profits have soared on high global prices. Many said they were redoubling community relations efforts to win local support for their projects.

Anglo American's Peru country manager Luis Marchese said plans for the company's $3 billion Quellaveco project "have not changed," and that the mine could begin producing copper in 2015.

Australia's Metminco Limited also said its $2.2 billion copper and molybdenum project Calatos was moving ahead in southern Peru.

"There are concerns at the moment, but we've never thought of suspending anything, we're trying to do things right," the firm's legal representative, Eduardo Llosa said.

Humala has said repeatedly that he wants mining, which generates 60 percent of Peru's exports and brings needed tax revenue, but he also wants businesses to contribute more to development in rural towns and better respect the environment in a country where a third of the people live in poverty.

The new minister of energy and mines, Jorge Merino, a technocrat appointed on Sunday, echoed the message shortly after taking office this week, saying he would seek mining investment but will try to ensure it helps underserved communities that have not yet seen the benefits of Peru's decade-long boom.

Canada's Candente Copper said its $1.6 billion Cañariaco project would depend in part on its own community relations work.

"There is always a possibility that the community rejects the project in consultation, but we are confident in our capacity to communicate," said Cañariaco's general manager Marco Marticorena.

(Additional reporting by Patricia Velez and Teresa Cespedes. Writing by Caroline Stauffer.; Editing by Terry Wade and Carol Bishopric)