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$4.8 billion Peru gold mine project suspended
$4.8 billion Peru gold mine project suspended after violent protests over water supply fears
By The Associated Press

LIMA, Peru (AP) ' The owners of a $4.8 billion gold and copper mining project, the biggest such investment in Peru, said Tuesday they were suspending it at the government's insistence following increasingly violent protests by highlands peasants who fear for their water supply.

Newmont Mining Corp. spokesman Omar Jabara told The Associated Press via email that the aim is to help restore public order.

Denver-based Newmont is the majority owner of the Conga project, which was to begin production in 2015 and is an extension of Yanacocha, Latin America's biggest gold mine.

Political leaders in Peru's northern state of Cajamarca began an open-ended general strike against the project last Thursday and violence has been escalating, including vandalism and clashes with police.

The Yanacocha consortium, which includes the Peruvian company Buenaventura Mining Co. and the International Finance Corporation, said in a statement that the suspension was "required by the Government of Peru for the sake of re-establishing tranquility and social peace."

On Tuesday, at least 20 people were injured, including eight by gunfire, in clashes between protesters and police, the regional health director, Reynaldo Nunez, told Canal N. He said one was in critical condition. Police said protesters sacked Conga offices in the town of Celendin.

Protest leaders said police fired tear gas and shotgun blasts at them

Before the suspension announcement, government officials continued to insist the protests did not enjoy widespread support.

"We regret the intransigence of the leaders who do not want to engage in dialogue," Interior Minister Oscar Valdes told reporters. "We regret that they are against their own population, children who aren't going to school, dairy farmers who are losing their milk."

Cajamarca is one the most heavily mined states in Peru, whose economy has been booming due high metal prices. Mining accounts for 61 percent of the South American nation's exports.

But peasants who live near mines complain of a lack of adequate oversight to ensure the operations do not contaminate or diminish water supplies, and political leaders in Cajamarca have called the Conga project's environmental impact study shallow and demanded it be re-evaluated.

Across Peru, there are more than 60 disputes over alleged damage to water supplies from mines, the country's ombudsman's office says.

The planned Conga mine is more than two miles (3,500 meters) above sea level.

An 11-page Environment Ministry study of the project completed last week urges modifications to ensure water sources are protected, especially regarding the replacement of four highlands lakes by reservoirs. Local residents fear the displacement of those lakes could dry up an important aquifer.

Environment Minister Ricardo Giesecke said after the study was leaked Friday that its conclusions do not amount to a rejection of the mine but rather guidelines for improving it.

That further angered protesters, and a deputy environment minister subsequently quit over the government's handling of the protests.

The Mining Ministry approved the project in October 2010 and by law judges the environmental soundness of mining projects.

Environmental activists complain that the ministry is heavily influenced by the industry and biased against environmental protection.

More than $40 billion in mining investments were lined up before President Ollanta Humala's June election and the mining industry agreed at his urging to a windfall tax to pay for social welfare programs that the government says will net $1 billion a year in revenues.


Associated Press writer Frank Bajak reported this story from Bogota, Colombia, and Carla Salazar reported in Lima.

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