Conga Mine put on the "back burner"

August 24, 2012

It appears the efforts to devlop the Conga gold project in Peru suffered another set back. The Peruvian government announced on Aug. 23 that Newmont Mining Corp’s $5 billion project is now “on the back burner.”

Reuters reported that Prime Minister Juan Jimenez made the comments after a poll by survey firm Ipsos showed 78 percent of people in the northern Peruvian region of Cajamarca opposed the planned mine. These comments were seen as a sign that the government will likely stop trying to overcome local opposition that has resulted in violence and two cabinet shuffles.

The conflicts at the mine have resulted in the death of five people and have dominated President Ollanta Humala’s first year in office.
Humala has tried to show investors that he is committed to projects in Peru’s $50 billion pipeline of planned mines, but critics say left-wing political leaders in Cajamarca have outmaneuvered him, Reuters reported.

Locals fear the project, essentially an expansion of the Yanacocha Mine in Cajamarca, will cause contamination and ruin local water sources essential to their agricultural livelihoods. This despite the fact that Newmont has submitted plans for reservoirs it would build that would provide year-round water supplies in areas that currently suffer during the dry season.

The Conga mine would be one of the biggest investments in Peru’s history. Mining makes up 60 percent of the nation’s export earnings and has traditionally powered its economy, although towns near mines often are plagued by poverty.

The project has become a lightning rod for debates about whether mining can benefit local communities without damaging the environment, and whether national economic interests should trump local opposition to extractive activities.

Other polls have shown nationwide support for Conga. A separate Ipsos poll this month found that nationally, 45 percent of Peruvians support it, while 40 percent oppose it.

Newmont, whose Chief Executive Officer Richard O'Brien was in Peru last week, said in July that Conga “will occur only with local and national support ... Conga is still in our plans but moving ahead on a very measured basis.”

Mining analysts have said the company might wait to build the mine until after Santos leaves office in 2014. He is widely expected to be eying a bid for president in 2016, when Humala cannot run for a second-straight term.

Newmont holds 51.35 percent of Conga, and Peru's Buenaventura owns 43.65 percent. Five percent is held by International Finance Corp.
Newmont and Buenaventura operate Yanacocha, which is one of the largest gold producers in Latin America. It produced 46.6 t (1.5 million oz) of gold in 2010.

Conga would produce between 18 and 21.1 t/a (580,000 and 680,000 oz/year) of gold annually in its first five years of operation and run for about 19 years.



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