Mining projects in Peru could be restarted

September 23, 2013

Some of the largest mining projects in Peru might be restarted according to Peru’s minister of energy and mines, Jorge Merino.

Speaking at the Perumin conference in Arequipa, Merino said Newmont’s $4.8 billion Conga gold project and the $1-billion Tia Maria copper mining project proposed near Arequipa by Arizona-based Southern Copper will both be restarted this year, according to a report in the Los Angeles Times.

The Conga project was halted last year when President Ollanta Humala declared a state of emergency after residents in northern Peru's Cajamarca region blocked roads and clashed with police at the site.

The Tia Maria copper mining project was halted in 2011 after clashes between residents and police left three dead.

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.

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

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 percent, 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 percent 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 percent, down from 54 percent in March.


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