Peru protests targeting Newmont's Conga test Humala

Peruvian protesters attacked Newmont Mining Corp’s Conga project for the second time in a month, testing President Ollanta Humala’s resolve to bring in foreign investment while resolving environmental disputes and extending the benefits of surging growth.

Protesters opposed to the company’s US$4.8 billion Minas Conga gold and copper deposit, the Andean country’s biggest investment project, burned down a piping warehouse and stole contractors’ equipment in the northern Andes yesterday, Newmont spokesman Omar Jabara said in an e-mail. Newmont halted construction work at the site prior to the attack.

Environmental protests by farmers who fear mining will pollute water sources have blocked projects by companies including Southern Copper Corp, Anglo American plc and Bear Creek Mining Corp. Failure by Humala to contain the protests may discourage mining projects expected to invest US$50 billion over the next decade, according to analysts including Canaccord Genuity’s Luis Zapata.

“A project with the size and visibility of Minas Conga is a definite measuring stick for other mining projects in Peru,” Zapata said in e-mailed comments. “If they were to let these protests expand, they are going to risk Peruvian projects being given higher country risk discount and becoming less attractive to international investors.”

Yesterday’s protest shut down schools, businesses and public transport and blocked roads in the highland city of Cajamarca, 560km northwest of Lima, according to Lima-based television station Canal N. Talks between central and regional government officials collapsed earlier this week.

Protesters last month destroyed US$2 million of earth-moving equipment at the Minas Conga project, which is being developed by Newmont and partner Cia de Minas Buenaventura SAA, which owns 44% of Newmont’s neighboring Yanacocha mine.

Humala, a former army rebel, was elected in June on pledges to raise mining royalties and tighten state control over natural resources. A windfall tax decreed in September seeks to raise income sixfold to PS3 billion a year to fund social spending.

“Mining hasn’t complied with its social role of attending communities, and that abuse has generated a climate of distrust,” Humala said yesterday at a conference in Lima. “That climate divides us between gold or water, and we need to solve that.”

Nov 25 (Bloomberg)