Main opponent of Newmont's gold project in Peru in prison

Main opponent of Newmont's gold project in Peru in prison

Protest at Conga mine, October 2013.

Peru’s Cajamarca region governor Gregorio Santos, who has led opposition to Newmont Mining's (NYSE:NEM), (TSX:NMC) $5 billion Conga copper and gold project, was ordered to jail for 14 months amid a corruption probe.

A federal judge authorized the detention Wednesday while prosecutors prepare their case, state news agency Andina reported (in Spanish).

Santos is suspected of having received bribes from companies in exchange for awarding 11 local public work contracts. If found guilty, he won’t be allowed to run for re-election in October, which would likely unlock mining investment in the region, such as the stalled Conga project.

The governor’s press advisor, Segundo Matta-Colunche, told Associated Press (in Spanish) that ever since Santos spoke up against Newmont’s proposed gold mine in 2011, the government began a campaign against him. This included 38 prosecution cases for various offenses, of which 35 have already been withdrawn for lack of evidence.

Main opponent of Newmont's gold project in Peru in prison

Gregorio Santos ordered to jail for 14 months amid a corruption probe.

The Conga project, located roughly 3,700 meters above sea level, was approved in 2010 by then-president Alan Garcia's government, and the current administration has continued to support it.

Originally scheduled to begin production next year, the mine will be developed in partnership with locals Buenaventura and Minera Yanacocha.

Conga was basically designed as an extension of Peru's Buenaventura's nearby Yanacocha mine. That is Latin America's largest gold mine and it is approaching the end of its life.

Newmont decided to halt Conga’s construction work in November 2011 after violent protests in the northern Peru region forced the government to declare a state of emergency.

Social pressure continued during 2012, with Peru’s government hiring international consultants to report on report on the viability of the water strategy proposed by the company and, eventually, ordering order a suspension of all work at the site, except for the construction of water reservoirs.

The project has the potential to generate up to 350,000 ounces of gold and 120 million pounds of copper a year, during its 19-year life. If it goes ahead it’d be the largest-ever single private investment in the South American country.