World number two gold producer, Newmont Mining Corp. (NYSE:NEM), will spend $440 million on the controversial Conga mine project in Peru over the next 18 months, about two-thirds less than the $1.5 billion initially budgeted, reports local newspaper Gestion.
In a presentation to investors on Wednesday, CEO Richard O'Brien said the decision was made due to the many delays caused by the Peruvian government and environmental reviews.
O'Brien said the company is still evaluating the future of the $4.8 billion gold project, if the modifications sought by the government after recommendations of an independent panel of experts prove to significantly affect its profitability.
The Conga mine project has faced strong opposition from residents of the gold-rich northern state of Cajamarca since the government approved its environmental impact study in October 2011. Some residents fear for their water supply, especially after the group of international experts hired by the government, concluded that Conga’s environmental impact statement (EIS) needed “substantive improvements”, including the expansion of a series of water reservoirs.
Newmont and Buenaventura, which together own 95% of the Conga mine project, had said they hope to begin production either in 2014 or 2015, generating between 155 and 235 million pounds of copper a year at the site, if it gets permission from the Peruvian government.
Construction was halted in November last year, after violent protests forced Peru’s government to declare a state of emergency in the area.