The world's number two gold producer, Newmont Mining (NYSE: NEM), expects to invest $150 million on its $4.8 billion gold-copper Conga project in Peru this year, but said it won't go ahead without community support, reports BNAmericas (subs. required).
The article quotes CFO, Russell Ball, saying the company plans to spend $80 million in equipment, $40 million in reservoir construction and nearly $30 million in community and social-related issues.
Last year was not an easy one for Newmont. Production troubles, labour issues and political problems in Peru and Indonesia hit the miner. On top of that, global demand for copper remained weak due to the prevailing frail economic environment, which —in turn— didn’t let prices rise and caused the cost of gold production to soar.
In the first nine months of the fiscal year, the company reported lower production figures for both copper and gold. Attributable gold production stood at 3.73 million ounces, down from 3.87 million ounces over the same period last year. Attributable copper production was 108 million pounds, down from 152 million pounds during the first nine months of 2011.
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 all through last year, with Peru’s government hiring international consultants to report on report on the viability of the water strategy proposed for the Cajamarca region, where the project is located.
Minas Conga is being developed by Minera Yanacocha, of which Newmont Mining, the world's number two gold producer, holds a 51.35% interest and Compañía de Minas Buenaventura a 43.65%.
In 2013 Newmont said it would continue to follow its "water first approach" announced in August last year. This means it will focus on the construction of four reservoirs it agreed to build in the Cajamarca region.
The contentious Conga is set to begin production in early 2015, but it continues to be on hold until at least the end of 2013. It is capable of producing up to 350,000 ounces of gold and 120 million pounds of copper per annum with a 19-year life of mine.
Conga was designed basically as an extension of Buenaventura's nearby Yanacocha, which is Latin America's largest gold mine and it is approaching the end of its life.
(Image of the 2011 protests against Conga from archives)