Peru declares state of emergency over Cajamarca gold mine protests

Reuters reports Peruvian President Ollanta Humala declared a state of emergency late on Sunday banning assembly and giving police power of arrest without warrant in an effort to quell protests against Newmont Mining's Conga gold mine that have caused havoc across the region of Cajamarca.

Over the 11 days of protests, boulders were used to block exits from the regional capital of more than 200,000 inhabitants, schools, hospitals and business were closed and dozens injured in clashes with police. Newmont last week suspended construction of the $4.8 billion project.

Protestors, led by Cajamarca's Maoist governor Gregorio Santos, say Conga will destroy the environment by transforming four high Andean lakes into reservoirs for mining operations. Santos, called Humala's announcement an "unnecessary provocation" according to a report by AP.

Reuters quotes from Ollanta's nationwide address: "Every possible means has been exhausted to establish dialogue and resolve the conflict democratically, but the intransigence of local and regional leaders has been exposed – not even the most basic agreements could be reached to ensure social peace and the reestablishment of public services."

Reuters reported earlier Sunday the blockades around the city had started to cause shortages of basic goods and quotes regional government spokesman Segundo Mata: "The main access routes have been cleared after police went in and opened up the roads. There's access for vehicles, the situation has got back to normal and vehicles carrying fuel, food and tourists are passing."

At least 200 communities nationwide in Peru have organized to stop mining or oil projects, usually over environmental concerns or to demand direct economic benefits in rural towns. reported last week on the unrest and on the formation of the 'Front for the Defence of the Interests of Cajamarca'. Read more.

Conga has gold deposits worth about $15 billion at current prices and would be the biggest investment ever in Peru mining. It is a crucial test for newly installed Humala who has on many occasions publicly backed the project. Royalties and taxes to the government from Conga, which would also produce copper, could total $800 million per year and operation was scheduled to start in 2014.

In October, Newmont (NYSE:NEM) was forced to briefly shut down nearby Yanacocha, a joint venture with South American precious metals company Buenaventura over the Conga protests. Yanacocha represents almost 25% of Newmont’s total daily gold output and is the biggest gold mine in South America.

In a statement released last week Denver-based Newmont CEO Richard O'Brien, said that if Conga has to be shelved, the company will reprioritize and reallocate capital to alternatives in Nevada, Canada, Ghana, Indonesia and Suriname.