Peru PM says Conga will get built, otherwise Newmont's compensation bill would be 'huge'

Peru's Prime Minister said on Tuesday Newmont Mining’s stalled Conga project will be developed as the government could end up with a "huge" compensation payment if the $4.8 billion mine does not go ahead.

Newmont stopped construction of the copper-gold project in November after violent protests in the poor Cajamarca region of northern Peru.

Business News Americas reports PM Óscar Valdés told daily La República:

We are faithful adherents of the agreements signed by the Peruvian government. People have fears so we are doing the survey [the review of the environmental impact study [EIS]] to dispel them. What if the company decides to go and sue Peru internationally? The compensation we would pay would be huge," the official was quoted as saying.

Valdés, who was elevated to the position after a cabinet shake-up prompted by the Conga crisis said earlier this month that he thought work on the project could restart by March.

In January Peruvian officials also announced a programme of social and infrastructure investments in Cajamarca aimed at winning over local protesters, led by Cajamarca’s Maoist governor Gregorio Santos. The protesters say Conga will destroy the environment by transforming four high Andean lakes into reservoirs for mining operations.

Fox Business reports a government review of the stalled project will focus on ensuring that water supplies are protected:

"The experts will be looking at water, as this is where there are the greatest number of doubts," Valdes said.

In December the government was forced to declare a state of emergency after 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.

Conga has gold deposits worth about $15 billion at current prices and would be the biggest investment ever in Peru mining.

Image by Georgios Kollidas / shows Miners on 5000 soles de oro 1985 banknote from Peru.