The team of three international environmental consultants hired by Peru’s government has recommended significant changes to Newmont’s hindered $4.8 billion copper-gold project, the Conga mine. But the government is saying its final decision won’t be determined solely by this or any study.
The long-awaited and twice postponed report, delivered yesterday, will be published online later today for greater transparency, said Peru’s environmental minister, Manuel Pulgar, in a press conference held Tuesday evening.
He added that the document was “highly technical” and that a simplified version would be made available after the whole paper is made public.
Pulgar emphasized that the report “will not determine the viability of Conga, as it is the government’s prerogative to make its own decision.”
The environmental, agriculture and mines ministers will study the study before reporting to a full cabinet meeting that will finally decide the fate of Peru's largest mining project, said Pulgar.
The consultants concluded the Conga’s environmental impact statement (EIS) had met required standards. However, they recommended a number of “substantive improvements”, including the expansion of a series of water reservoirs.
"This is not a political document and we hope it will help to find a solution to this conflict," said Rafael Fernández Rubio, one of the experts who reviewed the EIS.
"The report addresses the water issue in terms of quantity and quality. We have proposed our modifications and we think that having them applied to the project will bring substantial improvements," the expert added.
Good news for Newmont so far
Also yesterday, Peru's highest court, the Constitutional Tribunal, sided with Newmont (NYSE:NEM) by ruling against an ordinance from the regional government of Cajamarca, which had declared the Conga mining project ‘unviable’.
Tuesday’s ruling said Cajamarca’s government had exceeded its legislative powers, and said the region had no jurisdiction over regulations affecting medium and large mining projects, such as Conga.
Minas Conga is being developed by Minera Yanacocha, of which Newmont Mining holds a 51.35% interest and Compañía de Minas Buenaventura a 43.65%. The IFC owns the remaining stake.
Newmont has said it hopes to begin production either in 2014 or 2015, generating between 155 and 235 million tons of copper a year at the site, provided it gets permission from the Peruvian government.
The U.S.-based miner stopped construction in November last year, after violent protests forced Peru’s government to declare a state of emergency in the area.
More demonstrations are expected after today's announcement, which seems overall positive for Newmont. However, the protests and their political consequences could delay the project further even if Conga gets the green light.
Negative reactions to Newmont’s project are not unusual in Peru. Large-scale protests against mining have swept the country in recent years, making of social conflicts the main risk for investors in the local industry.
Peru’s extractive sector, which accounts for some 60% of the economy, is expected to bring Peru $50 billion in future investment over the next decade.