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Peru to resume talks on Newmont’s $4.8 billion Conga mine

Peru’s government is considering resuming talks with opponents of the $4.8 billion Minas Conga copper and gold mining project in the northern region of Cajamarca, Environment Minister, Manuel Pulgar Vidal, said in a TV interview on Sunday night.

The authority added the regional president of Cajamarca, Gregorio Santos, should participate in the talks, as he has been one of the most vocal adversaries of  the Conga project, leading the latest protests against it.

According to the minister, Catholic priests Miguel Cabrejos and Gaston Garatea will restart negotiations with all the parties involve with the controversial project, majority-owned by Newmont Mining Corp. (NYSE:NEM).

Minas Conga is being developed in the Cajamarca region of northern Peru 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%. The IFC owns the remaining stake.

Newmont had said it hoped 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 had proposed four high altitude lake reservoirs be substituted with artificial lakes, which triggered massive strikes and protests that ended up forcing Newmont to suspend the project in November last year and the Peru’s government to declare a state of emergency in the area.

Political minefield

The contentious Conga, which was to begin production in early 2015, was designed basically as an extension of the Peru’s Buenaventura’s nearby Yanacocha, Latin America’s largest gold mine, which is approaching the end of its life.

Conga 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.

The project is the largest ever single private investment in the country and has turned into a political minefield for President Ollanta Humala’s administration, with many in the opposition and within his own party calling for drastic changes to his handling of recent protests.

But negative reactions to mining projects are not unusual in Peru. Large-scale protests against exploration and extraction activities 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 the country $50 billion in future investment over the next decade.

Image: Protests in Cajamarca early this year. Courtesy of Aguamina.


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