MAC: Mines and Communities

Dancing the Conga in Peru

Published by MAC on 2011-12-05
Source: AP, Reuters, AFP, Mining.com (2011-12-02)

Jose de Echave resigns as vice-minister of the Environment

“Dancing to the tune of the Conga” has been the headline catchphrase for media in Peru over the past week. President Humala has changed his tune (and dance) from saying he would "defend water over gold" during his presidential campaign a few months ago in Cajamarca, to claiming Peruvians can have both...

In Lima, the conflict caused the resignation of vice-minister of the Environment (and one of MAC´s founders and long-time contributors) Jose de Echave, who said the government "lacks an adequate strategy for dealing with social conflict." See earlier post at: Peru: The Minister of Environment is a Caricature

In Cajamarca, where after almost two decades of gold mining by Minera Yanacocha people know all too well the impacts of large scale mining, they are standing firm in choosing water over gold.

Previous coverage on MAC: Anti mining protests in Ancash, Apurímac and Cajamarca, Perú

ESPAÑOL

Peru official resigns amid mining protests

By Carla Salazar

Associated Press (AP)

29 November 2011

A key official in Peru's Environment Ministry resigned Monday over the government's handling of mounting protests against mining projects by highlands peasants who fear for their water supplies.

Protest against Newmont's proposed Conga gold mine, near the Cortada lagoon
Protest against Newmont's proposed Conga gold mine,
near the Cortada lagoon. Source: Reuters

Jose de Echave told The Associated Press that he quit the job of deputy minister for environmental management because the government "lacks an adequate strategy for dealing with social conflict."

A former director of one of Peru's leading environmental groups, CooperAccion, de Echave had been a key player in negotiations with peasants whose protests have mounted in recent weeks against mining projects, the lifeblood of Peru's export-driven economy.

Such projects account for 61 percent of the South American nation's exports. But peasants who live near them complain of a lack of adequate oversight to ensure they do not contaminate or diminish water supplies.

The biggest such project being challenged is the $4.8 billion Conga gold and copper mine in the northern state of Cajamarca, an outgrowth of Latin America's biggest gold mine, Yanacocha.

U.S.-based Newmont Mining Corp., which owns a majority of the venture, said it suspended construction at the mine, which is due to begin operation in 2015, for a fourth day on Monday due to continuing protests and vandalism.

Cajamarca state's president and the mayors of surrounding municipalities have been leading protests against the mine since last month. They say its environmental impact study is shallow and are demanding it be re-evaluated.

An 11-page Environment Ministry study completed last week urges modifications to the project to ensure water sources are protected, especially regarding the replacement of four highlands lakes by reservoirs, according to the IDL-Reporteros online news organization, which obtained a copy.

Environment Minister Ricardo Giesecke said in media interviews after the document was leaked that its conclusions do not amount to a rejection of the mine but rather guidelines for improving it.

While not directly criticizing his former boss, de Echave said he was unhappy with the decision of Peruvian President Ollanta Humala to put the chief Cabinet minister in charge of environmental impact studies affecting the mining industry.

Activists say that will further emasculate the Environment Ministry, which already defers to the Mining Ministry on such matters.

Carlos Monge, Latin America coordinator for the New York-based watchdog Revenue Watch Institute, has said he believes the change will allow the government to ensure easy approval of more than $40 billion in mining investments lined up before Humala's June election.


Peru miners fear Conga-style protests could spread

By Marco Aquino

Reuters

2 December 2011

CUSCO, Peru - Peru's top miners and economic policy makers urged the government on Thursday to defend the crucial mining sector after violent protests halted work on the country's largest-ever mining investment.

Gathered in the Andes for an annual summit, business and policy leaders urged leftist President Ollanta Humala to be firm with protesters or risk losing some $50 billion in mining and oil investments private firms have pledged for the next decade.

"This is not the best signal," Central Bank President Julio Velarde told reporters two days after the government asked Newmont Mining to stop construction work on the $4.8 billion Conga mine to buy time for dialogue with protesters.

The Conga impasse has become the biggest test yet for Humala, who is trying to govern as a centrist. He campaigned on promises to stand up for the rural poor but has more recently committed to providing stability for investors.

Thirty people have been injured in clashes between police and townspeople from the northern region of Cajamarca who want Conga canceled because they say the giant mine would replace a string of alpine lakes with artificial reservoirs.

"The risk is if this continues or expands," said Pedro Martinez, president of the national mining association.

There are some 200 social conflicts in Peru, according to the country's human rights agency, and many have been directed against the mining sector, which is responsible for 60 percent of the country's exports.

Miners have raked in record profits in recent years due to high metals prices. They have also frequently been the target of protests, mainly from the one-in-three poor Peruvians who have not benefited from a decade-long economic boom.

Humala has said he needs mining to fund new social programs but that he wants to ensure private companies adhere to rigorous social and environmental standards and take part in the country's boom.

"Foregoing major projects means we are turning off one of our engines of growth. Peru needs to have all its engines running in order to continue growing at high rates and better distribute wealth," said former Finance Minister Luis Carranza, often seen as the architect of Peru's economic boom.

Peru is the world's No. 2 copper and silver producer and the sixth largest gold producer. Its economy has grown more than 6 percent on average for the past 10 years.


Peru protesters dig in heels after Newmont mine halted

By Omar Mariluz

Reuters

30 November 2011

Opponents of Newmont Mining's $4.8 billion Conga project refused to end their rallies on Wednesday, saying Peru must permanently cancel the proposed mine after temporarily halting work on it to avert violence.

Local political leaders want President Ollanta Humala to stop the gold mine from being built, saying the biggest mining investment in Peruvian history would replace a string of alpine lakes with artificial reservoirs and cause pollution.

U.S.-based Newmont and the government late on Tuesday suspended construction work for the time being after 30 people were injured when police fired rubber bullets, tear gas and at least two live rounds at protesters. The government urged both sides to negotiate an accord but faced resistance.

"We demand that the government issue a legal decree cancelling the project," Wilfredo Saavedra of the Environmental Defense Front of Cajamarca told Reuters.

"We will continue our protest. We want to see the miner pull its machinery out of the area," he said.

Gregorio Santos, who is the president of the region of Cajamarca and has helped lead protests now in their seventh straight day, said the mine must be scrapped.

The Conga impasse has become the biggest test yet for Humala, a left-wing former military officer who reinvented himself as a moderate to win election in June.

If the mine is eventually built, it would solidify Humala's reputation as a friend of big business who can ensure stability for $50 billion of planned mining and oil projects.

But if the project is stopped it might embolden left-wing groups who say Humala has drifted too far to the right.

"The radical left feels like it has gained ground in Cajamarca," lawmaker Luis Iberico said on local TV.

Local media have accused Saavedra, a lawyer who spent a decade in prison for belonging to the left-wing Tupac Amaru insurgency, of exploiting the issue to further a radical agenda. Saavedra has said his past shouldn't be used against him.

Pressure from Labor Confederation

Newmont says its environmental study for the project, which was approved a year ago by the previous government, met the highest standards available and was exhaustively researched with lots of community participation.

Humala has tried to govern from the center and neutralize a polarized political environment by helping the poor while promoting private investment.

He campaigned on promises to steer more social spending to rural towns to help defuse persistent social conflicts over natural resources while assuring companies they could move ahead with billions of dollars in mining and oil projects in Peru, one of the world's top mineral exporters.

The conflicts often turned violent during the term of Humala's predecessor, Alan Garcia, when 195 people were killed in clashes with police, according to Peru's human rights agency. So far, nobody has been killed on Humala's watch.

The Conga project, which Newmont owns with Peruvian precious metals miner Buenaventura, would produce 580,000 to 680,000 ounces of gold a year and open in 2014. It has gold deposits worth around $15 billion at current prices and sits 13,800 feet (4,200 metres) high in the Andes, about 600 miles (990 km) north of Lima.

Some 5,000 members of the CGTP, Peru's main labor confederation, marched in Lima on Wednesday to demand the government require a new environmental study for the Conga project with more community input before the project could go forward.

They also want Humala to cancel a $850 million contract that global logistics firm APM Terminals has to build a sprawling new port complex in Lima.

The union group says a public authority or a public-private partnership should be tasked with building and running the new port terminal. The CGTP has publicly supported Humala but has started to turn against him.

"President Humala still has a chance to react in time and get back on the correct path," said Mario Huaman, head of the left-wing confederation. "We demand that state-owned companies run strategic sectors."

(Writing by Terry Wade; Editing by Eric Beech)


Protests go on after Peru mine project suspended

AFP

30 November 2011

LIMA - Protesters in Peru on Wednesday called for the "definitive cancelation" of a $4.8-billion gold mining project a day after violent clashes prompted a suspension of operations at the US-run mine.

Days of violent protests forced the suspension of the country's most ambitious mining project, operated by US mining giant Newmont in mountainous northern Peru.

Protests blocking roads in Cajamarca department persisted Wednesday as local residents and environmental activists sought government guarantees that the project would not go ahead.

"We want the definitive cancelation of this project and expect a government decree that declares it non-viable," said the department chief Gregorio Santos.

A document released Tuesday by US-Peruvian consortium Yanacocha, run by Newmont and local partner Buenaventura, announced the suspension of the so-called Conga Project, which President Ollanta Humala had backed, and said the company was committed to entering new negotiations and seeking the "recovery of trust."

"But there has been no official government document on the action taken," Santos said.

"The Yanacocha firm does not rule Peru; it is the state which must express its will through a document in black and white," he said, stressing that after a government ruling there should be ample opportunity for debate.

Protests throughout the Cajamarca department have been boiling over for a week, with a mob setting fire to a local warehouse and the main airport being forced to close.

At least 10 people were injured on Tuesday's sixth day of protests, which have brought the department to a near standstill.

Wilfredo Saavedra, who heads the Environmental Defense Front of Cajamarca which called the indefinite strike one week ago, said the work stoppage will continue.

"The Yanacocha statement is not convincing, because it doesn't change the critical situation that we're in," Saavedra said, as he called for the removal of the company's mining equipment and more police reinforcements deployed in the region to reduce tensions.

The open-pit Conga Project involves moving water from four lakes high in the Andes into company-built reservoirs.

Protesters say the reservoirs do not adequately replace the lakes, which provide water for the region's residents, agriculture and livestock.


Yanacocha Suspends Construction at the Conga Project in Agreement with the Government of Peru

Buenaventura Press Release

30 November 2011

LIMA, Peru - Compania de Minas Buenaventura S.A.A., Peru's largest publicly-traded precious metals mining company announced today that Minera Yanacocha S.R.L. (Peruvian gold producer held by Buenaventura 43.65%, Newmont 51.35% and the IFC 5%), in agreement with the government of Peru, has suspended construction activities at the Conga project (or the "Project") in Peru for the safety of employees and community members. During the past month, the Conga project has experienced intermittent work stoppages as a result of ongoing protests in the region. Beginning in October 2011, anti-mining activists expressed concerns about perceived impacts of the Project on the local water supply. The Conga Environmental Impact Assessment was approved in 2010 after extensive review by the Peruvian government, which included significant engagement and consultation with local communities.

Buenaventura considers this a prudent decision in order to reestablish law and order in the Cajamarca Region that is under social unrest. The Company believed that Conga is a feasible mineral deposit and that the well being of the people in Cajamarca moving forward will depend on the development of this and other mineral deposits in the Region. Buenaventura believes that Yanacocha should continue working hard to develop the social acceptance of the project.

Mr. Roque Benavides, Buenaventura's Chief Executive Officer, said: "Suspending construction activities in Conga does not mean that we do not believe in the project. We think this is the best thing we can do for the people in Cajamarca and for the country. Buenaventura is committed to Peru and will keep on working enthusiastically to develop new projects with a better social and environmental understanding in Peru."

Company Description

Compania de Minas Buenaventura S.A.A. is Peru's largest, publicly-traded precious metals company and a major holder of mining rights in Peru. The Company is engaged in the mining, processing, development and exploration of gold and silver and other metals via wholly owned mines as well as through its participation in joint exploration projects.

Buenaventura currently operates several mines in Peru (Orcopampa, La Zanja, Uchucchacua, Antapite, Julcani and Recuperada), has controlling interest in two mining companies (CEDIMIN and El Brocal), as well as a minority interest in several other mining companies in Peru. The Company owns 43.65% in Minera Yanacocha S.R.L. (a partnership with Newmont Mining Corporation), an important precious metal producer, and 19.3% in Sociedad Minera Cerro Verde, an important Peruvian copper producer.


Peru mining protest closes airport

AFP

28 November 2011

LIMA - Long-running protests against plans to open a major gold and copper mine controlled by US-based Newmont Mining Corporation forced the closure of a local airport in northern Peru.

The airport of Cajamarca, a city of 220,000, was "temporarily closed to avoid confrontations" with some 500 protesters who had planned to take it over, airport chief Christian Rocha said. About a hundred passengers headed for Lima were left stranded.

Police officers -- some 100 of them -- were deployed around the airport.

Several major roads in Cajamarca department were cut off by protesters' barricades on the fifth consecutive day of the strike by union workers, farmers and environmentalists against Newmont's $4.8-billion Conga Project.

The open-pit project, located at 3,700 meters (12,140 feet) above the sea level, involves moving the water from four lakes high in the mountains into reservoirs the company would build.

Locals say the reservoirs do not adequately replace the lakes, which also provide ground water for agriculture and for raising livestock. The issue is of particular concern in Cajamarca, where a drought has forced water rationing for three months.

The conflict is seen as a crucial test for newly elected leftist President Ollanta Humala as he struggles to balance environmental concerns and the rights of local communities with the demands of the mining industry, the engine of Peru's economic growth in recent years.

Local officials, who support the strike, have repeatedly invited Humala to visit Cajamarca, but only Prime Minister Salomon Lerner has so far agreed to make the trip "if the conditions are ripe for and local authorities and the regional government allow it."

Cajamarca, known as the city where the last Inca emperor filled a room with gold to pay ransom for his release from Spanish conquistadores, is located 870 kilometers (550 miles) north-east of Lima. The Spaniards kept the gold and killed the Inca emperor.


Peru's highlands conundrum: gold versus water

By Frank Bajak

Associated Press (AP)

26 November 2011

LIMA Peru's biggest mining investment is under threat and government social welfare programs with it as highlands peasants step up protests against a gold-and-copper mine they fear could taint and diminish their water supply.

About 400 protesters tried to enter the mine's grounds Friday and some hurled rocks at police, who responded with tear gas and shotgun blasts, wounding one protester in the leg, Interior Minister Oscar Valdes told a Lima TV station.

Opposition to the $4.8 billion project, an extension of the Yanacocha open-pit gold mine that is Latin America's largest, poses the first major challenge to President Ollanta Humala's leadership.

He won office in June after promising the very people now mobilizing against Conga, whose 51 percent owner is Denver-based Newmont Mining Corp., that he would put clean water above mineral extraction.

He told the residents of the northern state of Cajamarca, one of Peru's most heavily mined, during a May campaign swing that he would ensure their water supply "because you don't drink gold."

"You don't eat gold."

But as protests began to rattle the Conga project last month, with heavy equipment vandalized, roads blocked and work temporarily halted, Humala was modifying the message.

The choice, he now said, need not be water or gold. Peruvians can have both.

After thousands joined protests in Cajamarca against Conga on Thursday, Humala told a gathering of peasant organizations in the capital of Lima: "You have my word. The state will guarantee water. All our children must have water."

Work at Conga was suspended for a third straight day Friday as protests continued, and Valdes said the wounded man was among two protesters arrested. Newmont spokesman Omar Jabara said one Conga worker's truck was badly damaged Friday in a hamlet on the mine's periphery.

Peru's Environment Ministry began last month to review the project - "some critical aspects of it," said Fausto Roncal, the ministry official in charge of evaluating environmental impact studies. He said its report would soon be delivered to Peru's chief Cabinet minister.

But investigative journalist Gustavo Gorriti reported Friday night on the IDL-Reporteros website that the 11-page report was delivered Thursday and raises "serious environmental objections." He said it recommends a "detailed hydrological and hydrogeological analysis" of the impact of the mine's two pits on an aquifer not adequately studied by Yanacocha.

Neither Roncal nor other Environment Ministry officials could immediately be reached for comment.

Once a fiery leftist, Humala slid toward the center to win the presidency of a nation that earns 61 percent of export revenues from mining. A boom in metals prices has fueled 7 percent annual economic growth over the past decade, and Humala inherited a nation with more than $40 billion in mining investment lined up.

But little of the mining wealth has reached the highlands where most mines are located and where Humala won office promising pensions for the elderly poor, a higher minimum wage, more education and health spending, rural electrification and sanitation.

To help finance those programs, Humala got the mining industry to agree to a windfall tax that the government says will reap more than $1 billion a year.

Conga mining is scheduled to start in 2015 and is projected to yield 11.6 million ounces of gold ($20 billion at today's prices) and 3.1 billion pounds of copper ($10 billion at today's prices) over two decades.

If the project is scratched, investor confidence could sag and the underpinning of Humala's social agenda collapse.

"This is a trial balloon for the pact Humala's government made with the mining impresarios," said Julia Cuadros, executive director of Cooperaccion, a nonprofit organization that promotes sustainable development.

Yet local opposition to the project is stiff, and led by elected officials. Critics say an environmental impact study for Conga that was approved last year doesn't adequately address the potential downstream damage of gouging open pits into mountaintops in what is likely an important aquifer.

It "will eliminate the principal mountain lakes of the region, which are the last that remain that can supply urban expansion in the coming years" Cajamarca's regional president, Gregorio Santos, told The Associated Press.

Not just the 7,000 or so immediate inhabitants will be affected, he said, but tens of thousands in valleys below. At risk, Santos added, are "probable water supply sources for forestation and sustainable agriculture programs, and also for fish farming."

Four man-made reservoirs will replace the four small mountain lakes to be displaced by the 8-square-mile (2,000-hectare) project at the headwaters of two rivers. The biggest reservoir will be used to help extract metal from rock crushed and laced with cyanide before settling it on barriers to prevent ground contamination.

The other three, said Newmont's Jabara, will more than double stored water for surrounding communities.

"We're doing everything that we can to make sure this project is environmentally sound," Jabara said. That includes a willingness to modify the environmental impact. "At the end of the day a project can't be successful if it ends up adversely affecting water supplies."

But environmentalists say that's exactly what happened with the Yanacocha mine, which began operating in 1993 and produced 3 million ounces of gold in its best year.

Peru's relatively lax clean-water standards permitted it to contaminate waterways, they say, while the regulatory process is biased in favor of miners because the Mining Ministry has the last word on environmental impact studies for mining projects.

"That doesn't happen in Chile, Colombia or Ecuador," said Manuel Glave, a respected Lima economist.

Peru currently has more than 60 disputes over the alleged detrimental impact of mining on water supplies, according to the national ombudsman's office.

The rancor has put an end to some projects.

Former President Alan Garcia's government, which approved Conga and was bullish on mining, nevertheless halted the Tia Maria project of Mexican-owned Southern Copper Corp. in April after three protesters died in clashes with police.

But Garcia's government also often sought the arrest of anti-mining and other protest leaders.

Humala may be similarly inclined. A top lawyer in the Interior Ministry, Julio Talledo, told the AP it has asked prosecutors to file criminal charges against Gregorio Santos and four local leaders who have led protests against Conga. The charges include "hindering the functioning of public services" and carry prison terms of at least two years. Prosecutors have yet to act on them.

Conga's credibility issues owe to past behavior of the Yanacocha consortium, which includes the Peruvian company Buenaventura Mining Co. and the International Finance Corporation, with a 5 percent stake, according to analysts.

In 2000, hundreds were sickened when a Yanacocha contractor spilled 335 pounds (150 kilograms) of mercury, a byproduct of the mine.

The consortium later provoked protests with exploratory drilling at the nearby Cerro Quilish. It shelved that project after complaints it would directly affect the water of the regional capital of 350,000 people.

More broadly, resistance to mining may owe more to the fact that it employs relatively few Peruvians, just 126,000 out of a population of more than 29 million.

Conga has 6,800 workers, mostly locals who live in wind-swept mountains dominated by subsistence farmers where running water, electricity, decent schools and health care have been in short supply.

The Yanacocha consortium is sponsoring projects in the mining zone that it says will address those deficiencies.

Yanachocha paid a total of $292 million in income taxes and royalties last year and made voluntary contributions of $29 million - not including social investments, Jabara said.

Associated Press writers Franklin Briceno and Martin Villena contributed to this report.


Demonstrators block city exits on day four of Peru gold mine protests

By Frik Els

Mining.com

27 November 2011

Latin American blogs reported on Sunday exit roads from the regional capital remained blocked and anger was mounting over Newmont Mining's proposed $4.8 billion Conga gold mine in northern Peru as protests entered its fourth day.

Schools and business had closed and police used teargas against marchers since protests began Thursday. Residents led by the Maoist president of the Cajamarca region, say Conga will destroy the environment by transforming four high Andean lakes into reservoirs for mining operations and on Saturday formed the ‘Front for the Defence of the Interests of Cajamarca'. Conga would be the biggest investment ever in Peru mining and is a crucial test for newly installed president Ollanta Humala (pictured) who has on many occasions publicly backed the project.

Terra reports on Saturday at a meeting attended by leaders from 13 provinces and 100 municipalities in Cajamarca, a city of 200,000, the ‘Front for the Defence of the Interests of Cajamarca' was created to fight the project which is close to South America's largest gold mine Yanacocha, also operated by Newmont.

A blogger for the Cajamarca Green Network has photos of the blockades and reports regional president Gregorio Santos has threatened more protests if President Humala does not personally visit the region.

There also appears to be some tension about Conga within the government - the environment minister this week issued a report that said two of the lakes could suffer permanent damage and suggested government monitoring over the 25-year mine life. Residents say the lakes also provide ground water for agriculture and for raising livestock. The LA Times reports royalties and taxes to the government from Conga, which would also produce copper, could total $800 million per year and operation is scheduled to start in 2014.

Environment and community leaders also did the rounds on Peruvian Sunday morning talk shows against the project. The Age reported on Friday one of the protesters carried signs that read: "Without gold you can live; without water you can die" and "The water belongs to the people, not the mining companies".

Nearly 500 years ago in Cajamarca the Spanish conquistador Francisco Pizarro captured the Inca emperor, Atahualpa, and as a ransom demanded a room full of gold and two rooms of silver. The Incas handed over the precious metals but Pizarro killed Atahualpa anyway. Reuters quoted on Friday Jorge Rimarachin, a lawmaker from Cajamarca: "Everybody in Cajamarca knows the history of Pizarro. It's very present in the minds of the people."

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 according to Reuters.

In October, Newmont was forced to briefly shut down 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.


Peruvian police break up protest at Newmont gold mine

By Teresa Cespedes

Reuters

26 November 2011

CAJAMARCA, Peru - Peruvian police fired tear gas on Friday to break up a protest at Newmont Mining Corp's proposed $4.8 billion Conga gold mine as the government tried to mediate a bitter environmental dispute over the project.

One of several hundred protesters was injured.

Environmental activists said they would keep protesting until President Ollanta Humala holds a town hall meeting to address their fears that the mine would hurt nearby water supplies.

"This project isn't viable," said the president of the region of Cajamarca, Gregorio Santos, who has led the protests.

Protesters and farmers say the mine would cause pollution and alter sources of irrigation water by replacing a string of alpine lakes with artificial reservoirs.

The central government has called the environmental plan for the project sound. The company said it was exhaustively researched and designed according to strict standards.

The plan was also approved by the previous government but the impasse over the project, which would be the biggest mining investment in Peruvian history and create thousands of jobs, has become a crucial test for Humala.

The leftist former army officer campaigned on promises to defuse persistent social conflicts over natural resources that have delayed billions of dollars in investments in Peru, which is one of the world's top minerals exporters.

Since taking office in July, he has tried to govern as a moderate who can help the rural poor while pleasing business.

But some longtime supporters complain he has moved too far to the right by saying he is in favor of the mine.

Others say the anti-mining sentiment he faces runs deep and cannot easily be mediated in a country where provinces have long felt ignored by the central government.

"Companies come here, take the gold and then go away - just like in colonial times. People feel cheated," said Jorge Rimarachin, a lawmaker from Cajamarca.

Incan Emporer

Nearly 500 years ago in Cajamarca the Spanish conquistador Francisco Pizarro captured the Incan emperor, Atahualpa, and as a ransom demanded a room full of gold and two rooms of silver.

The Incas handed over the precious metals but Pizarro killed Atahualpa anyway, Peruvian historians say. The room that held the gold is now part of a museum in Cajamarca.

"Everybody in Cajamarca knows the history of Pizarro. It's very present in the minds of the people," Rimarachin said.

To calm disputes over natural resources nationwide, Humala has started to roll out social programs and raised taxes on mining companies to spread the wealth from a decade-long economic boom to the one third of Peruvians mired in poverty.

Though Humala says he wants to steer more of the national budget toward rural provinces, a large chunk of Peru's mining tax revenues are controlled by regional governments that often end up hoarding cash because they lack the administrative capacity to spend it on residents - an institutional weakness that analysts say hurts support for new mines.

The Conga project, which Newmont owns with Peruvian precious metals miner Buenaventura, would produce 580,000 to 680,000 ounces of gold a year and open in 2014. It has gold deposits worth around $15 billion at current prices and sits 13,800 feet (4,200 metres) high in the Andes.

Nearby is Newmont's existing Yanacocha mine, which produced 1.5 million ounces of gold last year. It had a mercury spill in 2000 that still angers some local residents, though the company now runs extensive community development programs in the area.

Newmont has faced opposition to its expansion plans in the past. In 2004 it halted exploration to expand Yanacocha to include Cerro Quilish, a nearby mountain, because of community protests over water supplies. (Additional reporting by Terry Wade and Marco Aquino; writing by Terry Wade; Editing by Vicki Allen)

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