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Peru urges Newmont to improve water plan for $4.8bn Conga mine

The Peruvian government says Newmont Mining should consider revising the environmental plan for its $4.8 billion Conga gold mine, which has run into stiff opposition from locals because they fear it would displace a string of alpine lakes.

LIMA (Reuters) - 

 Peru urged U.S.-based Newmont Mining Corp on Friday to improve the environmental plan for its $4.8 billion Conga gold mine, which community groups oppose because they fear it would displace a string of alpine lakes.

 Environment Minister Ricardo Giesecke said Newmont (NEM.N) should consider revising the project's environmental impact plan, even though it was approved a year ago during the term in office of then-President Alan Garcia.

 The project, which would mark the biggest investment in the history of Peruvian mining, has run into stiff opposition and local political leaders have protested to demand the company abandon it.

 President Ollanta Humala's government has sought to mediate the conflict and has said it wants to see the mine built. Conga would generate hundreds of millions of dollars in new taxes and royalties for the government.

 "I wouldn't say the environmental plan is incomplete, but rather imperfect," Giesecke said on RPP radio. "Let's not be mistaken, the main part of the mine would be underneath where one of the lakes sits."

 He said the miner and its Peruvian partner, precious metals miner Buenaventura (BVN.N), should try to find new ways to keep the lakes intact.

 "Getting rid of the lakes would be like dynamiting the glaciers in the Andes, we'd be creating a problem that impacts the ecosystem," Giesecke said.

 "I'm sure the miner has the resources, scientists and technology to quickly reevaluate its plan."

 Buenaventura's Chief Executive Roque Benavides said it would "seem absurd" to revise an environmental plan that already had been approved.

 Newmont officials did not comment on Giesecke's remarks, but said the environmental plan for the mine was done according to rigorous standards and that four water reservoirs will be built to replace the existing lakes.

 They added that they resumed work on Conga after temporarily evacuating some workers and stopping earth-moving activity on Thursday over worries protesters would invade the site.

 At least 1,000 residents gathered on Thursday in Pampa Verde, about 12 miles (20 km) down the road from the Conga site, to voice opposition to the mine but there were no reports by police of any clashes in the area.

 Community groups are planning a much larger protest against the project in the region of Cajamarca next Wednesday.

 CALL FOR DIALOGUE

 Humala, who campaigned on promises to calm debilitating social and environmental conflicts over natural resources that hobbled Garcia's term, said more dialogue was needed.

 "We need to resolve social conflicts," Humala told reporters on Friday. "I think this can be done through dialogue."

 Speaking in general terms about hundreds of disputes nationwide, Humala also blamed regional and municipal politicians for fomenting conflicts over natural resources.

 "People with low approval ratings or facing re-elections will raise any flag just to safeguard their political futures, but this comes at the cost of generating and deepening conflicts," Humala said.

 Three months into his term, Humala has temporarily settled a vexing conflict over one of Southern Copper's (SCCO.N) mining projects. [ID:nN1E79109N]

 And despite a lingering strike at Freeport-McMoRan's (FCX.N) Cerro Verde copper mine, Humala has won the support of Peru's largest labor confederation, which has stopped issuing threats for general strikes like those that dogged Garcia.

 But the Conga project is his biggest challenge yet and -- with an investment equivalent to 3.6 percent of gross domestic product -- is so large that a failure to see it open could frustrate the business community.

 A third of Peruvians live in poverty and Humala has said including the poor in the country's decade-long economic boom would diminish social conflicts, improving the business climate.

 At a conference on growth and social inclusion in Lima on Friday, Standard & Poor's analyst Sebastian Briozzo said Peru might enjoy higher credit ratings if it sharply cut its poverty rate. S&P raised Peru one notch in August to 'BBB', the second-lowest investment grade rating.

 "The economy has come a long long way, but to move to significantly higher levels more political predictability is needed, which is directly linked to social improvements, better income distribution and poverty reduction," Briozzo said.

  (Reporting by Marco Aquino, Terry Wade and Omar Mariluz; Editing by Dale Hudson and David Gregorio)