SUSTAINABLE MINING

Anglo American says Peru water issue is solved

Anglo American says it has won community support for its water plan, a crucial requirement before it could begin construction of its $3bn Quellaveco copper project

Posted: Tuesday , 10 Jul 2012

LIMA (Reuters) - 

Anglo American hopes to begin construction of its $3 billion Quellaveco copper project in Peru soon and has won crucial community support for its water plan, the global mining company said on Mon day.

Luis Marchese, Anglo American's country manager for Peru, said the company is now waiting for construction permits from President Ollanta Humala's government.

Humala has encouraged companies to move ahead with a $50 billion pipeline of mining projects, but has had limited success overcoming disputes nationwide over the spoils of natural resources.

Quellaveco would produce 220,000 tonnes of the red metal per year, about a fifth of Peru's 2011 copper output. The project's environmental impact study was approved years ago by the government.

A series of accords, including the crucial issue of water access, has been reached with the local community, Marchese said. The miner still needs to reach a deal on contributions to the local area for social and other programs.

"We are in the dialogue process ... we are seeking the relevant permits and hope these can be obtained as soon as possible," Marchese told Reuters.

If construction starts on Quellevaco it would mark a rare bright spot in Peru's mining sector, which has been roiled by opposition led by local environmental and political groups for months. Poverty is still widespread in provinces where most mines are built and many locals complain of being left behind by the country's decade-long economic boom.

The government called in Roman Catholic leaders to start a new round of mediation o n M onday to end eight months of protests against Newmont Mining's proposed $5 billion Conga gold mine.

Protests against the project, the biggest in Peruvian history, turned deadly last week and have prompted calls for Humala to fire his prime minister and interior minister for leading a harsh crackdown.

Meanwhile, Humala's environment minister, Manuel Pulgar Vidal, said o n M onday the government would lift a freeze on bank accounts of the municipality of Espinar, in the southern region of Cusco.

The government froze the accounts in May over worries that the town's mayor was using public money to finance protests against Xstrata's $1.5 billion Antapaccay copper project, slated to open next month. Humala's government is trying to broker a deal between the town and the miner over voluntary financial contributions Xstrata makes to the municipal budget.

Water is often a source of conflict in the world's No. 2 copper producer. Farmers fear companies will pollute alpine lakes or use up scarce water resources they need for their crops.

Official data shows at least 15 people have died during Humala's term in protests over natural resources, and 174 were killed in similar circumstances from 2006 to 2011 on the watch of his predecessor, Alan Garcia.

The government suspended civil liberties in northern Cajamarca, near Newmont's Conga project, last week after clashes between protesters and police turned deadly. Critics said the government was too quick to give up on mediation and resort to force.

Anglo American hopes to begin construction later this year of Quellaveco, located in the southern region of Moquegua, Marchese said. Construction will take 44 months.

"We are maintaining our start date," he said. "We hope to have good news soon."

Anglo American operates the Collahuasi mine in neighbouring Chile, the world's top copper producer, with Xstrata. It is also trying to settle a multimillion dollar dispute with Chile's state-run Codelco.

© Thomson Reuters 2012 All rights reserved