POLITICAL ECONOMY

Newmont shows willingness to improve Conga gold project

Peru's government said on Monday US-based Newmont Mining is willing to improve the environmental mitigation plan for its proposed $4.8 billion Conga project as it seeks to overcome opposition to the mine.

LIMA (Reuters)  - 

Newmont Mining has shown its "willingness" to improve the environmental mitigation plan for its proposed gold mine known as Conga, Peru's government said on Monday, as it seeks to overcome opposition to the mine.

Mines and Energy Minister Jorge Merino said he would confer with officials from U.S.-based Newmont to define how the mitigation plan would be altered after a team of independent environmental auditors recommended a series of changes that could increase the cost of the controversial project, now estimated at $4.8 billion.

"We are going to sit down with them. They've said they are evaluating the proposed measures recommended by the auditors, but I think there's a good willingness on their part," Merino said on RPP radio.

Over the weekend, Carlos Santa Cruz, Newmont's chief for South America, said the company would carry out "technical and economic evaluations" of the auditors' recommendations, which called for the miner to preserve two of four alpine lakes that would be displaced by the mine and replaced with reservoirs.

President Ollanta Humala on Friday urged community activists to stop protesting against the stalled mine's construction and said the government would make sure the company adheres to strict social, environmental and labor goals.

His comments to end a months-long impasse came two days after the auditors encouraged the company to build larger reservoirs to guarantee more water supplies.

Newmont's plans fueled protests in the northern Cajamarca region late last year as some townspeople feared the most expensive mine ever attempted in Peru would leave local farmers without sufficient water supplies and cause pollution. The mine's construction has been halted since November.

The leaders of the protests - Gregorio Santos, who is the president of the region of Cajamarca, and Wilfredo Saavedra, who runs an environmental group - have said the Conga project isn't viable and have frowned on the auditors' recommendations.

Some of the protesters' arguments against the mine were undercut by the report from the auditors - who said water in the lakes is unfit for human or animal consumption because it is naturally toxic.

The auditors said the reservoirs would provide year-round water supplies to towns that currently suffer during the dry season, but encouraged Newmont to increase the storage capacity of the reservoirs to provide even more water.

STATE'S TOOLS

On Monday, Prime Minister Oscar Valdes was asked if the central government would impose the country's largest ever mining investment on community groups in Cajamarca who say they are opposed to the mine.

"The president of Cajamarca will have to understand that he needs to ensure development for his people," he told reporters. "We favor dialogue, but the state also has tools to make things happen."

Peru's Constitutional Tribunal has ruled that a regional ordinance Santos passed that said the mine could not be built was unconstitutional and on Friday public prosecutors opened an inquiry against him over allegedly using public funds to finance anti-Conga protests.

Police have detained Saavedra at least twice amid protests that blocked roads and later released him. A lawyer, Saavedra spent a decade in jail for belonging to the Marxist insurgency group Tupac Amaru. He later reinvented himself as an environmentalist.

Santos and Saavedra have at times seemed to criticize Humala, a former leftist, for drifting too far to the right since taking office in July in Peru, where rural communities have long complained about not seeing the fruits of the country's vast mining sector. A third of Peruvians live in poverty.

"The fight in Cajamarca is political. What we are asking for is a change in the extractive economic model backed by Humala," Santos said in Sunday's El Comercio newspaper.

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