Reuters reports Peruvian President Ollanta Humala declared a state of emergency late on Sunday banning assembly and giving police power of arrest without warrant in an effort to quell protests against Newmont Mining’s Conga gold mine that have caused havoc across the region of Cajamarca.
Over the 11 days of protests, boulders were used to block exits from the regional capital of more than 200,000 inhabitants, schools, hospitals and business were closed and dozens injured in clashes with police. Newmont last week suspended construction of the $4.8 billion project.
Protestors, led by Cajamarca’s Maoist governor Gregorio Santos, say Conga will destroy the environment by transforming four high Andean lakes into reservoirs for mining operations. Santos, called Humala’s announcement an “unnecessary provocation” according to a report by AP.
Reuters quotes from Ollanta’s nationwide address: “Every possible means has been exhausted to establish dialogue and resolve the conflict democratically, but the intransigence of local and regional leaders has been exposed – not even the most basic agreements could be reached to ensure social peace and the reestablishment of public services.”
Reuters reported earlier Sunday the blockades around the city had started to cause shortages of basic goods and quotes regional government spokesman Segundo Mata: “The main access routes have been cleared after police went in and opened up the roads. There’s access for vehicles, the situation has got back to normal and vehicles carrying fuel, food and tourists are passing.”
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. MINING.com reported last week on the unrest and on the formation of the ‘Front for the Defence of the Interests of Cajamarca’. Read more.
Conga has gold deposits worth about $15 billion at current prices and would be the biggest investment ever in Peru mining. It is a crucial test for newly installed Humala who has on many occasions publicly backed the project. Royalties and taxes to the government from Conga, which would also produce copper, could total $800 million per year and operation was scheduled to start in 2014.
In October, Newmont (NYSE:NEM) was forced to briefly shut down nearby 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 and is the biggest gold mine in South America.
In a statement released last week Denver-based Newmont CEO Richard O’Brien, said that if Conga has to be shelved, the company will reprioritize and reallocate capital to alternatives in Nevada, Canada, Ghana, Indonesia and Suriname.
11 Comments
Erin
We all know that the mining corporations are in the sack with the Government so its just a matter of time before the powerful start a propaganda machine to make the locals look like the bad guys here.And we all know they have a legit greivience but corporate greed will prevail as it always does.And another native people will lose the basic resources on which they have depended for hundreds of years.Its an old story repeated over and over…..
flounder
Where does that $800 million in taxes per year figure come from? Seem ridiculously out of proportion to the other figures in the article. As an example, if Conga has $15 billion in gold, and say a 15 year life, for $1 billion a year in gold being removed, does that mean that the severance tax is 80%? I know that it said there is copper involved as well (and silver will be too, given that it is probably a porphyry), so we are talking about an ultimate value of Conga in excess of $15 billion, but if the copper is the bigger money maker, wouldn’t it be called a copper mine in the article?
MINING.com Editors
Thanks for your comments flounder.
The $800 million figure I got from the LA Times (http://lat.ms/uQXqLI) who attributes the sum to government officials.
Newmont themselves say $680 million in royalties and $2 billion in taxes: (http://www.newmont.com/sites/default/files/u87/Conga_FactSheet.pdf)
This surely can’t be the annual amount but if its over the 19 year life, then its on the low side again.
Reuters quotes Newmont’s Yanacocha officials as saying taxes will be $300 million from Conga. (http://bit.ly/u8GZb3)
Conga is expected 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) according to AP (http://apne.ws/tnZ7Oy). I could find no mention of silver at Conga.
As with so many things the answer seems dependent on who you ask. And of course, both Newmont and Humala bolster their arguments by overstating what will go into state coffers.
Fredquimbyminer
mining makes jobs for every trade. Stop you bellyache Erin, and toss your cell phone, turn off your electrc, and pitch your car, you like the products mines give, but fail to stop using its product…you cell phone and computer and tv would not exist if not for gold mines
jimmyboy
The mining here is all that keeps this country running. There are other small inversions in peru but the country needs the influx of the dollar to continue to grow. People here have never had things so good. they just don’t know when to keep there mouth shut.
Rociod
We should form leaders in AUTO-DESARROLLO in the communities of PERÚ. They need to get rid of the ASISTENCIALIST style that is not working anymore. Forming true volunters leaders that will guide the people to run their small business is and was always a good solutions to the problems,
Cedo27
I live in Cajamarca and this is disgusting they are destroying my homeland.
Juan Vera
Mlnlng is not synonym of destruction
aqpcad
I feel so sorry for my country “Perú”. Where does all the money go?, if we have a lot of investors, especially in mining industry, how can we find in our country a lot of poverty and bad life conditions. If your saw others countries how they spend their money and invest in improving education and work for the benefit of their population, you would feel the same.
Mark Harder
An important factor in an economy based on resource extraction is that the extra revenues generated by adding value to those resources are lost if the resources are simply exported. The pro-industry argument is always made that more intense extraction activity generates jobs and taxes. This is true only up to a point. In the US, we are told that increased logging on public forests will rejuvenate our local lumber and mill towns and the states in which forests are located. In the past, this was very true. Now, however, logs and crude lumber are exported, and the mill towns are still suffering from unemployment, poverty, drugs, crime, etc. A component of the colonial history is that political independence from Britain brought economic independence as well. The industries that used our resources – fabrics, steel, manufacturing, infrastructure – were built here, not in Britain. Capital investment was also primarily local. When capital generated by resource extraction in developing nations is invested overseas, it is not available for local development. I believe that this is also a factor in Peru, which also lacks infrastructure needed for profitable mining.
Juan Vera
Fellow miners: any economy in the world could not survive without mining. I am a peruvian geologist. I left my country and emigrate to Canada in 1972, today I do work in Mexico. I left the country because “shining path” a terrorist group was devastating the economic`s country and political situation was dangeorus and unsafe. I used to work on Antamina project (1968) a beautiful geological zinc-copper-moly skarn type deposit with a big economic potential. Peru suffered a big economic backward in those days. Peru, today is very strong in mining. Let`s Conga project go ahead to increase mining wealth and sustainable development to peruvians.