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Newmont (NYSE: NEM) (TSX: NGT), the world’s no. 1 gold miner by output, has increased its planned investments for its Yanacocha Sulfides gold project in Peru from $2.25 billion to $2.5 billion, with a firm decision on the amount to be made by year-end.
The Denver, Colorado-based miner, which became the sole owner of Yanacocha in early April, said last week that once a formal decision on the project is made, development would take three years.
Newmont had said the sulfides project is one of the most important ones planned in Peru for the next five years. Once finished, it would add 525,000 ounces of gold equivalent a year to the company’s overall output.
The first phase will center on the Yanacocha Verde and Chaquicocha deposits, which will extend current operations beyond 2040. The following two phases could potentially add “several more decades” to the mine’s productive life, the company said while delivering its first quarter results last week.
“We’ve been in Peru for 30 years. The Yanacocha Sulphides project will ultimately position us to be in Peru for at least another 30 or 40 years,” chief executive Tom Palmer said in an investors update last year.
The mine, in northern Peru’s Cajamarca region, churned out in February 19,900 ounces of gold, totalling 42,900 ounces in the first two months of the year, up 4.8% compared to the same period of 2021.
Since last year, Peru has been hit by a rising wave of protests that have paralyzed several operations in the country over the last few months.
The world’s second-largest copper producing nation after Chile had to declare a state of emergency last week, as indigenous communities blocked Southern Copper’s (NYSE: SCCO) Cuajone mine for more than 50 days.
The blockade forced the company to halt operations, leaving 20% of Peru’s copper output offline.
Community conflicts with mining companies are nothing new in Peru, and some of the current unrest is more about protecting water supplies than securing a bigger share of the revenue miners obtain.
Yanacocha has not been affected this year, likely because the mine has provided over $1 billion in environmental and social responsibility projects since it started operations in the 1990s, according to Newmont.
About two-thirds of the mine’s revenue is ploughed back into the local economy in wages, taxes, goods and services, as the operation employs 1,400 workers directly and supports a further 40,000 Peruvian jobs. Two-thirds of workers at the mine are residents of Cajamarca.
Since former rural activist Pedro Castillo took office in July 2021, the number of social conflicts is up about 7%, official data proves. The worsening situation has deepened global concerns around a looming deficit of copper.
According to estimates from CRU Group, the copper industry needs to spend more than $100 billion to close what could be an annual shortage of 4.7 million tonnes by 2030.
