Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Reuters reports Peru’s government on Friday brokered the first in a series of talks between townspeople and Newmont Mining in a bid to solve a conflict over water supplies at the $4.8 billion Minas Conga project, adjacent to South America’s largest gold mine Yanacocha.
Newmont was forced to shut down operations for two days at Yanacocha after protesters blocked access to the mine. Minas Conga, partly-owned by Peru’s number one precious metals miner Buenaventura, would be the biggest investment ever in Peru’s mining sector. Buenaventura reported a 6% drop in quarterly gold output on Friday.
Reuters quotes a spokesperson for Newmont (NYSE: NEM) and Buenaventura as saying they are “absolutely committed” to “taking care of local land and water”, but that some community resistance could be expected in the next few years as more workers move into the field for construction.
Reuters reports Buenaventura’s gold output fell 6% during the third quarter. The company controls 43.7% of Yanacocha where annual output exceeds 1.5 million ounces and also owns 18.7% of the copper mine Cerro Verde with partner Freeport McMoran (NYSE:FCX).
Besides the protest at Yanacocha, Buenaventura has also been hit by strikes at Cerro Verde, where some frustrated workers started a hunger strike last week. Bloomberg reported workers there may return to work by mid-November after the Peru government set a deadline for a resolution to the conflict.
