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Originally published Tuesday, November 29, 2011 at 6:57 PM

$4.8 billion Peru gold mine project suspended

A $4.8 billion gold and copper mining project, Peru's biggest such investment, was declared suspended Tuesday after increasingly violent protests by highlands peasants who fear for their water supply.

Associated Press

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LIMA, Peru —

A $4.8 billion gold and copper mining project, Peru's biggest such investment, was declared suspended Tuesday after increasingly violent protests by highlands peasants who fear for their water supply.

At least 20 people, including eight with gunshot wounds, were injured Tuesday in clashes between opponents of the Conga project and police who used firearms, Cajamarca state regional health director Reynaldo Nunez told Canal N television. He said one person was in critical condition and the injured included police.

"After discussions with the government, it was agreed that to help restore public order, the project would be suspended," Newmont Mining Corp. spokesman Omar Jabara told The Associated Press via email.

Denver-based Newmont is the majority owner of Conga, which was to begin production in 2015 and is an outgrowth of Yanacocha, Latin America's biggest gold mine.

However, leaders of the open-ended protest against the planned mine that began Thursday in the northern state bordering Ecuador said they would not halt the action until the project is canceled.

Cajamarca's president, Gregorio Santos, told the AP that opponents want "a legal document that definitively eliminates" the project.

At a Lima news conference, Prime Minister Salomon Lerner did not answer a reporter's question of whether the suspension was temporary or definitive.

The protests have been increasingly violent, including vandalism on the mine's property.

The Yanacocha consortium, which includes the Peruvian company Buenaventura Mining Co. and the International Finance Corporation, said in a statement that the suspension was "required" by the government "for the sake of re-establishing tranquility and social peace."

Lerner, appearing at a the news conference with Newmont Vice President Carlos Santa Cruz, said the government was forging "a new relation between communities and mining, a relation that was historically marked by mistrust."

That includes, Lerner said, involving the local populace in decisions involving mines to "dispel all doubts and guarantee, as a priority, water for human consumption."

Local protest leader Milton Sanchez was not appeased.

"We regret that the government's reaction came after the spilling of blood in which today we have 17 wounded," he told the AP by phone. "We peasants of Cajamarca feel tremendously defrauded by (President) Ollanta Humala and really consider him a traitor."

Humala, a center-leftist, had told Cajamarca residents before his June election that he would guarantee their water supply was more important to him than gold.

Before the suspension announcement, government officials continued to insist the protests did not enjoy widespread support.

"We regret the intransigence of the leaders who do not want to engage in dialogue," Interior Minister Oscar Valdes told reporters. "We regret that they are against their own population, children who aren't going to school, dairy farmers who are losing their milk."

Cajamarca is one the most heavily mined states in Peru, whose economy has been booming due high metal prices. Mining accounts for 61 percent of the South American nation's exports.

But peasants who live near mines complain that the government does little to ensure they don't contaminate or diminish water supplies.

Across Peru, there are currently more than 60 disputes over alleged damage to water supplies from mines, the country's ombudsman's office says.

An 11-page Environment Ministry study of the Conga project completed last week urges modifications to ensure water sources are protected, especially regarding the replacement of four highlands lakes by man-made reservoirs.

Local residents fear the displacement of those lakes could dry up an important aquifer. The project is located more than two miles (3,500 meters) above sea level, above the headwaters of two rivers.

Environment Minister Ricardo Giesecke said after the study was leaked Friday that its conclusions did not amount to a rejection of the mine but rather guidelines for improving it.

That only further angered protesters and a deputy environment minister quit over the government's handling of the protests.

The Mining Ministry approved the project in October 2010 and by law judges the environmental soundness of mining projects.

Environmental activists contend the ministry is heavily influenced by the industry and biased against environmental protection.

More than $40 billion in mining investments were lined up before Humala's June election, and the mining industry agreed at his urging to a windfall tax to pay for social welfare programs that the government says will net $1 billion a year in revenues.

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Associated Press writer Frank Bajak reported this story from Bogota, Colombia, and Carla Salazar reported in Lima. AP writers Franklin Briceno and Martin Villena in Lima contributed to this report.

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