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Deadly Clash in Peru Continues PR Nightmare for Newmont

COMMENTARY—ProspectingJournal.com—If the image of mining in Peru wasn’t already on shaky ground, it is now: on Tuesday, 3 protestors died and 21 were injured as clashes between police and locals over Newmont’s $5 billion gold mine turned ugly.

Again, Peru had to declare a state of emergency in the mineral-rich Cajamarca region where Newmont’s Conga mine is set to be the biggest mine in Peru’s history, producing between 580,000 and 680,000 ounces of gold annually. The mine, situated more than 3km above sea level, will replace the nearby Yanacocha, which is nearing the end of its life.

The tipping point emerged shortly after the government gave Newmont permission to proceed with the construction of the project in exchange for Newmont’s agreement to comply with a more stringent environmental plan. As part of this agreement, Newmont will build larger reservoirs that will replace two or more alpine lakes and will guarantee year-round water supplies in nearby communities.

Many locals, however, aren’t buying it. Despite Newmont’s agreement to bide by the findings of a group of international experts, they point to the findings of the experts who, after being hired by the Peruvian government to look into the potential impact the mine would have on the region’s water supply, concluded that the Conga mine would need “substantive improvements” in relation to a number of factors. Shortly after Newmont started work on these reservoirs, the violence erupted.

In a recent press release, Newmont states “We have ratified our decision to implement the recommendations international auditors made to the environmental impact study for the Conga project.”

Thus both Newmont and the government are now faced with a protest that seems determined to halt or at least slow the production of the mine at every step, whether it is in relation to reservoirs, land, wealth distribution or a combination of factors. From the viewpoint of the locals, this is understandable. After all, although Peru is the world’s second largest producer of copper and sixth of gold, many communities suffer in poverty, a persistent economic issue that has often resulted in anger towards mining giants whom many claim take but don’t give.

For the government, turning the tap off and blocking mines like the Conga is unthinkable, as Peru’s economy is heavily dependent on the mining industry. For miners such as Newmont, the ongoing protest shows a level of extreme frustration that, if not dealt with at the community level, could unwind or delay even the most ambitious plans. And for locals, the claim to environmental sustainability and wealth is an uphill battle against powerful government and corporate forces.

It’s a mess, really, but in the end the construction will lumber on. Peru’s vast mineral wealth is one of the country’s strongest assets and, for companies such as Newmont, is justification for the difficulties faced in the extraction of sought-after commodities. And as we shall see in the coming months, the fine balance will be one of environmental standards, wealth distribution and, perhaps most importantly, community relations.

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Chris Devauld
ProspectingJournal.com

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