Peru Admits Obvious in Newmont Mining's Conga Project
Peru's vice president admitted the obvious yesterday: Newmont Mining's copper and gold project Minas Congas remains stalled, and though hopeful it will one day advance, local communities remains steadfast in their opposition.
So much for Cajamarca region people's being "unanimous" in their support for the Conga project and opposition leaders being "no longer relevant" as one Peruvian cabinet ministers proclaimed in December when attempting to jawbone the project forward. And any remaining trust in that proclamation was dispelled the following month when hundreds of protestors stormed the site, damaging a telephone tower, and kidnapping a security guard. The latest pronouncement by the government is just a recognition of the reality.
Hard feelings remain all around, however. Newmont suspended construction at Conga in 2011 after series of violent protests broke out as locals were concerned the project would pollute or deplete their water supply. The miner committed to building water reservoirs to win over local people, but the following year five people were killed in clashes over the project.
Newmont completed the Chailhuagon reservoir last May, and Reuters reports that with it now full ahead of the dry season, the miner will be releasing water to downstream communities to help benefit them.
Now that the government admits the existence of an impasse, it might create doubts about Southern Copper's progress at Tia Maria, the copper project that was also halted in 2011 after violent protests left three people dead there. The miner has the support of the government as well, and Peru's minister of energy and mines said all that was needed for work on the $1 billion to begin again was for Southern Copper to get a "social license" from the people.
As miners face the task of improving their finances by constructing new mines or expanding existing ones, First Nations and indigenous tribes globally have asserted their claims to the lands where development is to take place, if not to the minerals themselves. Barrick Gold ran up against local opposition in Chile and Goldcorp has done so in Mexico, while both Rio Tinto in Arizona and Taseko Mines in British Columbia have felt their sting as well. Seems the social license has been revoked.
The declaration by Peru's VP doesn't change Newmont's situation as the miner doesn't anticipate any work being undertaken there anytime soon, nor does its partner in the venture, locally based Buenaventura, who says it isn't anticipating any progress this year, either.
Moreover, the new assessment doesn't change my opinion that Newmont Mining remains one of the biggest opportunities in 2014. With tensions heightened in the Ukraine, China's economy slowing, and our own economy in a weakened state, gold will continue to add to the 11% gains it's already notched this year and the miner will gain with it.
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The article Peru Admits Obvious in Newmont Mining's Conga Project originally appeared on Fool.com.Rich Duprey has no position in any stocks mentioned, and neither does The Motley Fool. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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