By Ryan Dube
AREQUIPA, Peru--Peruvian Mines and Energy Minister Jorge Merino
said Monday he is confident that the Tia Maria copper project and
the Minas Conga copper and gold project will overcome community
opposition.
The two projects have represented the Peruvian mining sector's
struggle to resolve opposition to industry activities in rural
communities. Resolving the disputes has been one of the biggest
challenges facing the government and companies in one of the
world's biggest producers of copper, gold, silver and zinc.
Southern Copper Corp.'s (SCCO, SCCO.VL) $1 billion Tia Maria
project was suspended in 2011 following violent protests by local
residents concerned about its impact on the local water supply. The
company is currently working on a new environmental impact study
that will involve pumping in sea water.
Mr. Merino said that the company's decision to use sea water
will help it win approval from local residents. "This is a big
step. We're sure that Tia Maria is going to be one of the new
projects in development," he said.
Mr. Merino also said that Minera Yanacocha, which owns the $5
billion Minas Conga project, is making advances in gaining support
from surrounding communities, which are also concerned about its
impact on the local water supply.
Yanacocha is 51.35% owned by Newmont Mining Corp. (NEM).
Compania de Minas Buenaventura (BVN, BUENAVC1.VL) and the World
Bank's International Finance Corp. also have a stake.
Violent protests against the Minas Conga project last year left
a number of people dead and led the company to suspend work, except
for the construction of water reservoirs. Yanacocha says it is
building the reservoirs prior to starting work on the mine in order
to ensure the supply of water.
Opponents of Minas Conga continue to hold protests. However,
recent demonstrations have been smaller. Mr. Merino said that round
table discussions with local residents are starting to pay off.
"Conga continues to be a challenge," he said during a press
conference at a mining conference in southern Peru. "But we are
confident that with this new relationship that the company is
developing with the communities that Conga is also going to be
developed."
Mr. Merino also said that the startup of new mine projects in
the coming months will help support Peru's exports and the
government's tax collection.
In the first seven months of this year, Peru had a trade deficit
of $1.2 billion, compared to a trade surplus of $2.9 billion in the
year-earlier period, due to a sharp decline in exports. Exports
have fallen mainly due to lower metal prices as demand for
commodities from China has weakened.
Authorities have said that the startup of new mine projects will
boost export volumes, helping to offset lower metal prices. The
next large-scale mining project scheduled to start production is
Chinese-owned Minera Chinalco Peru's Toromocho copper project.
Toromocho is expected to start production before the end of this
year.
"In 2014, we are going to increase our mining exports by 10%
thanks to Toromocho," Mr. Merino said.
He said these projects will also help improve the central
government's tax collection from the mining sector. Tax collections
from the mining sector fell 40% in the January to August period,
compared to the same period a year earlier.
Write to Ryan Dube at ryan.dube@wsj.com
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