Peru negotiates end to siege at Yanacocha gold mine

Farmers Reach Deal
Over Peru Gold Mine

By Carla Salazar
Associated Press
Wednesday, August 30, 2006

http://biz.yahoo.com/ap/060830/peru_gold_mine.html?.v=1

LIMA, Peru -- Latin America's largest gold mine and protesting farmers reached a government-brokered agreement late Tuesday to end a six-day roadblock that prompted a 24-hour shutdown of operations.

Peru's presidential Cabinet chief, Jorge Del Castillo, announced the deal to lift the roadblock Wednesday and immediately resume gold production at the Yanacocha gold mine, majority owned by Denver-based Newmont Mining Corp.

The announcement followed more than three hours of shuttling between meetings with each side because Yanacocha executives refused to participate in face-to-face talks, saying the roadblock was an unfair pressure tactic.

"The company will restart all mining activities in Cajamarca province as soon as free passage on the road and secure conditions are established," Del Castillo told reporters.

In exchange, the company agreed, among other things, to attend all negotiation meetings called by a high-level government commission that will travel to the northern Andean province next Sunday, Del Castillo said.

The farmers had insisted that they were protesting alleged depletion and pollution of water supplies and not because they want Yanacocha to provide them jobs, as the company maintains.

On Tuesday, business leaders blamed the weeks-old government of President Alan Garcia for not doing more to dislodge the protests.

"The government has to carry out its responsibilities and ensure that laws aren't broken," said Oscar Gonzalez Rocha, vice president of the National Society of Mining, Energy, and Petroleum.

Yanacocha said it would not participate in government-mediated talks until the roadblock by about 100 farmers in northern Peru was lifted.

Since 1993, Yanacocha has operated open pit mines on a plateau nine miles from Cajamarca, a city 350 miles north of the capital of Lima.

The dispute centers on the Carachugo gold pit, the latest expansion of Yanacocha's operation, which uses cyanide and massive amounts of water to extract gold from ore piled on impermeable barriers designed to prevent toxins from seeping into the ground. On Friday, Yanacocha suspended construction of the Carachugo project -- set to start production at year's end -- because of the protests.

The Rev. Marco Arana, of Grufides -- an environmental and social justice organization based in Cajamarca -- said studies have detected heavy metals in fish and traces of cyanide from strip mining.

The impasse comes less than a week after del Castillo told Congress that mining companies had agreed to contribute some $770 million to social programs over the next five years.

The voluntary payments were an alternative to the possibly contentious renegotiation of contracts to impose new taxes on windfall mining profits.

Business and mining industry leaders complained Tuesday that by refusing to send police in to remove the farmers, Garcia's government had violated that agreement.

Yanacocha produced 3.3 million ounces of gold in 2005, and expects to generate 2.6 million to 2.7 million ounces this year.

In 2004, the company was forced to shelve exploration plans on the nearby Cerro Quilish mountain -- which holds an estimated 3.7 million ounces of gold -- after violent protests by farmers who said the project threatened water supplies.

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