Mining Proves a Test of Mettle for Peru’s Ambitions of Economic Development

Wednesday, December 7, 2011

The resignation of Peru’s deputy environment minister amid violent protests against the country’s largest ever mining project has highlighted how weak institutions, unable to ensure decisions are made on the basis of robust information, undermine green policymaking in Latin America.

José de Echave quit in late November, calling environmental impact studies on the $4.8bn (£3.1bn) Minas Conga open-cast gold and copper mine, located in the northern Cajamarca region, “weak, outdated and lacking in credibility”.

The move exposed divisions within the administration of President Ollanta Humala indicative of the difficulties faced by left-of-centre governments in resource-rich countries. Balancing economic development based on foreign investment with environmental protection is far from easy.

After days of violent protests, and following De Echave’s resignation, the US-based Newmont Mining Corporation – the majority partner in the joint venture, together with Minera Yanacocha, behind the Conga plans – said it was halting construction in an effort to ease tensions. But CEO Richard O’Brien indicated that the company, which is South America’s largest gold producer, remains committed to the project.

At issue is the impact on the local watershed, as Yanacocha plans to divert water from four mountain lakes into new reservoirs to enable mining to proceed. Protests have been led by local farmers and residents concerned about the impact on the underground drainage network and natural water harvesting system. Cajamarca is Peru’s leading dairy and livestock region.

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