Newmont Mining Corp. (NEM), the world’s second-largest gold producer, is cutting 6,000 jobs at its suspended $4.8 billion Peruvian gold project to reduce costs, Vice President Carlos Santa Cruz said.
The Minas Conga project, halted by environment protests in November, is “vital” to the company’s nearby Yanacocha mine, Santa Cruz said today at a press conference in Lima. Yanacocha, Latin America’s largest gold mine, has seen output drop by 60 percent since 2005 as ore reserves dwindle.
“We’re revising the project’s costs and have canceled contracts for 6,000 workers as the suspension had an initial impact of $2 million a day,” Santa Cruz told reporters. “We hope to restart operations as soon as possible, but it doesn’t depend on us.”
Newmont, based in Greenwood Village, Colorado, expects a government-commissioned review of the project’s environmental impact study to be completed in the first week of April, Santa Cruz said. Conga, located in the northern Andean region of Cajamarca, may produce as much as 680,000 ounces of gold and 235 million pounds of copper a year by the start of 2015, according to the company’s website.
Newmont fell 1 percent to $54.30 at the close in New York. The stock has dropped 9.5 percent this year.
Rising costs and equipment delivery delays in the mining industry mean time lost for the suspension will make the project more difficult to develop, Santa Cruz said.
“The delay is affecting us,” he said. “We’re going to make every effort and spend our last drop of sweat to bring Conga online.”
Cajamarca regional government official Gregorio Santos, who led project protests, this week presented a report by U.S. hydrologist Roberto Moran that says Conga is environmentally unsustainable because of wastewater treatment costs.
Newmont says building Conga will require the construction of four reservoirs to replace four lakes, doubling regional agriculture water supplies. Farmers, who were afraid the project would dry up local water supplies, blocked roads and destroyed Newmont installations in November.
Newmont will take opponents’ opinions into account in an overhaul of its project study, Santa Cruz said.
Newmont, which owns 51 percent of Conga, is partners with Peru’s Cia. de Minas Buenaventura SAA on the development. Newmont is the second-largest gold producer ranked by revenue after Toronto-based Barrick Gold Corp. (ABX)
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