Newmont’s Peru Gold Mine Needs ‘Substantive Improvements’

Newmont Mining Corp. (NEM)’s suspended $4.8 billion gold project in Peru needs “substantive improvements” to gain approval, according to the author of a government-commissioned study.

“There’s no such thing as zero impact, the project requires substantive improvements,” Rafael Fernandez, who co- wrote a study on Minas Conga that was delivered to the government today, said at a press conference in Lima.

Peru suspended the project and commissioned a review after Andean farmers, fearing the project would dry up local water supplies, blocked roads and destroyed Newmont installations in November. The government will make a decision on the mine based on the report’s recommendations, said Fernandez.

Greenwood Village, Colorado-based Newmont, which has invested $800 million in the project to date, proposes to build reservoirs in the northern Andean region of Cajamarca to replace four highland lakes which would dry up.

Newmont welcomes the review of Conga’s 13-year environmental impact study and is confident the consultants were objective and impartial in their work, spokesman Omar Jabara said in e-mailed comments last week.

“Conga’s reservoirs would more than double the current water storage capacity of the four lagoons in question and would provide a reliable, year-round water supply to downstream users,” Jabara said. “Conga’s EIA underwent extensive reviews by 12 government agencies and was approved by the mines and energy ministry in 2010.”

Legal ruling

The 248-page report will be published April 18 on government websites and discussed in public hearings, Peru Cabinet Chief Oscar Valdes said at the press conference.

The Constitutional Tribunal, Peru’s highest law court, today overruled a legal ban on the Conga project issued by the Cajamarca regional government last year, Environment Minister Manuel Pulgar said at a separate press conference.

The consultants recommended increasing water storage capacity in the reservoirs and delegating Peru’s National Water Authority to monitor water usage, Pulgar said.

“This isn’t a report that determines viability or not,” Pulgar said. “It’s an objective, technical report that will allow for dialogue based on solid foundations.”

Newmont gained 0.3 percent to $48.33 at the close in New York. The stock has dropped 19 percent this year.

To contact the reporter on this story: Alex Emery in Lima at aemery1@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net

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