Peru Judge Jails Governor Opposed to Newmont Mine Amid Probe

The governor who supported protests against Newmont Mining Corp.’s Minas Conga gold project in Peru was ordered to jail for 14 months amid a probe of allegations officials in his government took bribes, state news agency Andina reported.

Judge Mercedes Caballero authorized the detention of Cajamarca Governor Gregorio Santos while prosecutors prepare their case, Andina reported today. The state government’s main office and Santos’s chief adviser, Cesar Abanto, didn’t answer telephone calls made after business hours seeking comment on his detention and response to allegations.

Newmont and local partner Cia. de Minas Buenaventura SAA postponed work on the $5 billion Minas Conga project in Cajamarca in 2012 after farmers staged protests over its impact on water supplies. Santos, who said in 2011 and 2012 the project wasn’t viable environmentally, will now be unable to run for re-election, possibly allowing mining companies to revive projects in the state, said Cesar Perez-Novoa, head of research at BTG Pactual in Santiago.

“It could potentially unlock investment in the region, and of course, Minas Conga,” Perez-Novoa said by telephone. “If the perception of risk changes as a result, it will trigger the deployment of capital, de-bottleneck some mining projects and increase the incentive for exploration.”

The governor hasn’t been found guilty of a crime and is in a temporary holding cell, Andina reported in its online edition.

A former school teacher who’s in the last year of his four-year mandate, Santos denied any wrongdoing in a May 16 interview with newspaper La Republica. His party, the Movement for Social Affirmation, registered him this week as their candidate to run for re-election on Oct. 5.

Newmont and Buenaventura are considering plans to develop Conga as a smaller mine than initially planned, Buenaventura Chief Executive Officer Roque Benavides told reporters May 22. Building the mine hinges on obtaining political and community support, he said.

Newmont rose 0.8 percent to $24.88 today in New York and Buenaventura increased 0.1 percent to $10.68.

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