After the publication of the international expert report, president Humala announced that the Conga project is viable, if the mining company is willing to adjust the exploitation plans to the environmental recommendations, proposed by the experts. One of the main recommendations is the preservation of two mountain lakes, that, according to the company’s original plans, normally would had to be displaced. How did the different stakeholders respond to this statement?

Newmont will not invest in Conga if the project is not profitable

Newmont Mining Corp is the main shareholder in the Conga mining project (51,35 %).

Last week Carlos Santa Cruz, Newmont’s chief for South America, said that they would carry out technical and economical evaluations of the recommendations. Minister of Mines and Energy, Jorge Merino, was hopeful about further negotiations with Newmont officials; “we are going to sit down with them. They've said they are evaluating the proposed measures recommended by the auditors, but I think there's a good willingness on their part."

Later that week Richard O’Brien, CEO of Newmont, said that the company will take its money to other countries if these alternations to the Conga project prove economically unfeasible. “If Conga cannot be developed, though, in a safe, socially and environmentally responsible manner while also earning our shareholders an acceptable return, then we will reallocate that capital to other development projects in our portfolio, including opportunities in Nevada, Australia, Ghana and Indonesia”, he said. He added that they “have other options if it is not favorable.”

The Chief Executive Officer also noted that he hopes that Newmont can continue to operate in Peru. “We have been privileged to work in Peru for more than 20 years and we want to continue to be a part of the government’s social-inclusion efforts and the development of the country through responsible mining,” O’Brien said. "Conga's development would be a significant source of revenue for the government of Peru, along with significant employment”, he continued.

The government still beliefs in a reasonable compromise

Jorge Merino, minister of Mines and Energy, stated that the government is negotiating an agreement with the mining company. “In good faith, we are working on a binding document. We will wait to make this document public. (…) Yanacoha publicly announced that they are evaluating the alternatives, we hope that we’ll have a written agreement as soon as possible”, he said.

Mariano Castro, deputy (viceministro) of Environmental Management, stated that the mining company has to come up with a social pact for the development of Cajamarca, in order to gain the confidence of the people. The deputy of Agriculture, Juan Rheineck Piccardo, assured that the agro and the mining industry can benefit the economic development of the region of Cajamarca. He understands the distrust of the people of Cajamarca regarding mining projects. In the past several projects did not respect existing agreements, he said. The deputy believes in a new relation “society – sustainable mining projects”, a complementary relationship where the people benefit from the presence of the mining companies. A government controlled social pact should ensure sustainable mining.

Social and environmental leaders still reject Conga

The proposal of Mariano Castro, that the mining company has to come up with a social pact in order to win the confidence of the people of Cajamarca, was rejected by the different Defense Fronts. Wilfredo Saavedra, president of the Environmental Defense Front of Cajamarca, said that a dialogue regarding the viability of the Conga project between the Council and the different social and environmental leaders is no longer possible. Ydelso Hernández, president of the Regional Defense Front, also declared not to believe in a social pact. He said not to trust a social pact made by Yanacocha, for this company has violated environmental rights and failed to comply with social agreements. Jorge Spellucín, of the Defense Front of the province San Marcos, joins their analysis; “We can’t give up the ground we’ve already won”. A regional strike on May 31 is to be expected.

Latin Pacific Capital: Newmont has much to lose

Emilio Zúñiga, the vice president of Latin Pacific Capital, a Peruvian investment bank, stated that Newmont will miss out on a “golden opportunity” if it reallocates its capital to another country. Newmont has to comply with the recommendations. It would not harm the Peruvian investment climate, if Newmont decides to reallocate its capital to another country, Zúñiga said. In the last four years the investments in Peruvian mining projects have exceeded 15 billion dollars, he said. “Now, there are important explorations in Cajamarca. The following years these projects possibly will enter the operation phase. That’s why I’m sure that the Conga problem will be resolved”, he concluded.

(Reference of text: Reuters, april 23, 27 and 28, 2012 – La Republica, april 28 and 30, 2012 – Forbes, april 27, 2012 – Panorama, april 30, 2012 – El Clarín, april 30, 2012

The Conga impasse

This standstill characterizes the Conga project. After months of protest the government initiated an international expert report, it was meant to give more technical information and to unblock the impasse. The president called upon community activists to stop protesting against the mine’s construction and said the government would make sure that the company adheres to strict social, environmental and labor goals. The Chief Executive Officer of Newmont Mining threatened to take the company’s capital elsewhere, if the imposed measures would mean that the project is no longer feasible. The opposition made clear that dialogue is no longer an option, a social pact is not wanted and that there is only one way out; the ending of the Conga project. The question still remains; now what?