Ollanta Humala, Peru’s president, has a $4.8bn headache.
The former army officer is on his way to pulling off a remarkable political transformation – from darling of Latin America’s radical left to champion of investment as the motor for “social inclusion” – but a mining dispute is getting in his way.
Conga, a major gold and copper project led by Newmont of the US and its Peruvian partner Buenaventura, has been shut for almost four months after protesters blockaded the city of Cajamarca for 11 days over water supply concerns.
Investors with interests in the world’s second-biggest silver and copper producer and sixth biggest gold producer are watching the Conga dispute – and Mr Humala – closely.
“The aspect that most draws our attention is the decision to step outside the usual channels and institutions and hire international consultants to review the environmental impact statement,” said a spokesman for Anglo American.
A team of independent consultants is expected to finish its review of Conga’s EIS on April 6 and recommend whether the project should proceed. With $42.1bn in mining investments slated by 2015, President Humala has a lot riding on their conclusion.
Gregorio Santos, the leftist regional governor of Cajamarca and one of the principal opponents of the mine, has already said he will not recognise the consultants’ findings.
And the recent kidnapping of seven community workers in the Cajamarca region has underscored the depth of anti-Conga sentiment in some communities.
“They appear with gifts whenever they need something, as they do now, in need of social licence to run the Conga mining project,” said Hector Medina, mayor of Chugur, the community that took the workers prisoner in its town hall for two nights.
Carlos Mercado, managing director of Foncreagro, which is contracted by Newmont and Buenaventura to deliver social programmes to their nearby mine, Yanacocha, denied his workers were swapping gifts for political support.
“Our colleagues have been doing social work,” he said. “It is regrettable that the climate of intimidation has reached levels of kidnapping and holding people against their will.”
So far, Mr Humala has won a measure of public support for his handling of Conga. After replacing his prime minister, Salomon Lerner, with Oscar Valdés in a major cabinet reshuffle, his approval rating jumped to 59 per cent in February.
A six percentage point-drop in Mr Humala’s approval rating this March is thought to have more to do with the scandal over the president’s brother Antauro, a convicted coup leader, who was photographed enjoying a new, more comfortable prison cell.
According to an Ipsos-Apoyo poll on Sunday, 65 per cent of Peruvians support Mr Humala’s decision to bring in international consultants to review Conga.
But a separate poll by Datum showed Peruvians are divided about whether he can resolve the dispute, and pessimistic about the impact the project’s failure would have on the country. Forty-one per cent of Peruvians believed Conga would go ahead, while 40 per cent expected the project to fold. Fifty-five per cent of Peruvians believed that if the project did not advance, mining investment would stall or decline.
Get alerts on Peru when a new story is published