Thousands strike in Peru against gold exploration

Wed Sep 8, 2004 06:31 PM ET

By Tania Mellado

LIMA, Peru, Sept 8 (Reuters) - Some 4,000 Peruvians stopped work and marched through the northern town of Cajamarca on Wednesday, demanding a ban on a gold exploration project they say is contaminating and drying up their water supplies.

The strike shut down banks, markets and public transportation in Cajamarca, 535 miles (856 km) northeast of Lima. Earlier in the week farmers and residents blocked roads to protest exploration of the Cerro Quilish deposit by Latin America's biggest gold mine, Yanacocha.

Yanacocha is controlled by U.S.-based Newmont Mining Corp.(NEM.N: Quote, Profile, Research) with Peru's Buenaventura (BUEv.LM.: Quote, Profile, Research) (BVN.N: Quote, Profile, Research) as partner.

"The provincial mayor is leading this strike. There are about 4,000 people marching peacefully in the main square against exploration at Cerro Quilish," Juan Mendez, a police officer in Cajamarca, told Reuters by telephone. Drums and whistles could be heard in the background.

"There will be no let up until (Energy and Mines Minister Jaime Quijandria) quits or revokes (the exploration permit)," Alejandro Rebasa, vice president of the Cajamarca region, told the crowd.

Demonstrations by farmers in a region famed for its milk and creamy cheeses have delayed the Quilish gold search since 2002. But exploration restarted in August after the ministry granted Yanacocha a new permit.

The company had said it expected exploration work to continue until March 2006, but on Monday it suspended the search as protests revved up.

Quilish -- one of a cluster of deposits that are all part of Yanacocha's 600-square-mile (1,500-sq-km) site -- has proven and provable reserves of 3.7 million ounces of gold and Yanacocha hopes production could begin as early as 2007.

Local residents, many of whom are subsistence farmers, say they want mining activity at the site banned, at least until conclusive hydrological studies are done. They blame Yanacocha for the shortage of water in the Andean province, and fear that a gold mine at Quilish could poison water supplies.

But Yanacocha says a regional drought, not mining activities, is the reason for the lack of water.

Quijandria on Tuesday told a congressional commission that Quilish exploration had no impact on "the quantity or quality of water in Cajamarca."

Yanacocha Managing Director Carlos Santa Cruz told CPN radio on Wednesday: "All the requisites to conduct exploration were met. I think the negative effects caused by the drought were not evaluated and they had consequences that brought about this confusion."

Peru is the world's sixth-largest gold producer.

Yanacocha expects to increase its gold production this year 7 percent to 3 million ounces. Newmont has a 51.4 percent share of the mine and Buenaventura owns 43.65 percent.