From: Rick Vecchio, Associated Press
Published October 5, 2004 12:00 AM

U.S. Mine Tries to Dig Out from Under Local Discontent in Peruvian Andes

CAJAMARCA, Peru — Gerardo de la Cruz, a 42-year-old farmer, is one of thousands who spent two weeks blockading a U.S.-run gold mine in the Andes, the latest example of the uneasy relationship between Peru's rural poor and the mining industry.


The siege of Latin America's largest gold mine was lifted Sept. 17 after Peru's Mining Ministry struck a deal to postpone the search for ore pending a study of the impact mining could have on the water supply to de la Cruz's village. But Yanacocha, 51 percent owned by Denver, Colorado–based Newmont Mining Corp., still has a serious image problem to overcome.


"The mine here is interested only in money, hauling off gold, and nothing else," de la Cruz said.


The blockade of the mine's access road was sparked by fears that new mining on Cerro Quilish, the mountain where Yanacocha had started exploratory drilling, could deplete and contaminate water supplies.


Yanacocha isn't the first mining company to run up against broad public opposition. The government last year withdrew permission for Canada's Manhattan Minerals Corp. to develop the Tambogrande gold and copper project in northern Peru that called for uprooting a third of the local townspeople.


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Yanacocha acknowledges it underestimated the concern over water but points to an independent study that said its operations pose no immediate health threat and isn't to blame for decreased water supplies.


Mining is key to Peru's economy, which has been growing at about 4 percent annually since President Alejandro Toledo took office in 2001. Mining provides about half of Peru's more than $11 billion in exports this year but directly employs only about 70,000 of Peru's 27 million people, mostly in remote regions.


For years, Yanacocha has provoked resentment among the area's 140,000 inhabitants, in part because it hired only about 1,260 of them.


For many like de la Cruz, who ekes out a living raising a few head of cattle and growing potatoes and carrots, Yanacocha represents only the downside of boomtown economics: a higher cost of living and increased crime and prostitution.


But water is the most explosive issue for farmers, who accuse Yanacocha of contaminating and drying up water sources that irrigate crops and sustain dairy production. They claim some waters downstream from the mine are now putrid, and that the company has refused to reopen one diverted irrigation canal, leaving 160 families dry.


Community relations were also greatly damaged in June 2000 when a mine contractor spilled 335 pounds of mercury in a small town south of Cajamarca, sickening 1,100 people whose damage claims are now in U.S. courts. Yanacocha spent $14 million cleaning up the spill.


"The frogs, ducks, and trout we used to have in the Rio Grande are gone," said Segundo Briones, a community leader, referring to one of three rivers that drop down from the mining operations. "We won't be fooled anymore."


Since 1993, Yanacocha has operated an open pit mine on a plateau about 13,000 feet above sea level, nine miles from Cajamarca, a small Spanish colonial city 350 miles north of Lima. The company uses cyanide and massive amounts of water to extract gold from ore piled on impermeable barriers designed to prevent toxins from seeping into the ground.


Yanacocha blames water scarcity on drought and points to the study that was commissioned by the World Bank and completed last year by Colorado-based Stratus Consulting Inc. The 20-month study determined the mine didn't cause water supplies to drop and posed no "imminent short-term danger of illness or death to people, livestock, or crops."


It said the mine could be responsible for killing fish and other water life but added that the greatest health threat was from human and animal waste.


Newmont, Yanacocha's owner, has global operations that make it one of the world's biggest mining companies. Its spokesman, Doug Hock, said Yanacocha underestimated water concerns but was eager to work more closely with the community on the new water study.


He said Yanacocha, which yielded just under 3 million ounces of gold last year, paid about US$140 million in Peruvian income tax, of which half goes to Cajamarca's government.


In the last 11 years, Yanacocha independently financed the construction of 35 schools, built miles of road, and brought electricity and drinking water to remote communities, Hock said, adding the company has poured tens of millions of dollars into Cajamarca's economy through local suppliers to the mine.


Still, Antonio Brack, a leading Peruvian ecologist, blames Yanacocha and the government in distant Lima, which he says gives short shrift to the region's traditions and water needs and thinks of its people as "poor peasants, period."


Source: Associated Press


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