LIMA, Peru - The president of Newmont Mining Corp. said Friday that the U.S. company could halt investment in a major gold mining project in Peru's north if modifications sought by the government significantly affect its profitability.
Newmont's Richard O'Brien said in an earnings call with analysts that if the $4.8 billion project cannot be developed "in a safe, socially and environmentally responsible manner" while also earning shareholders "an acceptable return" Newmont will "reallocate that capital to other development projects in our portfolio, including opportunities in Nevada, Australia, Ghana, and Indonesia."
The project faces stiff opposition from residents of the heavily mined northern state of Cajamarca who say they fear for their water supply.
It has been suspended since December, when Newmont halted work out of concern for employee safety after a series of violent protests.
Last week, President Ollanta Humala said Newmont, the majority investor in Conga, should heed recommendations of government-hired environmental experts who said two mountain lakes slated for destruction should be preserved.
Humala also said the project should create 10,000 jobs and quadruple the amount of water in reservoirs the company has offered to create to replace four lakes that would be destroyed.
O'Brien said Newmont was evaluating the recommendations of the environmental experts as well as the Peruvian government.
"Conga's development would be a significant source of revenue for the government of Peru, along with significant employment," O'Brien said.
Newmont is the majority stakeholder in Conga as well as in nearby Yanacocha, Latin America's biggest gold mine.
Yanacocha, which is nearing the end of production, has a history of troubled relations with neighbouring farmers who claim it has harmed their water supplies.
Peru's economy depends heavily on mining, which accounts for more than 60 per cent of its export income.
