Peru Declares State of Emergency to Quell Violent Mining Protests

LIMA--Peru'sgovernment declared late Tuesday a state of emergency in three provinces in Cajamarca region following violent protests againstNewmont Mining Corp.'s(NEM) Minas Conga copper and gold project.

The 30-day state of emergency, which suspends civil liberties like freedom of assembly, took effect Wednesday and is aimed at restoring order in the provinces. Three people were killed Tuesday and 21 others injured during clashes between police and protesters.

Resolving the conflict over Minas Conga is seen as a test of the government's ability to resolve other social conflicts that have delayed investment projects inPeru'smining sector. Companies have lined up investment projects worth more than$53 billionin the next few years.

Opponents of Minas Conga want the project to be canceled, citing concerns about its potential impact on the water supply. Protests have been led by Gregorio Santos, the president of Cajamarca's regional government, as well as civil- society groups.

Minas Yanacocha, the company developing Minas Conga, called for dialogue to resolve the dispute and renewed its commitment to Cajamarca. "We express our deepest condolences to the families of the three people that died," Yanacocha said in a statement.

Newmont holds a 51.35% stake in Yanacocha.Compania de Minas Buenaventura SA(BVN, BUENAVC1.VL) has 43.65%, andInternational Finance Corp.owns the remainder.

While protests against mining projects inPeruoften turn deadly, it is the first time fatalities have been reported during protests against Minas Conga.

Minas Conga, which will require an investment of about$5 billion, was put on hold late last year due to the opposition. The company said this week that it had started environmental work to prepare sites for the construction of water reservoirs, which would increase the supply of water to the local population.

Minas Conga is expected to have an average annual output during the first five years of 580,000 to 680,000 ounces of gold and 155 million to 235 million pounds of copper. Production is scheduled to start in 2017.

Write to Ryan Dube at ryan.dube@dowjones.com

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  07-04-12 0932ET
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