Xstrata committed to Peru despite protest

Mon May 28, 2012 4:11pm EDT
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By Marco Aquino

LIMA (Reuters) - Protests at Xstrata's XTA.L Tintaya copper mine in southern Peru have blocked transport links, but it is operating normally and its port on the Pacific coast has stocks of concentrates for the time being, a company executive said on Monday.

Despite being hit by a week-long protest, Xstrata is committed to investing in Peru and its $1.5 billion expansion to the Tintaya mine is on track to open in late August, said Luis Rivera, the company's operations director for Peru.

The protest over the spoils of natural resource wealth is one of many that President Ollanta Humala has tried to defuse. The protests threaten to delay investments in a sector that drives 60 percent of exports. RPP radio said at least one bystander died on Monday near the protests, where police have clashed with people blocking roads. About half a dozen people have died in protests over natural resources since Humala took office in July.

Protesters in the province of Espinar claim the mine causes pollution and want the company to boost financial donations it makes to the local government of Espinar, which the company has rejected saying its voluntary contributions are already very generous.

"Our local contribution is 30 million soles ($11 million) a year, which isn't a little," he said. "We give 3 percent of our pre-tax profits to the province of Espinar and they want us to raise this to 30 percent."

Espinar, like many local and regional governments in Peru, is periodically hit by anti-mining protests by poor residents who say they haven't seen the benefits of the country's decade-long economic boom. The central government and miners criticize local governments for lacking the capacity to spend tax revenues and say they are sitting on piles of cash.

"The municipal budget in Espinar is 190 million soles a year, and its efficiency is only spending 30 percent, and they are asking for more money," Rivera said.

He said all serious studies have shown the mine fully complies with all environmental standards and that complaints of the protesters over water quality were being trumped up for political reasons.   Continued...