Rio Tinto suspends Peru construction after protest

LIMA (Reuters) - Mining giant Rio Tinto has temporarily suspended construction of a processing plant in northern Peru because of protests, the company's Andean office said on Monday.

Australia's Rio Tinto began building in the coastal region of Chiclayo earlier this year. The company has said the plant, which would test minerals, is key to a pre-feasibility study of its mammoth copper project, La Granja.

Protesters threatened to invade the miner's installations if Rio Tinto did not agree to stop work, local media groups reported over the weekend. Activists are worried the project will harm the environment, sap water from local producers and generally, create conflict.

"Because of recent events and the potential risk to people involved in the project, Rio Tinto has decided to suspend, temporarily, construction at its test plant until conditions allow for project's safe development," Rio Tinto said in a statement.

The company added exploration at its copper project, which is located in Cajamarca and expected to cost some $700 million, was not affected and will continue like normal.

La Granja is thought to have between 4 billion tons and 8 billion tons of mineral deposits with a copper grade of 0.5 percent.

After Chile, Peru is the world's second largest copper producer.

(Reporting by Teresa Cespedes; Writing by Dana Ford; Editing by Marguerita Choy)