UPDATE 1-Peru rejects Southern Copper mine study

Fri Apr 8, 2011 6:26pm EDT

Related Topics

* Gov't says environmental impact study "inadmissible"

* Company set to discuss project's fate this month

* Project hit by violent protests involving farmers (Adds details on project, background)

LIMA, April 8 (Reuters) - Peru's government said on Friday an environmental impact study presented for Southern Copper's (SCCO.N) $1 billion Tia Maria mine was "inadmissible," the latest setback to hit the project.

Southern Copper's chief executive Oscar Gonzalez said last week he would discuss whether to continue with the project at a board meeting later this month, following violent protests by local farmers. [ID:nN29299135]

Southern Copper, a unit of Grupo Mexico (GMEXICOB.MX) and one of the world's largest producers of the red metal, will have to present a new study if it wants to move forward, a mining ministry spokeswoman said.

"This takes things back to square one," she said.

Peru's government had already halted the evaluation of the environmental impact study in a bid to quell local residents' anger over the project, which they fear could affect water supplies.

Clashes over natural resources are common and sometimes deadly in Peru. Many Peruvians feel left out of a decade-long economic boom, and how to share the benefits of the nation's natural resources has been a key issue in campaigning for Sunday's presidential election.

Tia Maria would produce 120,000 tonnes of copper a year, according to Southern Copper. Peru is the world's third-largest copper producer. (Reporting by Patricia Velez; Writing by Helen Popper and Caroline Stauffer; editing by Jim Marshall)

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