UPDATE 2-Newmont halts work on Peru mine to restart talks
* Gov't says violence must be averted
* Protests grow, airport closed
* Environmental official resigns amid controversy
By Omar Mariluz and Terry Wade
LIMA, Nov 29 (Reuters) - Newmont Mining Corp temporarily halted work on its $4.8 billion Conga gold project on Tuesday after the government asked it to help calm violent protests and restart talks with a skeptical local community.
President Ollanta Humala had been trying to mediate a bitter conflict over water at the proposed mine for weeks but ended up ordering police to break up protests on Tuesday after demonstrators started vandalizing the U.S. company's property.
Authorities in the region of Cajamarca said up to 30 people were injured when police fired rubber bullets, tear gas and at least two live rounds at protesters opposed to the gold project, which would be the biggest mining investment in Peruvian history.
"Recognizing the government's desire for a new relationship between mining companies and communities, we promise to facilitate the reestablishment of dialogue," Newmont's top Peruvian executive, Carlos Santa Cruz, said on state television.
He said he hoped the company would reach an accord with protesters "as soon as possible" so that work could resume. Operations at the project had been on hold since the protests started six days ago but Tuesday's announcement pointed towards a much longer suspension.
Humala, a former military officer, campaigned on promises to steer more social spending to rural towns to help defuse persistent social conflicts over natural resources while assuring companies they could move ahead with billions of dollars in mining and oil projects in Peru, one of the world's top mineral exporters.
The conflicts often turned violent during the term of Humala's predecessor, Alan Garcia, when 195 people were killed in clashes with police, according to Peru's human rights agency.
Humala has emphasized mediation efforts to avert violence and to break the Conga impasse, which has become the biggest test of his young presidency.
"We've made every effort to avoid the loss of life despite being provoked ... the rule of law must be respected and we reiterate our call for dialogue," Prime Minister Salomon Lerner said as he urged protesters to negotiate with the company.
Local political leaders want to stop the mine from being built, saying it would replace a string of alpine lakes with artificial reservoirs and cause pollution.
Protesters also have criticized Humala, a former leftist, for moving too far to the right and for supporting the project, which would generate thousands of jobs and enormous tax revenues.
In a sign the issue has caused cracks within Humala's diverse cabinet, the government confirmed on Tuesday that Vice Minister for the Environment Jose de Echave, who for years led an NGO that criticized big mining projects, had resigned.
He quit only days after the government said the project should go forward despite a leaked memorandum from the environment ministry saying it would hurt the local ecosystem.
Newmont has said its environmental study rigorously adhered to the highest standards available, and that it would try to respond to local concerns as much as possible so that the mine can be built.
HISTORY OF CONFLICTS
Protesters want the government to cancel the project, even though its environmental impact study was approved a year ago. Farmers say the mine would alter sources of irrigation water.
"The people want the project declared unfeasible because there are sufficient technical arguments showing that it is not viable," said Wilfredo Saavedra of the Environmental Defense Front of Cajamarca.
Several local newspapers have called the protesters intransigent and criticized Saavedra, a lawyer who spent a decade in prison for belonging to the leftist Tupac Amaru insurgency. Saavedra has said his past shouldn't be used against him.
The Conga project, which Newmont owns with Peruvian precious metals miner Buenaventura , would produce 580,000 to 680,000 ounces of gold a year and open in 2014. It has gold deposits worth around $15 billion at current prices and sits 13,800 feet (4,200 metres) high in the Andes, about 600 miles (990 km) north of Lima.
Nearby is Newmont's existing Yanacocha mine, which produced 1.5 million ounces of gold last year. It had a mercury spill in 2000 that still angers some local residents, though the company now runs extensive community development programs in the area.
Newmont has faced opposition to its expansion plans in the past. In 2004 it halted exploration to expand Yanacocha to include Cerro Quilish, a nearby mountain, because of community protests over water supplies.
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