Report says Newmont should aim to save Peru lakes

Wed Apr 18, 2012 5:48pm EDT

* Government to issue recommendations based on report

* Minister says new conditions to raise Newmont's costs

* Opposition to mine remains

LIMA, April 18 (Reuters) - Newmont Mining Corp should consider leaving two lakes intact and increasing the amount of water held in artificial reservoirs it plans to build for its $4.8 billion Conga project in Peru, auditors said in a report released on Wednesday.

Newmont's plan to replace four alpine lakes with artificial reservoirs fueled protests in the northern Cajamarca region as some townspeople fear the most expensive mine ever attempted in Peru would leave local farmers without water supplies.

In a bid to gain confidence from locals, President Ollanta Humala's government asked three independent European auditors to issue an evaluation of the mine's environmental impact study, which was approved by the previous government.

"Alternatives should be evaluated for the relocation of the mine tailings to try to avoid covering the Azul and Chica lakes," their 260-page report made public on Wednesday said.

Other recommendations included increasing the capacity of the artificial reservoirs, more secure storage of waste from a water treatment plant, and trying to conserve more soil.

The Conga dispute has tested campaign promises from Humala, who took office in July. He pledged to resolve more than 200 environmental conflicts that could delay Peru's $50 billion pipeline of mining and energy projects.

The government will analyze the report before establishing new conditions for the gold and copper project, said Environment Minister Manuel Pulgar. He declined to give a timeline for the process.

Though the report does not give any cost estimates for its recommendations, Pulgar said Newmont would have to increase its investment to meet the new conditions.

"Some recommendations could be relatively low-cost... and others like increasing reservoir capacity to store water could have a higher cost," Pulgar told journalists.

Newmont has indicated it is willing to fine-tune its mitigation plan. It has also said the reservoirs as planned would guarantee a year-round water supply for Cajamarca.

The head of the Environmental Defense Front of Cajamarca, which leads protests against the project, said the report would not reverse community opposition.

"With all the errors they've made in presenting this report, it only justifies the invalidity of this project," said William Saavedra, who spent a decade in jail for belonging to the Marxist insurgency group Tupac Amaru.

For the full report on Conga see:

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