Peru arrests mayor leading protests against Xstrata
* Humala cracks down in mineral resource conflicts
* Riot police storm mayor's office in Cusco region
* Critics say his government too confrontational
By Terry Wade and Marco Aquino
LIMA, May 30 (Reuters) - Peruvian police on Wednesday arrested the mayor leading a protest against global miner Xstrata, as President Ollanta Humala cracks down hard to end conflicts over natural resources.
In an unusual display of force, dozens of riot police in helmets and carrying plastic shields stormed the municipal building in the town of Espinar in the mountainous southern region of Cusco to pull Mayor Oscar Mollohuanca from his office.
Politicians, some from within Humala's own party, said the government's authoritarian tactics had scuttled mediation efforts in a poor town where residents complain of being left behind by the country's decade-long boom.
"The detention of the mayor is a huge worry because it has ruined the dialogue process," congresswoman Veronika Mendoza, a legislator from Humala's Gana Peru party, said on Canal N television.
Humala, a former military officer, took office in July urging mediation to calm hundreds of disputes nationwide over the spoils of natural resources. But critics say he has become impatient with intransigent protesters and too willing to rely on a firm hand to maintain order.
RALLIES FOR AND AGAINST
Widespread conflicts over mineral resources threaten to delay billions of dollars in investments in a sector that drives 60 percent of exports in Peru's fast-growing economy. On Thursday, people are planning a rally in Cajamarca against a $4.8 billion gold mine planned by U.S.-based Newmont - a day after thousands marched in favor of the mine.
Protests on Monday in Espinar turned violent, killing two people and injuring at least 50. The government then invoked emergency rules that suspend freedom of assembly in a bid to end the protests.
At least 10 people have died in disputes over natural resources since Humala took office in July. At least 174 people died in similar protests during the government of his predecessor, Alan Garcia.
Protesters in Espinar say Xstrata's Tintaya copper mine causes pollution and want the company to boost financial donations it makes to the local government of Espinar to 30 percent of pre-tax profits.
The company has rejected those demands, saying it already gives 3 percent of pre-tax profits to the municipality and that those donations would increase by two-thirds once its $1.5 billion expansion to the Tintaya mine, called Antapaccay, opens in August.
Xstrata is also working on its $4.2 billion Las Bambas project in southern Peru. It would produce an average of 400,000 tonnes of copper concentrate plus gold, silver and molybdenum byproducts. The company's website says it should open by the end of 2014.
Prime Minister Oscar Valdes, also a former military officer, said the environmental concerns over Tintaya were trumped up and that Espinar's mayor had walked away from earlier negotiation efforts.
The government's tough line has annoyed residents and police have struggled to clear the streets in Espinar. He denied the government was being confrontational.
"Order must be re-established," Valdes said. "The Humala government is always willing to dialogue."
He blamed far-left ideologues for fomenting the protests.
"One thing is to dialogue. Another thing is to permit vandalism," Valdes said.
Jorge Acurio, the president of the region of Cusco, said that there was no chance to negotiate a settlement so long as the mayor was being held.
"I demand the mayor be freed. How can we hold a dialogue without him? Who are we going to talk to? I was supposed to be the host of the mediation process."
Cusco is a traditional stronghold of Humala, and protesters there have accused him of abandoning his leftist roots and cozying up to foreign investors.
Members of Humala's Cabinet said they were unwilling to travel to Espinar to hold negotiations without more assurances that it was secure.
"The people in Espinar are peaceful. Espinar is tranquil," Mollohuanca said on Wednesday before he was detained.
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