CORRECTED-Peru's VP says local people still have reservations about Conga gold mine

Sat Mar 1, 2014 3:59pm EST

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(Corrects fifth paragraph to clarify that deaths came after construction was suspended, not before.)

By Allison Martell

TORONTO, March 1 (Reuters) - Tensions at Newmont Mining Corp's Conga project have been reduced, Peruvian Vice President Marisol Espinoza told Reuters on Saturday, but local communities still have doubts about the stalled copper gold mine.

Peru has a significant mining industry, but in recent years violent protests have derailed some major projects, including Conga. Last September, Peru's then-mining minister was quoted in the Los Angeles Times saying work on Conga would soon resume, but Newmont said nothing was imminent.

"Communities are still fighting for their demands. There are some reservations," said Espinoza, through an interpreter. "In that regard the government is working really hard to provide basic services, infrastructure services such and water and sanitation."

Many peasants who live near Conga, in the northern region of Cajamarca, fear it would pollute or deplete their water, so improving infrastructure could be key to resolving the conflict.

Denver-based Newmont suspended mine construction in 2011 after violent protests. It said it would focus on building water reservoirs and winning over local people. The next year, five people were killed in clashes over the project.

President Ollanta Humala has broadly backed Conga, but the dispute rattled his government, sparking cabinet shuffles. The situation has been closely watched by investors, along with progress on Southern Copper's Tia Maria project, also the target of protests.

Espinoza was in Toronto for the world's largest mining industry gathering, the Prospectors and Developers Association of Canada convention, which opens on Sunday.

She said Peru's government will continue to support projects that benefit not just investors, but also local communities.

Newmont spokesman Omar Jabara confirmed in an email on Friday that Newmont has not yet decided whether to resume mine construction at Conga. He said the Chailhuagon reservoir, completed last May, is now full ahead of the dry season, which usually starts in April.

"We expect the on-going water releases will continue to benefit the downstream communities until and throughout the entire dry season," he said.

Peruvian miner Buenaventura has a minority stake in the Newmont-controlled joint venture that owns Conga, as well as the nearby Yanacocha gold mine. (Reporting by Allison Martell; Editing by Dan Grebler)

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