Peru protesters end blockades after deadly clash

by Reuters
Monday, 27 June 2011 15:39 GMT

* Aymara Indians want all mining concessions revoked

* At least five killed in clash

* Canadian company's license revoked

* U.N. treaty on indigenous rights at issue

By Terry Wade

LIMA, June 27 (Reuters) - Thousands of indigenous protesters opposed to mining lifted their blockades in the remote Peruvian region of Puno, residents said on Monday, after a deadly clash prompted the government to give them more control over natural resources.

Peru's mining ministry issued a rule over the weekend that requires companies to consult with mostly Aymaran Indians in southern Puno before building new mines or oil projects.

The government also revoked the license of Canadian mining firm Bear Creek <BCM.V> on Friday in a bid to persuade the protesters to allow stores and roads to reopen.

The company's shares were down 22 percent on Monday as traders dumped the stock because it lost its license. [ID:nWEN4740]

Protests in Puno turned violent on Friday and five people died in a clash with police. Conflicts over natural resources -- which have killed nearly 100 people over the past three and a half years -- have marred departing President Alan Garcia's term as poor towns demand a bigger slice of Peru's lucrative mining boom or try to halt projects they said would cause pollution.

President-elect Ollanta Humala, who takes office on July 28, campaigned on promises to end conflicts, in part by charging a windfall profits tax on mining companies to fund anti-poverty programs in rural towns.

"The issue of mining concessions generates 70 percent of the conflicts in the provinces and we think mining needs to contribute more to development," Humala told reporters on Monday.

A leftist former army officer who has promised to govern as a moderate, Humala said remote towns bear the costs of mines, which can cause pollution and sap scarce water supplies, but do not see direct economic benefits from them.

U.N. TREATY

Humala also wants to pass a bill that would require Peru to adhere to the U.N. treaty on indigenous peoples, which requires tribes to be "consulted on issues that affect them" to ensure there is "free, prior and informed participation in policy and development processes."

Congress approved the bill at least once, but Garcia refused to sign it into law, saying the treaty gives local communities the power to veto the construction of new mines.

Mining is the traditional economic engine of Peru, one of the world's fastest-growing economies, and Garcia has lined up more than ${esc.dollar}40 billion in foreign investment for mining projects for the next decade.

The ruling passed by the mining ministry over the weekend requires companies to follow the spirit of the treaty in southern Puno, but not nationwide where more than 200 conflicts over natural resources nag the government.

Some 5,000 protesters, mostly Aymara Indians, descended on Puno over the past few weeks to demand concessions be revoked for all mining companies, not just Bear Creek's Santa Ana project, ostensibly over concerns about potential pollution.

Bear Creek, whose share price has sunk during the protests, had planned to produce silver starting in 2012 in Santa Ana, located some 860 miles (1,385 km) from Lima. The mine has reserves of 63.2 million ounces of silver.

Despite the revoked license, a political solution is possible, Bear Creek Chief Executive Andrew Swarthout said on a conference call with investors.

"This project still remains in the best interest of both the central and local governments and communities," he said.

"Outside council and legal advisors ... firmly believe the decree is not legal. It is unconstitutional, is in violation of Peru foreign investment laws and constitutes expropriation." (Reporting by Terry Wade, Patricia Velez and Enrique Mandujano in Lima and Julie Gordon in Toronto)

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