The politics of resources redefined™
The politics of resources redefined™
The politics of resources redefined™
The politics of resources redefined™
The politics of resources redefined™
The politics of resources redefined™
The politics of resources redefined™

Ratings update: Newmont, Peru

As Newmont steps back from its $5bn Conga project, Critical Resource reflects on the financial risks that stakeholder opposition poses to mining projects in Peru. Despite a positive political and economic outlook, anti-mining activism remains a serious obstacle.

Key Development

  • In February 2016 Newmont announced that it did not anticipate being able to develop its Conga copper and gold project in Peru “for the foreseeable future.” The company blames market conditions and the social and political environment facing the country’s mining investors. The project – a joint venture between Newmont (51.35%), Buenaventura (43.65%) and IFC (5%) – has been on hold since 2011 due to community and political opposition. With a capital cost of $5bn Conga would be the largest mining investment in Peru’s history.
  • Newmont’s statement comes shortly before Peru’s presidential election which will be contested in July by two market-friendly candidates: Keiko Fujimori and Pedro Pablo Kuczynski. Left-wing, anti-mining candidate Verónika Mendoza did not make it past the first round of voting in April.



  • Conga has struggled with opposition from local and regional activists since it submitted its environmental impact assessment in 2010. Opposition has focused particularly on perceptions over potential water impacts. In 2011 Regional President Gregorio Santos led violent demonstrations against the project. This prompted President Ollanta Humala to declare a state of emergency and force the company to suspend operations. In July 2012 four protesters were killed in clashes with police in the towns of Bambamarca and Celendin. Despite being arrested in June 2014 on corruption charges, Santos was re-elected in October of the same year and continues to orchestrate mining opposition from prison.
  • Newmont has taken steps to respond to stakeholder concerns, particularly on environmental issues. In 2012 the company proposed to build reservoirs to guarantee year-round water for towns suffering shortages. The plan was expected to add up to $200m to project costs. This led President Humala to agree in principle for the project to restart. In the end, only construction of the reservoirs, rather than construction of the mine, was authorised. Newmont’s experience speaks to the strength of Peru’s anti-mining movement – even where companies show willingness to address stakeholder concerns and have national political backing.
  • Although Newmont has decided not to move ahead, mining companies’ relationships with the national government are expected to improve following the 2016 presidential election. Both remaining candidates in the July run-off are keen to unblock stalled mining investments but have been cautious about their pronouncements on controversial projects like Conga. Given the relatively positive outlook for national politics and copper/gold markets, Newmont’s decision is indicative of the challenges they see at the local level.
  • Both of the remaining candidates are trying to win over communities. Ms Fujimori vows to enable communities to become shareholders in projects while Mr Kuczynski – Peru’s former mining minister – proposes guaranteeing advance social and environmental benefits from mining projects. Some analysts believe that providing advanced benefits at Conga could have helped win over stakeholders before opposition snowballed.
  • Even though two investor-friendly candidates triumphed in the first round of the presidential election, it is clear that anti-mining sentiment remains strong across Peru. Verónika Mendoza – whose running mate was a leading figure in the protests against Conga – received almost 50% of the votes in some resource-rich regions and 19% of votes nationally. Mr Santos, who also ran in the election from prison, won more than 40% of the votes in Cajamarca but only 4% nationally. Ms Fujimori and Mr Kuczynski received 40% and 21% respectively. A Mendoza-Santos coalition might have kept them in the running for the second round.
  • Mining companies will continue to face an uphill struggle in Peru as resentment towards the sector remains deep-rooted in many rural communities. Other companies have faced very similar challenges to Newmont. Last year, several protestors were killed in demonstrations against Southern Copper and MMG. Around $30bn of mining investment in Peru is stalled largely as a result of stakeholder opposition (but also due to market conditions). Newmont’s experience clearly shows that companies need to engage with local and regional stakeholders early and proactively if they want their projects to succeed.

This article uses Critical Resource’s LicenseSecure™ model to assess the likely level of political and stakeholder risk. Our updates provide a rapid overview of new or updated ratings in our database, with a focus on projects in the news. Please note that these ratings updates are provisional, based in part on open source analysis and are not from client projects. Full LicenseSecure analyses are in-depth, involve extensive intelligence gathering and are confidential.

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