Doing the Conga

SINCE he took office as president in July, Ollanta Humala has proffered few words to Peruvians, giving only one press conference and few interviews. He was characteristically laconic on December 4th when he declared a state of emergency in the northern department of Cajamarca, dispatching the army to quash weeks of protests against Minas Conga, a giant mining project. His television address announcing the measure lasted less than three minutes. But it could come to define his five-year presidential term.

As a leftist candidate in the past two presidential elections, Mr Humala railed against foreign mining companies and courted the social movements that oppose them. But he knows that as president his standing will depend mainly on whether he can maintain Peru’s recent rapid economic growth. Growth is now slowing, as in the rest of the world, although it will still be over 6% this year. Matching or beating that rate in future will turn on how much of the $50 billion in mining and hydrocarbons investment planned for the next five years actually goes ahead.

Minas Conga, a $4.8 billion copper and gold project, would be the largest single mining investment in Peru’s history. It is an expansion of Minera Yanacocha, Latin America’s biggest gold producer, which is mainly owned by America’s Newmont and Peru’s Buenaventura. Conga would open by 2015 and pay $3 billion in taxes over the next 19 years, half of which would stay in Cajamarca. But the project would turn several small Andean lakes into reservoirs or tailing ponds.

Some locals support Conga. Others worry that it could threaten water supplies for farming. Yanacocha’s own environmental record has not been spotless. Nevertheless, Cajamarca’s regional president, Gregorio Santos, waited a year after the project’s approval before calling for a new environmental-impact study. He then went further: in alliance with extreme-left groups last month he called an indefinite “strike” to stop Conga. The demonstrators blocked roads and shut the airport; public offices and private businesses closed and losses mounted to $10m a day, according to the local chamber of commerce. As the protests grew violent, Newmont agreed to a government request to suspend the project, pending a review. But the government has refused to bow to the protesters’ demands to scrap it.

Most Peruvians will support the state of emergency. The conservative opposition had earlier berated Mr Humala for weakness in his handling of the dispute. Several big mining and electricity projects have been cancelled this year because of local protests. The task for Mr Humala is to put in place procedures for evaluating mining and other big projects that most Peruvians see as fair. But one thing now seems clear: those pundits who predicted that an economic slowdown would prompt Mr Humala to move further to the left were wrong. The president is a man of as few principles as words.

The Economist.