Illegal Miners Are Digging Gold at a $4.8 Billion Newmont Site in Peru

(Bloomberg) — A multibillion-dollar gold project owned by the world’s largest bullion producer has been invaded by illegal diggers in northern Peru, according to a senior government official.

Newmont Corp.’s stalled Minas Conga project in the Cajamarca region is “partially exploited by illegal mining,” Prime Minister Ernesto Alvarez told reporters Friday. Newmont had no immediate comment.

Denver-based Newmont has become the latest global company to confront unregistered miners as near-record prices increase incentives for diggers in the country’s poor rural areas. Southern Copper Corp., First Quantum Minerals Ltd. and MMG Ltd. said illegal miners were delaying progress by using their privileges.

Development of the Conga project, worth an estimated $4.8 billion, was halted shortly after environmental permits were obtained in 2010, following farmers’ opposition that turned into violent protests. Newmont still holds the mineral rights.

“When legal mining that meets high standards is not developed, it leaves the area open to illegal mining that pollutes and uses violence,” said Alvarez, a top aide to interim President Jose Jeri.

Peruvian authorities are grappling with how to deal with a rise in illegal mining. The government has backed the extension of a controversial permit known as Reinfo, which allows unofficial diggers to operate on relaxed conditions. SNMPE, Peru’s mining industry chamber, strongly opposes Reinfo.

“On the Conga issue, we were told it shouldn’t happen because local communities prefer agriculture,” Alvarez said. “The rivers originating from the Conga region are now polluted by mercury used in illegal mining. This is a terrible situation.”

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