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Last Updated: Wednesday, 1 June, 2005, 23:19 GMT 00:19 UK
Gold mine sparks battle in Peru
By Hannah Hennessy
BBC reporter in Choropampa, Peru

Francisca Guarniz was affected by mercury poisoning
Francisca Guarniz (right) says she was affected by mercury poisoning

Francisca Guarniz sobs as she remembers the night she flung her nine-month-old daughter on her back and ran down the hill to catch the silvery droplets that spread out across the road in her village.

"It was shining like a mirror and we started collecting it without foreseeing the pain that would come to destroy us," says the 51-year-old.

She says her bones ache, while her daughter has learning problems and is small for her age.

On 2 June 2000, a truck carrying mercury from South America's largest gold mine spilled some of its load, and turned Choropampa into an environmental disaster.

Five years later, the residents of this Andean village say they are still suffering the effects of mercury poisoning.

Many are involved in legal disputes with US mining company Newmont, the main stakeholder in the Yanacocha mine.

The company says it has spent millions of dollars on cleaning up, compensation and public works projects and has overhauled its safety procedures.


Choropampa has become synonymous with the struggle between foreign mining companies and their Peruvian neighbours, many of whom argue they are negatively affected by the social and environmental impacts of mining.

Peru's weak government is doing little to ease the tension.

Local governments have been accused of failing to use the funds received from mining to benefit local residents.

Meanwhile, the country's unpopular president, Alessandro Toledo, is under pressure in the face of persistent protests and an investigation by Peru's Congress.

Mining boom

Mining remains vital to Peru's economy, providing 55% of its exports last year and almost 30% of tax revenues.

map of peru

The relationship between the mines and ordinary Peruvians is especially emotive in the city of Cajamarca.

It was here in 1532, that the imprisoned Inca ruler Atahualpa offered to fill a room full of gold in return for his freedom.

He kept his side of the deal, but his Spanish captors murdered him.

Now some people here say Peru's gold is being taken by foreigners again.

The Yanacocha mine is just an hour north of Cajamarca, and produces more gold than any other mine in the world.

It straddles the Andean watershed, covers more than 170,000 hectares and has estimated reserves of 32 to 33 million ounces.

Its output has soared from around 80,000 ounces in 1993 to 3.3 million ounces last year and has around 8,000 employees, of which 60% come from Cajamarca.

City under stress

The mine's management admits it has grown faster than it had ever imagined.

The city of Cajamarca has grown from around 30,000 people when Yanacocha arrived in 1993 to 240,000.

Yanacocha says it has invested tens of millions of dollars in social projects such as schools and potable water for the residents of one of Peru's poorest regions, and says that half its income tax payments go to Cajamarca province rather than the national treasury.

But the growth of the mine has fostered resentment and suspicion.

Yanachocha gold mine, Peru
The Yanacocha gold mine wants to expand to the mountain behind

Local people say that while jobs and wealth have increased, so have crime rates and prostitution.

The city's mayor accuses the mine of using Cajamarca like a mining camp, overwhelming its services and destroying its roads with heavy machinery.


Last September, thousands of people blocked the mine's entrance, protesting against a planned expansion at a mountain site called Cerro Quilish.

Locals said this would threaten a major water supply and contaminate rivers.

For two weeks, the Yanacocha mine had to fly in vital staff by helicopter.

Yanacocha's operations manager, Guy Lansdown, says it failed to understand the magnitude of the community's concern.

"We thought we could go ahead and explore Cerro Quilish," he says.

"Obviously the community did not think that, so we pulled back. We've got to sharpen our pencils and get out and communicate with them and work with them."

But Marco Arana, head of a non-governmental organization called Grufides which campaigned against Cerro Quilish, says communication was not the problem.

"They need to change their system of environmental management, they need to stop contaminating waters, they need to have an independent authority that certifies the environmental quality of its processes."

Yanacocha says it is doing all this.

Weak government

Mr Arana says this must go hand-in-hand with efficient state control.

But he says the government, which has a year left in power, cannot provide this.

Yanacocha, too, feels let down by the current administration.

"It's a very weak government right now. We can't rely on the support of them," said Mr Lansdown.

The frailty of the government has led to suggestions that some view Yanacocha as a kind of substitute parent, providing the sort of services an effective government might otherwise provide.

Yanacocha knows it has a difficult balancing act. Its future is inextricably linked with that of the people of Cajamarca and feelings run deep on both sides.

In order for the government, residents and the mine to benefit, all sides will have to compromise.

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