Peruvian villagers 'to sue mining giant'

Lawyers for the villagers have filed a complaint against Newmont Mining in a U.S. District Court, the Reuters news agency reported.

The accident took place two years ago and involved a truck operated by a contractor carrying mercury from the Yanacocha mine to the capital, Lima.

The complaint reportedly alleges the mercury spill led to disfigurement and physical disabilities among local people.

World Bank funds

A spokesman for Newmont declined to comment on the filing because the firm has not seen the complaints, Reuters said.

After the spill, along a 25 kilometre stretch of road that passed three villages, some of the mercury was collected by local people.

Newmont has a 51% stake in the giant Yanacocha open pit mine, which is a joint venture with Peruvian firm Compania de Minas Bueunaventura.

The World Bank also holds a 5% stake in the mine through its International Finance Corporation (IFC), which backs development projects by private capital.

The US mining giant does not dispute that the accident - which was investigated by the IFC's funding compliance arm - took place, though it says the spill was not under its control.

Health screening

Newmont has reportedly spent $14m to clean up the mercury spill.

Shortly after the accident, Newmont chairman Roland Chambre said the firm was "taking aggressive steps to implement health screening and environmental monitoring."

Mercury is a by-product of the cyanide leaching method used to extract ore from rock at the mine.

The Yanacocha mine employs about 1,300 people.

In 2000, it produced 1.8 million ounces of gold - the industry's standard unit of measurement - and its reserves were estimated at 36.6m ounces.

US-based Newmont became the world's biggest gold producer earlier this year when it beat rival AngloGold in a battle to take over Australian mining giant Normandy.