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Caiman Valores is a Colombian based independent investment analytics and risk management consultancy. The consultancy specializes in South American listed companies as well as conducting regional economic and risk assessments. The consultancy is currently located in Colombia. The principal of... More
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  • Further Protests In Peru At Newmont's Yanacocha Mine 0 comments
    May 14, 2012 2:09 AM | about stocks: NEM, BVN

    Late last week there were further protests in Peru at Newmont's (NYSE:NEM) showcase Latin American gold mine Yanacocha. This mine is the largest gold producer in Latin America and a significant gold producer for Newmont, which operates it with its junior partner Peru's Compania de Minas Buenaventura (NYSE:BVN). There has been no publicity to date in the mainstream western press concerning the protests but they are part of a series of ongoing local protests against the mine because of environmental concerns in the local community.

    These protests haven't reduced production at the mine. As Bloomberg reported on May 9th 2012, Peru's gold output has climbed for a fourth successive month on gains at Newmont Mining's Yanacocha mine, with production increasing by 27%.

    Late last year Newmont suspended its planned commencement of the Conga gold mine in Peru as a result of continuing protests against the mine over concerns of increased environmental concerns by residents in the northern Andean department of Cajamarca in recent months due to threats to their water supply. Newmont has proposed building reservoirs to replace the four natural lagoons that thousands depend on, so that it can drill for gold.

    As a result the Peruvian government re-evaluated the mine and demanded a new EIS. As a result changes were recommended but opposition has continued and this has shaken up President Ollanta Humala's government, with Cabinet chief Salomón Lerner and the environment minister among others resigning from the government.

    This seems to indicate further instability in President Humalla's government, which is certainly leading me to consider that the level of political risk for investors in Peru has risen. Especially when considered in conjunction with recent incidents showing a re-emergence of Peru's once thought spent insurgency group, the Shining Path. Overall it indicates that the degree of investment risk is rising in Peru and investors would be welled advised to understand the implications this has for their investments.

    Disclosure: I am long BVN.

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