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http://ca.reuters.com/article/topNews/idCABRE9400CG20130501

Exclusive: Peru rolling back indigenous law in win for mining sector
Wed May 1, 2013 6:56am EDT Print This Article | Single Page [-] Text [+]

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By Mitra Taj and Teresa Cespedes

LIMA (Reuters) - Peru's mining minister is winning a crucial cabinet battle by swaying President Ollanta Humala to water down a law that gives indigenous groups more say over new mines and oil projects - and a deputy minister will likely resign in protest.

According to half a dozen people with direct knowledge of the internal tug-of-war, Mines and Energy Minister Jorge Merino has prevailed in excluding Quechua-speaking communities in the mineral-rich Andes from being covered by the law.

Sources said he fears applying the law throughout the highlands - as the government once said it planned to do - would delay a pipeline of mining investments worth $50 billion.

Several people in Merino's office declined repeated requests by phone and email for comment.

The tussle underscores a quandary facing Peru, one of Latin America' fastest-growing economies: how to develop its vast mineral wealth while also addressing a legacy of inequality from its colonial past.

The "prior consultation law," which Humala touted during his 2011 campaign as a salve for widespread conflicts over natural resources, requires companies to negotiate agreements with indigenous communities before building new mines or oil wells around their lands.

It does not give the communities the power to veto a project, but miners have said it could snarl approvals for new mines for everything from gold to lead.

"Merino has realized that with this law the government was shooting itself in the foot," an industry source said. Continued...