Newmont Mining: If Mine Opposition Wanes, Will Miner Care?

With all the problems gold miners faced in 2013, the pushback many received from those living near the mines probably ranked near the bottom of the list, especially since it gave companies like Newmont Mining (NEM) and Barrick Gold (ABX) ready excuses to cut back on spending.

Eva-Lotta Jansson/Bloomberg/Getty Images

Yet signs are emerging that some communities are reassessing their opposition, especially as they weigh the costs to their economies.  

Yesterday, for instance, the Wall Street Journal reported that local opposition to the Minas Conga project in Peru, a joint venture between Newmont Mining and Compania de Minas Buenaventura (BVN), could be dissipating. The Wall Street Journal reports:

Work at Newmont Mining Corp.’s majority-owned Minas Conga copper and gold project, which will require investments of $5 billion, could also restart in 2014, government officials said recently.

Violent protests against Minas Conga in 2012 led the company to suspend work on the construction of the mine. The company is currently building water reservoirs that it hopes will help it win over local support by ensuring communities’ water supply.

The conflict over Minas Conga’s was one of President Humala’s main challenges during his first year in office. The successful development of the project would be a victory for Mr. Humala’s administration and a sign that his government is able to resolve community opposition that has delayed billions of dollars in mining investments.

But with the price of gold tumbling–SPDR Gold ETF (GLD) has dropped 28% this year–what if Newmont and Compania de Minas Buenaventura aren’t ready to get working? JPMorgan’s John Bridges, in a report released yesterday, writes:

Local communities in the vicinity of the Conga project are apparently willing to forget the 2012 protests and be more supportive of Minera Yanacocha’s Conga project…

However, we understand that Newmont’s current plan is only to revisit its decision on the Conga project in 2015 after the Peruvian electoral cycle is over. The project requires $5bn in capital investments and with gold trading at $1,200/oz it is likely that the partners would be cautious about re-starting Conga, perhaps making the other development routes more attractive.

Shares of Newmont Mining have gained 0.9% to $23.14 at 10:27 a.m. today, while Compania de Minas Buenaventura has risen 2.7% to $11.28 and Barrick Gold is up 2.2% to $17.48, thanks to gold’s rise today. The SPDR Gold ETF has advanced 1.2% to $116.79 today, helping to lift the Market Vectors Gold Miners ETF (GDX) 2% to $21.06.