Peru Suspends Southern Copper Project for 90 Days (Update2)

April 21 (Bloomberg) -- Peru's government suspended Southern Copper Corp.'s $900 million Tia Maria copper mine project for 90 days to appease protesters, Cabinet Chief Javier Velasquez said.

Velasquez, who held talks today with farmers opposing the project in the southern Andean province of Islay, said Peru's largest copper miner will continue working on an environmental impact study. Protesters, fearing the project will consume water used for irrigation, blocked roads and burned buses during the last week.

"We haven't broken with the juridical order of things," Velasquez told state television station TV Peru today. "You can't impose such a major investment project when you have an entire population against it."

Phoenix-based Southern Copper's project, which is slated to produce 120,000 metric tons annually, is part of $35 billion in mining investments expected over the next decade, according to the Energy and Mines Ministry. Environmental protests have delayed mine developments by companies including Southern Copper, Anglo American Plc and Newmont Mining Corp.

The community of Islay won't allow the company to build the mine, protest leader Pepe Gutierrez told Lima-based Radioprogramas. Talks with local community leaders will resume next week, Velasquez said.

Southern Copper Chief Executive Officer Oscar Gonzalez Rocha didn't return telephone calls or an e-mail seeking comment.

'Culture of Blackmail'

"We must avoid the culture of blackmail, where protesters block a road to force a decree," Jose Miguel Morales Dasso, an official at the National Society of Mining, Petroleum & Energy, told reporters in Lima today. "The fact we're in an election year proves social conflicts have more to do with political interests than mining issues."

Southern Copper fell 1.1 percent to $31.645 at 2:15 p.m. in New York Stock Exchange composite trading. The stock has dropped 10 percent since the protests began April 14.