President Humala has declared a state of emergency in the northern part of Peru as talks with protesters have broken down. The army and police will have additional powers for 60 days, including the right to arrest without a warrant in four states within the Cajamarca region.
Protests over water supplies under mining projects have forced Newmont Mining ( NEM , quote ) to suspend the $4.8 billion Minas Conga gold project in the area. Other protests have also caused stoppages at projects by Southern Copper ( SCCO , quote ), and Anglo American ( AAUKY , quote ).
Other companies operating in the area include Rio Tinto ( RIO , quote ) and Gold Fields ( GFI , quote ).
Humala, elected last year on a pledge to use the mining industry to better support the country's poor, has shown that he is much more like Brazil's Lula da Silva than he is a Peruvian Hugo Chavez .
Although the government has increased royalties on mining, the original fear that the new administration would be anti-capitalist has proven unfounded.
Peru is expected to post the largest increase in GDP within the region for this year. GDP growth in the third quarter expanded to 6.5% while the Peruvian sol has appreciated 3.9% against the dollar this year. The central bank meets on Wednesday of this week but is not expected to move rates from 4.25%.
Newmont is down about 0.5% this morning but up strongly over the last six months (24.8%) and year (10.4%).
The Peruvian ETF ( EPU , quote ) is significantly lagging its Latin counterparts this morning, up a mere 0.6% compared to gains of 1.5% to 2.5% elsewhere in the region.
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