Fearing arsenic pollution, Peru stops Canadian Gold Hawk Resources from exploiting mine

Peru hit by mine pollution emergency

By Naomi Mapstone in Lima

Published: July 20 2008 19:49 | Last updated: July 20 2008 19:49

Peru has declared a state of emergency at a mine near Lima over fears that arsenic, lead and cadmium from its tailings dam could pollute the main water supply for the capital.

Gold Hawk Resources, of Canada, confirmed the government has asked it to stop operations and relocate its processing plant and tailings dam from the Coricanca mine in the Tamboraque hillside region, which has been weakened by seismic activity and subterranean water filtration. 

Kevin Drover, president and CEO of Gold Hawk, said in a statement the government’s emergency decree would “expedite the required authorisations to implement measures that will minimise the risks to people, the environment and property.”

The company informed authorities of the problems with the tailings dam in May and had already stopped operations. Last week it completed a $3.3m private placement to invest in Coricancha, including the relocation of its tailings dam.

“The closing of the private placement provides Gold Hawk with the funds to support the planning activities necessary to deal with the ground displacement, move our tailings to Chinchan and conduct the necessary engineering studies to bring our Coricancha mine and processing facility back into operation,” Mr Drover said on closing. He could not be reached for comment yesterday.

Beatriz Merino, Peru’s ombudswoman, in a letter to president Alan Garcia, warned that a major earthquake could threaten the Rimac river system, the key potable water supply for Lima’s 8m residents.

“The National Civil Defense Institute, or Indeci, has issued a “high risk” warning because of the enormous probability that the tailings dam will collapse,” she wrote.

More than two-thirds of the world’s earthquakes occur along the west coast of South America, where Lima is situated.

Gold Hawk bought the mine from Gestiones y Recuperaciones de Activos in 2006 for $12m and its subsidiary, the San Juan S.A. Mining Company, started production last year as gold prices doubled.

Copyright The Financial Times Limited 2008