Minera Yanacocha SRL, which runs Latin America's largest gold mine, on Friday ceased activities at its Carachugo project in northern Peru because of protests.
The shutdown at the Carachugo site, which was set to start production at the end of the year, is the latest setback for Yanacocho, which has faced ongoing protests in the last few years.
Yanacocha said Friday that ongoing talks with community groups in the Combayo area of northern Peru had failed to result in an agreement.
"Yanacocha has paralyzed all activities in the Carachugo project for an indefinite time frame and as a consequence it will have to suspend all social programs in the zone," the company said.
A company official said that the cessation affects some 1,045 employees working on construction at the Carachugo project.
Newmont Mining Corp. (NEM) has a 51.35% stake in Yanacocha, while Compania de Minas Buenaventura SAA (BVN) holds a 43.65% share. The International Finance Corp. holds a 5.0% stake.
A company executive said the protests haven't disrupted production at Yanacocha.
The stoppage of the project comes after a series of clashes between the police and protesters who have blocked roads. One protester died in a clash early this month.
"Regrettably, as a direct result of the safety and security threats posed by the roadblocks, more than 1,000 contracted workers will be laid off until normal operations can resume without endangering the employees, contractors and community members in the area," Randy Engel, Newmont's vice president of communications and investor relations, said in a statement.
On Thursday, the office of the nation's ombudsman, which often seeks to mediate disputes, said that it was pulling out.
"We took this decision since despite our efforts, we didn't find serious and transparent conditions for a dialogue between the two sides," Rolando Luque, of the ombudsman's office, was quoted as saying in government newspaper El Peruano on Friday.
A group of local residents started protests earlier this month against Yanacocha, initially demanding more work. The protesters have since made other demands.
The Peruvian government has been following the protests and the talks.
"We are ready to go to the city of Cajamarca to seek a solution to the problem," Energy and Mines Minister Juan Valdivia told reporters on Friday.
The mayor of the town of Combayo, Luciano Llanos, told RPP radio Friday that the community hadn't benefited from the project.
Yanacocha was forced in 2004 to shelve exploration plans in the nearby area known as Cerro Quilish, estimated to contain 3.7 million ounces of gold, after violent protests by farmers who believed the project threatened water supplies.
Minera Yanacocha produced 3,333,088 ounces in 2005. The company forecasts producing between 2.6 million and 2.7 million ounces of gold this year.
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