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10/6/11

Keith Laskowski of Estrella Gold (EST.v) interviewed by Reuters on Peru mining scene

This is an interesting interview.

7 hours ago by Thomson Reuters
* Changes in mining sector welcomed by some miners
* Estrella has big exploration portfolio in Peru
By Terry Wade
LIMA, Oct 6 (Reuters) - President Ollanta Humala's effort to solve conflict over natural resources by steering more money to rural communities is welcome and could make life easier for mining firms, the head of a top Peruvian junior miner said.
Keith Laskowski, chief executive of Estrella Gold , said the previous government paid too little attention to settling disputes between corporations and communities that arose as billions of dollars poured into Peru's mining sector over the last 15 years.
"The prior administration wasn't dealing with this very much, or at all," Laskowski, whose company runs exploration and resource definition work on 30 properties in the Andean country, told Reuters.
"I'm very glad (the new president is) trying to deal with it because it was becoming prohibitive in some instances to try to explore."
Then-president Alan Garcia helped lure $40 billion in planned investment to Peru's mining sector, only to see his term marred by conflicts that often turned violent. More than 200 communities have organized to halt mining or oil projects.
But Humala, a leftist former military officer who took office in July, has won quick approval for two bills in Congress aimed at calming tensions.
One requires firms to consult with local communities about mining and oil projects proposed near their lands before beginning construction, while the other raised royalties on miners to fund infrastructure and social programs.
"(The government) has to equalize these issues and improve the landscape for the communities that, to some degree, have certainly been offended and overlooked," Laskowski said.
He said mining companies of all sizes must develop strong relations with communities, which often are worried about pollution, losing control of scarce water supplies or not receiving direct economic benefits from mining.
"To be successful, you can't have a separation between the community and the company," said Laskowski, a geologist who is also a consultant for the International Finance Corporation -- a member of the World Bank group -- on its potential equity investments in small mining companies.
"You can have the best deposit in the world, but if you don't have the community on your side you aren't going to go anywhere," he said.
NEW SOUTH AFRICA
Estrella arguably has the biggest exploration portfolios in Peru and 24 of its properties are part of a strategic alliance with Cliffs Natural Resources .
"We are in Peru because it has fantastic mineral endowment, meaning that we have a better chance of success, and it has a good mining law," he said. "We used to think South Africa was incredibly endowed -- I think Peru is the new South Africa when you look at the amount of diverse metals here."
Though Peru is a top global metals producer, its mining ministry says less than 1 percent of the country's existing mineral deposits are being mined.
The laws introduced by Humala, who was initially feared by many in Peru's mining sector, were made after he negotiated the content of the bills with mining companies.
In practice, that means the consultation law will not give veto power to communities when it goes into effect in January and royalties will be charged on a sliding scale depending on profit margins in boom and bust years.
Those two laws still need to be implemented and companies are trying to persuade the government to apply them in ways that won't turn off investors.
Humala is also reviewing the process for giving licenses to exploration companies, apparently in a bid to make sure all companies are actively exploring their concessions and not just holding them to speculate.
Any changes for junior mining companies will need to be made in a way that does not hurt exploration and shut off the country's future pipeline of big projects, Laskowski said.
More and more hurdles could reduce Peru's competitiveness in a difficult and often risky business.
But for now, Laskowski's feeling is that the new taxes and consultation requirement are reasonable.
"I think the bottom line is there is a need for more money to go to the communities and this is one way to do it," he said. (Editing by Dale Hudson)


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