Argentina's Mining Foes Flex Muscle As Protests Flare

According to the Mining Secretariat, investment in the sector totaled 11.1 billion pesos ($2.55 billion) in 2011.

Mining opponents were heartened last month when the governor of La Rioja Province suspended Montreal-based Osisko Mining Corp.'s (OSKFF, OSK.T) gold-mine project in the Famatina region due to stiff resistance from environmental activists and local residents.

The battle lines quickly shifted to neighboring Catamarca Province, where residents of the town of Andalgala threw up roadblocks to Anglo-Swiss miner Xstrata PLC's (XTA.LN) Alumbrera copper-gold mine and its nearby Agua Rica project.

Police clashed with activists last week when clearing the roads and now groups of mining supporters have put their own roadblocks in place to stop reporters and more activists from entering Andalgala.

Stoking the tension is the two-year anniversary of a series of violent clashes over Agua Rica that led a judge to suspend the project. That suspension was lifted last week.

"There is a tense calm," said Sergio Mendez, the environment secretary for Andagala's new mayor Alejandro Paez.

Mendez was a leader of the local citizens assembly opposing Agua Rica and Paez campaigned on a platform of blocking the project.

Mendez said many local communities oppose big mines due to pollution fears and the large quantities of water used by the industry.

The growing friction between mining supporters and opponents has forced President Cristina Kirchner to wade into the fray.

At the behest of the administration, governors and representatives of 10 mining provinces pledged Wednesday to work with the federal government to support mining. They also agreed to protect the environment and ensure that local communities receive a bigger share of the wealth created by mining.

"Maybe there was bad communication from our part and that's why the people react like this," Jujuy Governor Eduardo Fellner said at a press conference.

On Tuesday, Catamarca's pro-mining Governor Lucia Corpacci said her government will launch a public-awareness campaign to build support for the industry.

"Mining is the most important industry in our province and we recognize that," she said.

"We are optimistic about the future development of the industry in Argentina since the support of the national and provincial governments has been very encouraging," Xstrata spokeswoman Emily Russell said.

But activists are convinced the antimining movement will gain momentum.

"This is not going away, it's self-propagating," said Daniel Taillant, founder of environmental advocacy group Cedha.

In addition to activists, local politicians frequently stoke opposition to mining to garner support.

In 2007, La Rioja Governor Beder Herrera successfully led an impeachment drive against his predecessor, Angel Mazza, amid allegations of corruption related to a contract with Barrick Gold Corp. (ABX, ABX.T) to develop a mine at Famatina.

Barrick abandoned the project. Herrera later threw his support behind Osisko before bowing to public pressure and suspending the project last month.

About eight provinces have banned open-pit mining and the use of chemicals common in the industry such as cyanide, effectively putting them off limits to large-scale mining projects.

At the same time, a strict federal glacier-protection law threatens to stall a number of projects by limiting economic activity in the areas near glaciers.

Environmental groups say that a host of projects are breaking the law by affecting glaciers, allegations denied by the companies and the federal government. The glacier law faces several legal challenges, with a number of provinces questioning its constitutionality.

In November, a federal judge in San Juan Province suspended key provisions of the law at the behest of labor unions and mining industry associations until the Supreme Court can rule on the matter.

Copyright © 2012 Dow Jones Newswires

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