Protests and strikes against the resource industry in Peru have created a major setback for a Vancouver mining company.
Bear Creek Mining (TSX-V:BCM) said Wednesday the Peruvian Ministry of Energy and Mines had suspended the environmental and social impact assessment on its flagship Santa Ana silver project in Chucuito province.
The suspension delays the development of the project and will last until May 2012, when the company had hoped to already have the project under construction.
The Peruvian government said the suspension would allow the company to pursue its project at a later date when the political climate in the region is less charged.
Bear Creek, on the other hand, has said the suspension is based on “weak legal grounds” and it’s assessing “legal alternatives” to get the project back online.
“We continue to believe that these protests and government responses are the result of the pre-election political climate,” said Andrew Swarthout, Bear Creek’s CEO.
The protests come amid a tightly contested presidential campaign in the South American country.
Demonstrators are concerned Bear Creek’s project could damage the environment, with little benefit for the local population.
Bear Creek has said Santa Ana would create 2,500 direct and indirect jobs, and result in more than US$330 million in royalties and taxes.
The suspension comes one week after the Peruvian government set up a 180-day commission to study and propose action in respect to mining activities in the region while the government resolved the protests.
At the time, Bear Creek said the study would set the project back approximately half a year.
The company’s stock then plummeted 17% to close at $6.06 on May 31.
At press time, Bear Creek’s shares were valued at $6.05.
Joel McKay
Twitter: jmckaybiv