Not Golden

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Another hurdle is the environment. Manhattan Minerals plans to pay $100 million in wages during the estimated dozen years that the Tambogrande mine would operate. But locals insist that agriculture near the mine is a $60 million-a-year concern, and they don't want it threatened by terrain-scarring open-pit mining. In the southern Andean town of Lircay in Peru's poorest state, Huancavelica, residents feel the same way so much so, in fact, that they recently took to the streets to block a proposed open-pit mine there, setting fire to government installations and attacking visiting officials from the Energy and Mines Ministry.

Although the era of state-owned mining created most of the environmental problems, the companies that bought up Peru's mines in the '90s now cope with them. Consider the La Oroya copper smelter in the central Andes region, which Doe Run, based in St. Louis, Mo., bought in 1997 for $150 million. Last year Doe Run dodged bankruptcy by restructuring (2001 revenues: $737.5 million). The government gave the company 10 years to clean up the environmental mess at an additional cost of some $100 million. It has spent $40 million so far, including money for a program to reduce high blood-lead levels in area children.

"We have made La Oroya and its surroundings better than it was in 1997," insists Doe Run Peru president Ken Buckley. That's not enough, say critics, who argue that Doe Run is speeding up production to recoup its investment and doing little to reduce lead levels in the surrounding air, which are 700 times internationally accepted levels. (Doe Run is also in the cross hairs of the Environmental Protection Agency back in the U.S. for lead-poisoning problems.)

The bottom line is that Peru needs the investment: 54% of its 27 million people still live in poverty, and the government is tapped out especially after the massive financial scandals of now disgraced ex-President Alberto Fujimori. "If we have to sit down with a community a thousand times, that's what we'll do" to resolve the backlash, says Finance Minister Jaime Quijandria. "But we are not going to pressure people if they want to stay poor." The problem is that until now, no one has bothered to show people how a mine can make them richer without ruining their heritage.