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Key permit for copper project in Peru fuels fears of new round of unrest

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By Marco Aquino

LIMA, July 10 (Reuters) - Peruvian President Martin Vizcarra's decision to grant a green light for a long-delayed copper project is emerging as a key test of his ability to ease opposition to mining that has derailed billions in investments in the world's No. 2 producer.

Opponents of Southern Copper Corp's $1.4 billion proposed Tia Maria mine readied plans on Wednesday for an indefinite strike, a day after Vizcarra's government granted the company a construction license that two of his predecessors had declined to issue.

Tia Maria is expected to add 120,000 tonnes of copper annually to Southern Copper's production portfolio at the "very competitive cash cost" of $1 per pound, Moody's Investors Service said.

Peru's business community cheered the decision to grant the construction license, seeing it as a rare instance in which a mining project derailed by protests might be revived.

But in the southern Peruvian province of Islay, where at least six people have been killed in protests against the project this decade, it sparked anger and vows to stop it.

"It's a traitorous blow," Julio Cornejo, mayor of the town of Cocachacra, told Reuters by phone.

Cornejo and other Tia Maria opponents fear the project will interfere with farming and pollute water supplies, remaining opposed even after Southern Copper made plans to build a desalinization plant.

Protests are scheduled to start on Monday and will continue until the permit is annulled, Cornejo said.

Some 400 police officers were transported to Islay province late on Tuesday to control possible outbreaks of violence, said Hernan Vale, the prefect of Arequipa.

Vizcarra, in office a little over a year, is from Moquegua, a small mining region next to Islay. He once helped lead protests demanding a greater share of proceeds from other Southern Copper units in the region. Later, as governor, he helped negotiate a solution between Anglo American and local residents opposed to its Quellaveco project.


Southern Copper has stressed that, even with the granting of the license, construction on the project will not begin until concerns by local residents are cleared up - something the company has spent years trying to do.

But Southern Copper has to show authorities it has activated the project in some way to keep approval of its environmental permit in force, said Jose de Echave, a director for the environmental group Cooperaccion and a former environment ministry official.

The company's environmental plan, approved in 2014, had been set to expire Aug. 1, a key reason the government granted the construction license now.

Vizcarra told Reuters in May that Tia Maria still lacked the kind of local support needed to start construction. But he said he thought it would get there, in part through a development program for the region he was working on with local authorities.

But now many of those authorities say they feel let down.

The region's governor, Elmer Caceres, said Vizcarra had promised to send his prime minister to discuss Tia Maria with locals before authorizing its construction.

"The decision was made without consulting the population," Caceres said. (Reporting by Marco Aquino, Writing and additional reporting by Mitra Taj Editing by Leslie Adler)