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Peru mine protest forcing Southern Copper to import copper concentrate, executive says

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By Marco Aquino

LIMA, March 16 (Reuters) - Southern Copper plans to import copper concentrate potentially from as far away as Mexico for its refinery in Peru after protests halted operations at its Cuajone mine, a senior executive said.

Raúl Jacob, the company's vice president of finance, said this would imply an increase in costs and a decrease in profits for this year. It comes as community protests hit copper mines in Peru, the world's no. 2 producer.

Southern Copper, controlled by Grupo México , has a smelter in the Peruvian town of Ilo and operates the Cuajone and Toquepala mines in the south. It operates the La Caridad and Buenavista deposits in Mexico.

"There are several sources, possibly one could be from Mexico, from one of the companies related (to the group)," said Jacob.

On previous occasions they have bought copper concentrates from Chile or from other Peruvian mines, he said.

"In this case, due to market conditions, it is more likely that we will buy concentrates from other countries."

Southern Copper produced about 400,000 tonnes of copper concentrate in Peru last year, according to government data.

Cuajone, the company's second largest mine in Peru after Toquepala, has been paralyzed since late February by a blockage of a railway line used to transport its concentrates and water being cut off due to a protest in the region of Moquegua.

"This is going to drive up costs, for sure," Jacob said. When asked if this would also impact profits for the year, he said it would because "every day that passes the company is going to be prevented from selling some $4.8 million."

The protesters are demanding compensation of $5 billion for the use of their land and a 5% share of the company's profits. The company says it has full land use rights and that the protest is illegal.

Jacob said he hoped authorities would intervene to put an end to the conflict, claiming that the protest along with others hitting MMG Ltd's huge Las Bambas copper mine were affecting 20% of the country's copper production.

Southern Copper has pending copper projects to be developed, such as Tía María, Michiquillay and Los Chancas in Peru, which could involve investments of some $8 billion.

Jacob said that talks with residents and authorities of Moquegua were being resumed to try to end the conflict, but that the blockades must end.

"You cannot negotiate with a gun to your head," he said. (Reporting by Marco Aquino; Editing by Adam Jourdan and Angus MacSwan)