Drug trade behind Peruvian mine killings at Rio Blanco - source

The head of a business leaders group says there is no dispute between the mine and the community so it is likely drug traffickers, who want to keep the area around the controversial Rio Blanco Copper project undeveloped, were behind the weekend attack

LIMA (Reuters) - 

A weekend attack on a controversial copper project in northern Peru that left three dead may have been the work of drug traffickers who want to keep the area undeveloped in order to protect their trade, the head of a business leaders group said on Tuesday.

The Rio Blanco copper project, owned by China's Zijin Mining Group (601899.SS: Quote)(2899.HK: Quote), on Sunday was was invaded by 15 to 20 gunmen who fired at employees -- killing three -- and then set the complex ablaze, the company said.

Opium poppies cultivated for the heroin trade are grown in the mountainous area.

"There is no dispute or conflict with the community, so this makes you think that criminal interests are behind it, probably drug traffickers," said Ricardo Briceno, head of Confiep, Peru's largest business federation.

Police said they were still collecting evidence from the attack, and did not rule out a revenge attack stemming from a previous clash at the site.

Big mines tend to bring roads, police and development to areas where those involved in the drug trade want to keep a low-profile.

"Narcos don't like formal companies because they bring lots of attention to the area of their illegal activities," said Fernando Cilloniz, an analyst for CPN radio.

Peru is the world's No. 2 cocaine producer and the government has leased concessions to foreign mining companies giving them rights to look for minerals near coca farms.

President Alan Garcia's government has tried to build a stronger presence in rural areas to discourage coca planting and crack down on the cocaine trade.

The $1.4 billion Rio Blanco mining development is run by Monterrico Metals of Britain, which was bought by Zijin in 2007.

HISTORY OF VIOLENCE WITH LOCALS

The company and people from the business community say townspeople now support the construction of the mine, though violence has broken out before at Rio Blanco.

In 2005, one protester was killed and roughly two dozen others were tortured when residents mobilized to stop construction of the Rio Blanco mine, which they said would cause pollution and hurt water supplies.

Garcia has worked hard to lure foreign investors to Peru, but local critics often say he ignores environmental concerns about big mines.

The government has also struggled at times to win the public debate over the benefits that big mines bring to isolated towns in the Andes.

Residents in poor Peruvian towns, sometimes working with international environmental groups, often argue with foreign firms and the government over mining and oil projects in Peru, one of the world's largest mineral exporters. Periodically, violence erupts.

In June, three dozen people died near the town of Bagua, in Peru's northern jungle, as police broke up roadblocks set by indigenous groups opposed to oil exploration on their ancestral lands.

It was the biggest crisis of Garcia's term and dozens of towns have moved to block mining or petroleum projects nationwide. (Reporting by Marco Aquino; Writing by Terry Wade; Editing by Christian Wiessner)

© Thomson Reuters 2009 All rights reserved

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