Peru's Humala says Newmont mine project needs work

Humala, who urged community activists to stop protesting against the stalled mine's construction, said the government would make sure the company adheres to strict social, environmental and labor goals.

His comments to end a months-long impasse came two days after independent environmental auditors encouraged the company to build larger reservoirs to guarantee even more water supplies. They also said the company should preserve two lakes that would be displaced under the company's original plan.

"The company should meet the environmental and social recommendations made by auditors. And the capacity of the reservoirs should be at least four times greater than originally proposed by the company so as to benefit more townspeople," Humala said in a televised address.

Newmont's plan to replace four alpine lakes with artificial reservoirs fueled protests in the northern Cajamarca region late last year as some townspeople feared the most expensive mine ever attempted in Peru would leave local farmers without sufficient water supplies and cause pollution. The mine's construction has since been halted.

In a bid to gain confidence from locals, Humala's government asked three European auditors to issue an evaluation of the mine's environmental impact study, which was approved by the previous government.

Newmont has not yet responded to Humala's latest comments but has said it is willing to fine tune its mitigation plan. It has also said the reservoirs as planned would guarantee a year-round water supply for Cajamarca.

Peru's environment minister has said some of recommendations made by auditors would be relatively more costly and that the company would have to decide if it still wants to proceed after the government's recommendations.

(Reporting By Terry Wade; Editing by Bob Burgdorfer)