Peru police held hostage as mining unrest deepens

LIMA (Reuters) - Peruvian protesters held 48 policeofficers hostage on Tuesday and workers went on strike at asecond copper mine as the government scrambled to end aweek-long blockade over mining taxes and avert more violence.

Residents of Moquegua province have occupied roads,including Peru's main highway to Chile, and severed access tothe Ilo smelter and Cuajone mine of Southern Copper, thecountry's largest copper producer, to demand their provincereceive a bigger share of taxes paid by the company.

Union workers at the Cuajone mine deepened the crisis bystarting a two-day strike for better benefits, the latest signthat President Alan Garcia is being pressured to spread thewealth from a 6-year economic boom to labourers and the poor.

Jorge del Castillo, Garcia's chief of staff, urgedprotesters to free the kidnapped police officers and negotiatein good faith to reach a deal on how to divvy up mining taxes.

"I can't negotiate, in the name of the government, with apistol aimed at my head," he said. "We can't negotiate untilall police are let go."

Police, armed with tear gas but vastly outnumbered, wereoverpowered by club-wielding protesters on Monday when theytried to break the blockade of a bridge.

The police, some swathed in makeshift bandages, were thenherded into a nearby church and surrounded by hundreds ofprotesters. Twelve of the 60 officers were freed on Tuesday andevacuated to a hospital to be treated for injuries.

The protests started with 5,000 people fanned out acrossthe province and have included as many as 20,000 to pushGarcia, whose approval rating hovers at 35 percent, to do moreto quickly lower the poverty rate.

Delays could erode support for his free-market programs ata time when left-wing parties are eyeing Peru's nextpresidential election in 2011 and the poverty rate, whilefalling, is still near 40 percent.

PROVINCE CUT OFF

The blockade has cut road links to Tacna, Peru'ssouthernmost province, and the government has been forced tosend tanker ships with food and fuel to replenish supplies.

Moquegua, more than 700 miles south of the capital, blamesthe central government for allowing Tacna to get a greatershare of taxes generated by Southern Copper.

Residents in provinces like Moquegua say Peru's economicsurge has passed them by, even as mining companies reap hugeprofits.

The strike at Southern Copper comes as Peru's third-largestcopper pit, Cerro Verde, was in its eighth day of a labourwalkout, union leader Leoncio Amudio said.

The mine's owner, Freeport-McMoRan, has said productionremains steady and that the government has declared the walkoutillegal, meaning labourers could eventually lose their jobs ifthey fail to return to work in coming days.

Peru is a leading global exporter of minerals and AlbertoAdrianzen, a political analyst, said other regions could holdprotests over what they see as their fair share of miningtaxes.

"This could spread to other provinces," he said. "Thegovernment needs to overhaul the way it shares mining revenuewith the provinces."

(Writing by Terry Wade, Editing by Sandra Maler and CynthiaOsterman)