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Peru protest turns deadly, Bear Creek project halted

Protests against mining and energy projects in southeastern Peru turned deadly on Friday, killing at least two people, hours after the government said a Canadian firm's mining licence would be revoked in a bid to calm unrest.

The violence was the latest sign the departing government of President Alan Garcia is being dogged by social conflicts over natural resources. President-elect Ollanta Humala, who takes office on July 28, campaigned on promises to end bitter conflicts that pit poor towns against mining and oil companies.

Two people died and 12 were wounded when police clashed with demonstrators trying to seize control of the Juliaca airport in the region of Puno, according to a local hospital and media reports.

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Earlier on Friday, two sources close to the government said Canadian miner Bear Creek Mining Corp. would have to stop all work on its concession in Puno. A statement by Peru's mining ministry later confirmed the news.

"It has been agreed to repeal the authorization," lawmaker Yohny Lescano, who participated in a government dialogue on Thursday with protesters over the Santa Ana project.

Bear Creek chief executive officer Andrew Swarthout said the government has given the company no official word about any pending cancellation of the mine, which is still under development.

"We certainly have a strong legal recourse should something be nullified or further suspended at Santa Ana, and we will certainly avail ourselves at every possible channel," he told Reuters.

Some 5,000 protesters, mostly Aymara Indians, have descended on Puno for more than a month to demand concessions be revoked for all mining companies, not just Santa Ana, ostensibly over concerns about potential pollution.

But the magazine Caretas reported this week that wildcat miners are interested in the lands of the concession and are working alongside protesters. Locals think the concession has valuable gold deposits in addition to silver. Wildcat gold mining is a major cause of mercury pollution in Peruvian rivers and lakes.

"We are waiting for the official announcement and then we will stop the protest," said Rufino Machaca one of the protest leaders in Puno.

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Peru's human rights office says nearly 100 people have died in rural uprisings in the past 3-1/2 years as communities demand a greater share of Peru's growing wealth. The Andean nation's economy is one of the world's fastest-growing but nearly one-third of its people are still poor.

Bear Creek had planned to produce silver starting in 2012 in Santa Ana, located some 1,385 kilometres from Lima. The mine has reserves of 63.2 million ounces of silver.

"The project in itself really only represents about 8 per cent of the company's net present value, but from a market psychology perspective it is going to be damaging for the company," said BMO Capital Markets analyst Andrew Kaip.

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