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Published: Tuesday July 1, 2014 MYT 4:10:02 AM
Updated: Tuesday July 1, 2014 MYT 4:11:21 AM

Peru governor to seek re-election, fight gold project from prison

LIMA (Reuters) - The jailed governor of a mineral-rich region in Peru who helped derail Newmont's $5 billion (£2.9 billion) Conga gold project will run for re-election on an anti-mining ticket this year from prison, his party said on Monday.

A federal judge in Lima last week ordered Gregorio Santos imprisoned for 14 months, saying he might flee the country while public prosecutors prepare corruption charges against him.

Peruvian law does not prohibit detained citizens from running for office unless sentenced with a crime, the electoral authority said.

Santos will continue to appeal to detractors of the Conga project in Peru's northern region of Cajamarca by going forward with his campaign, said Olmedo Auris, vice president of Santos's party, Movimiento de Afirmacion Social, or MAS.

Porfirio Medina will campaign for Santos on the ground in Cajamarca as his deputy governor and run his office if they win, Auris said. Regional elections are in October.

Santos's bid clouds expectations that Newmont and junior partner Buenaventura will get Conga off the ground now that its most powerful opponent is behind bars.

The companies stopped construction on the massive gold project in 2011 after protests led by Santos, a fiery former peasant patrol leader, ended in clashes with police.

Buenaventura's share price jumped 6.94 percent after Santos was imprisoned last Wednesday. Conga would offset dwindling gold deposits at the companies' nearby Yanacocha mine.

Opponents say Conga would pollute or deplete water sources used by Andean peasants, and they have rejected the companies' plans to build reservoirs for community use.

It is unclear how much support Santos still has with voters in Cajamarca, which ranked as the country's poorest region last year with more than half of its population living in poverty, according to state statistics agency Inei.

Auris said Santos's campaign will emphasize Conga and his imprisonment, which he described as politically motivated and intended to pave the way for the project.

The public prosecutor investigating Santos said last week that Santos got kickbacks on 11 local public works projects.

Santos has denied the accusations. He is the third governor put in preventive prison in recent months as the attorney general's office cracks down on corruption of local officials.

Newmont controls 51.35 percent of Conga, Buenaventura 43.65 percent, and the International Finance Corporation 5 percent.

(Reporting by Mitra Taj; Editing by Leslie Adler)

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