Two die in attack on Chinese mine in Peru

Two workers died and two were missing after an attack on Chinese miner Zijin's controversial Rio Blanco copper project in Peru, a sign the government's push to lure foreign investment has polarized domestic politics, Reuters reported.

About 15 to 20 gunmen invaded the mining camp on Sunday and fired at its security guards, according to Jian Wu, Rio Blanco's director. The two men killed were guards from a company called V-Sur, which provides security for Zijin. The armed gang also torched the site, Wu said.

Police were still collecting evidence from the Rio Blanco attack, which may have been an act of revenge.

"This is evidently an act of terror, of violence ... and it would not surprise me if there are political and economic interests at play to scare investment away, to create an image of political instability," Wu said on Canal N TV.

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 September, an arm of Peru's government that tracks social conflicts said that communities nationwide have organized to block 103 new mines or oil wells.

The case of Rio Blanco has been especially bitter and critics say President Alan Garcia, whose approval rating is just 26 percent, has often ignored environmental concerns in his push to lure foreign investment.

Garcia's administration often tries to undermine the credibility of environmental and rights groups by taking them to court or calling them terrorists. Rights groups say he tries to play on the fears of Peruvians who remember the leftist insurgencies of the 1980s and 1990s.

"There are many agitators, looking to sow acts of violence and slow some investment projects. This we already knew," Garcia said of the latest attack. "We must verify and properly clarify the circumstances of these deaths. The state must act with much severity."

A local group that has opposed the mining project, The Front for the Sustainable Development of the Northern Frontier, denied responsibility for the attack.

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

The $1.4 billion Rio Blanco mining development is run by Monterrico Metals of Britain, which was bought by Zijin Mining Group <601899.SS><2899.HK> in 2007.

In Britain, rights groups have filed a lawsuit against Monterrico over the 2005 clash, about 500 miles (800 km) north of Lima, Peru's capital.

Rio Blanco, which was to start producing in 2011 but has faced repeated delays, has said the mine should churn out some 200,000 tonnes of copper concentrate a year once operational.

Some mining analysts doubt Rio Blanco will ever open. In recent years, community opposition forced Manhattan Minerals to abandon its mining project in the region of Piura, while Newmont Mining halted plans to look for mineral deposits in Cerro Quilish.

Besides Zijin, other Chinese miners such as Chinalco and Minmetals [CHMIN.UL] have been investing in Peru, despite frequent conflicts over who controls natural resources.

According to Peru's mining ministry, Chinese companies have pledged to invest at least $6 billion in the sector over the next few years.

Tensions continue to simmer elsewhere in Peru. This month, tribes in Peru's southern Amazon threatened to forcibly remove employees of U.S. energy firm Hunt Oil's petroleum exploration project in the Madre de Dios region.

Hochschild Mining said on Monday a camp where it is exploring for silver in the region of Cusco has been occupied for days by residents of the area who say they are worried about potential pollution to water supplies.

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.

The government has filed legal motions to dissolve Aidesep, the rights group that organized the Bagua protests.

Bagua marked the worst unrest of Garcia's term and forced him to ask Congress to repeal two laws designed to attract billions in investment to the Amazon.