Environmental activists protest outside Peru’s embassy in London Tuesday. Members of the Survival International group were protesting outside Peruvian embassies and consulates around the world to call for an end to the expansion of the Camisea gas project in Peru’s Amazon rainforest. The placards reads in Spanish: “Help! Isolated indigenous people in danger”. — AP

LIMA — Peru's mining minister is winning a crucial cabinet battle by swaying President Ollanta Humala to water down a law that gives indigenous groups more say over new mines and oil projects — and a deputy minister will likely resign in protest.



According to half a dozen people with direct knowledge of the internal tug-of-war, Mines and Energy Minister Jorge Merino has prevailed in excluding Quechua-speaking communities in the mineral-rich Andes from being covered by the law.



Sources said he fears applying the law throughout the highlands — as the government once said it planned to do — would delay a pipeline of mining investments worth $50 billion.



Several people in Merino's office declined repeated requests by phone and email for comment.



The tussle underscores a quandary facing Peru, one of Latin America' fastest-growing economies: how to develop its vast mineral wealth while also addressing a legacy of inequality from its colonial past.



The “prior consultation law,” which Humala touted during his 2011 campaign as a salve for widespread conflicts over natural resources, requires companies to negotiate agreements with indigenous communities before building new mines or oil wells around their lands.



It does not give the communities the power to veto a project, but miners have said it could snarl approvals for new mines for everything from gold to lead.



“Merino has realized that with this law the government was shooting itself in the foot,” an industry source said.



Eva Arias, the head of the country's association of mining firms, was more diplomatic.



“We hope the law isn't politicized. It could be a tool to forge consensus and development ... otherwise it could slow investments,” she told reporters.



Foreign investment in mining has traditionally powered Peru's fast-growing economy. Sources from the private sector and government said the debate over how to apply the new law has pitted the mining and finance ministries against the ministries of culture, environment and social inclusion.

Ivan Lanegra, a deputy minister for culture charged with implementing the law, plans to quit over the changes as soon as this week, two well-placed sources said. — Reuters