Peru deputy minister resigns as Humala rolls back indigenous law

LIMA -- May 4 (Reuters) - A key Peruvian official tasked with implementing a law to give indigenous groups more rights has resigned to protest efforts by President Ollanta Humala's cabinet to roll back the law to protect mining investments.

Deputy Culture Minister Ivan Lanegra, who confirmed his resignation on Saturday on Twitter, was upset the government decided to exclude Quechua-speaking communities in the mineral-rich Andes from being covered by Peru's "prior consultation law," a number of sources told Reuters.

That law gives indigenous communities the right to shape natural resource developments that affect them, but does not allow them to veto projects.

Still, mining companies in one of the world's top minerals exporters were worried the law would slow new projects by making community approvals more difficult.

Reuters reported in an exclusive on May 1 that Mines and Energy Minister Jorge Merino had persuaded Humala to keep Quechua communities from being covered by the law, because Merino feared its broad application in the Andes would hold up a $50 billion pipeline of mining investments.

Foreign investment in mining has traditionally powered Peru's fast-growing economy.

Merino has argued that Quechua communities in the Andes are not "indigenous" but instead "peasant" because they mixed with Spanish colonizers centuries ago, often have formal town assemblies, and are less isolated than Amazon tribes.

Humala has made comments echoing Merino's position.

It is unclear whether Lanegra's resignation will further delay the application of the law in the Amazon, where it is still expected to cover tribes near Peru's oil and gas reserves.

"I am grateful for the honor to have served my country and led such a challenging process that has only seen its first chapter," Lanegra said on Twitter.

Humala had touted the prior consultation law as a salve to widespread and sometimes violent conflicts over mining and energy projects in Peru. Many communities have organized to hold up projects that they say could reduce scarce water supplies, cause pollution or fail to generate sufficient jobs and tax revenues.

When he signed the law in 2011, Humala listed the Quechua as one of the indigenous groups that would be covered by the law to "build a great republic that respects all its nationalities."

(Reporting by Mitra Taj; Editing by Terry Wade and Vicki Allen)