LIMA, Nov 12 (Reuters) - Peru is starting to apply an indigenous rights law in the country's key mining sector, reversing course from its previous position in order to ward off potential lawsuits, the government said on Thursday.
The government could ask some companies to suspend some exploration activities while the law is applied retroactively, said Deputy Culture Minister Patricia Balbuena.
Peru's so-called prior consultation law, passed by President Ollanta Humala in 2011, aims to give indigenous people more say in extractive projects that could impact them. It requires the government to negotiate with native communities before approving projects, but does not give them the right to veto them.
Fears the law would slow investments and the view that Quechua-speaking communities in the mineral-rich Andes don't qualify as indigenous had kept the government from requiring consultations for mining projects.
But Balbuena said that after an internal dispute, the government has decided that it cannot deny that there are indigenous communities near potential new mines.
"It's a threat to legal security because you're putting forward projects that you'll later have to annul," Balbuena said in an interview.
"We can no longer say that there are no indigenous communities in the Andes. That debate is over, and I think that's a big advance," Balbuena said.
The government has already held consultations with communities near two mining exploration projects. Each process took about 30-40 days, Balbuena said.
The Culture Ministry expects to start another two or three consultations for greenfield projects by year end.
But the government did not apply the law for some eight mining projects that have already started, Balbuena said.
The government is now evaluating how to apply "corrective measures" for those projects, and could ask companies to pause activities while the government works with communities, Balbuena said. "We're looking at them case-by-case."
The turnabout comes as Peru's economy has slowed on slumping prices for its minerals, which dominate export earnings and drive growth in the Andean country.
Peru's main mining association has urged the government to speed up permitting for projects to encourage investments that have slipped on the commodities lull.
The government has already conducted several consultations with indigenous communities near oil reserves in the Amazon.
"There are lots of challenges in mining," Balbuena said. "We're evaluating lessons from the first two processes to see what we can do better."
Peru is the world's third-largest copper and zinc producer. (Reporting By Mitra Taj; Editing by Christian Plumb)