LIMA, Dec 17 (Reuters) - Peru's Congress on Friday rejected the government's plan to hike taxes on mining companies, although it allowed for taxes to be raised in other smaller areas of the copper-rich country's economy.

The result was a blow to the four-month old administration of leftist President Pedro Castillo, whose flagship plan is to hike taxes on mining companies in order to fund higher social spending. Peru is the world's No. 2 copper producer.

Earlier this week, lawmakers had removed any mention of a modification to the mining tax regime during committee discussions, and the final text voted on by Congress did not mention mining.

Peru's mining industry had vigorously opposed the tax hike plan, arguing that it was already paying as much or more than in other countries with large mining industries.

Congress's decision to reject the mining tax hike occurred as one of Peru's largest copper mines, MMG Ltd's Las Bambas, is set to suspend production indefinitely starting on Saturday due to a road blockade by local residents who are demanding jobs and higher economic contributions from the company. (Reporting by Marco Aquino and Marcelo Rochabrun Editing by Paul Simao)