The Burmese opposition leader Aung San Suu Kyi has faced scores of protesters at a Chinese-backed copper mine in north-western Burma – the site of a violent police crackdown against opponents last year – where she defended a government recommendation that the controversial $1bn project should continue.

Aung San Suu Kyi's visit to Monywa, 450 miles north of the commercial capital Rangoon, came just one day after a government-backed investigation commission – which she chaired – admitted that the project lacked environmental protection measures and would not provide jobs for locals, but should nonetheless continue in order to encourage foreign investment and maintain a positive relationship with China.

The commission's findings were met with immediate outrage by opponents and activists, who point to wide-scale land grabs to make way for the mine's expansion, and allege that the project creates myriad health and environmental problems and should be unilaterally stopped.

Aung San Suu Kyi, who was re-elected as party leader during the National League for Democracy's (NLD) first-ever party congress over the weekend, spoke to protesters at three different villages and also visited the offices of the mine's joint owners, the Chinese mining firm Wan Bao and the Burmese-military-backed Union of Myanmar Economic Holdings. Hundreds of protesters had gathered outside the offices, sources told the Guardian, but were held back by police barricades. A separate protest took place in Rangoon.

Speaking in Burmese, Aung San Suu Kyi warned protesters that stopping the mine could potentially "hurt Burma" as "the other country [China] might think that our country cannot be trusted on the economy".

She added: "We have to get along with the neighbouring country, whether we like it or not."

Aung San Suu Kyi's spokesman, Nyan Win, could not be reached for comment on Wednesday. But U Soe Win, who helped found the NLD, told the Guardian that the commission's report was a "very critical issue and situation for us" and added: "We can't comment on this issue. Please understand this. No one [from the NLD] will comment on this."

The Nobel laureate, once considered a messiah who could do no wrong, has come under fire in recent months not just from critics but members of her own party as well, many of whom balk at her pacifying approach towards, and so-called "fondness" for, the military, which still comprises one-quarter of the government. Her father, Aung San, was a general who fought for Burmese independence, but it was a five-decade-long junta that also kept Aung San Suu Kyi under house arrest for the best part of 20 years until a nominally civilian government took power in 2011.

Many activists hoped that Aung San Suu Kyi's chairing of the investigation commission might put an end to the mine's operations, where an 11-day occupation by protesters in November was broken up violently by police wielding smoke bombs laden with phosphorous – an agent generally used in war. The smoke bombs led to the hospitalisation of more than 100 people, among them 99 monks, for severe burns. While it was the largest crackdown of force since the president, Thein Sein, came to power in 2011, it underlined the very tangible faultlines of a country still transitioning from a violent past towards democracy.

The commission acknowledged that the government had made mistakes in dealing with the mine and made a list of recommendations – among them anti-riot training for police officers, compensation to farmers using current market prices for their seized land, and the return of nearly 2,000 acres for farming purposes. It also created a new commission composed of representatives from the government and the mine's joint owners to implement those recommendations.

But protests are expected to continue, with many activists upset by the commission's stress on maintaining good relations with China. "The commission should think about the welfare of their own people – poor local villagers – rather than good relations with China," the protest leader Thwe Thwe Win told Associated Press.