Commodities and Futures News

Analysis: Peru’s mining execs ‘lose faith’ in gov’t despite moderate shift

2022.07.27 14:10

2/2
Analysis: Peru's mining execs 'lose faith' in gov't despite moderate shift
FILE PHOTO: Members of indigenous communities camp on the property of Chinese-owned Las Bambas copper mine, in Las Bambas, Peru April 26, 2022. REUTERS/Angela Ponce/File Photo

2/2

By Marco Aquino

LIMA (Reuters) – Peruvian mining executives who oversee some of the world’s largest copper mines are losing whatever slim thread of faith they may have had in left-wing President Pedro Castillo’s ability to boost the sector, even after his shift away from early proposals to sharply raise taxes on the industry.

Mining executives interviewed by Reuters pointed to social protests by Castillo supporters that led to month-long production halts at two major copper mines. They said his failure to quell social uprisings also delayed a pipeline of new mining projects worth $53 billion at a time of high copper prices.

Castillo, who took office a year ago this week, was elected with overwhelming support in mining districts, as he pledged to redistribute Peru’s mineral wealth. On the campaign trail, he accused corporations of “plundering” resources instead of sharing with local communities.

Since then, he has moderated his position toward the industry that accounts for 60% of the country’s exports, appointing an orthodox economy ministry and meeting with executives both in Peru and on trips abroad.

Still, industry executives complained that he has not reined in supporters who protest that they still are not seeing a trickle-down effect from mining to their communities. Peru’s mines are concentrated in remote Andean regions, among the country’s poorest.

“Foreign investors have lost faith in Peru’s ability to move mining projects forward,” Southern Copper (NYSE:SCCO) Corp Chief Financial Officer Raul Jacob told Reuters. The Grupo Mexico unit’s Cuajone mine halted copper production for over a month due to a community protest.

Copper production in Peru, the world’s No. 2 producer of the red metal, has fallen 10% so far this year from pre-pandemic levels, dragged down by Cuajone and MMG Ltd’s Las Bambas, which also suspended operations.

Copper prices have fallen 30% since March but remain relatively high, boosting tax coffers under an administration eager to fund social programs.

Communities are “seeing a newly elected government giving them a supported platform to protest in a way where (they thought) there would be no repercussions,” MMG Executive General Manager Troy Hey said in a call with analysts this week.

Still, at least three large mines in Peru are close to finalizing expansion plans, although long-term perspectives look cloudier.

Antamina, Peru’s largest copper mine owned by Glencore (OTC:GLNCY) and BHP, is waiting on approval for a $1.6 billion expansion.

Newmont is close to making a final decision on its $2.5 billion Yanacocha Sulfides project. President Tom Palmer this week called it an “exciting chapter in Newmont’s long and profitable journey in Peru.”

On Tuesday, the company said “The Sulfides project is expected to provide profitable production for years to come”.

Las Bambas has received permits to build its new Chalcobamba pit on land once owned by the indigenous Huancuire community, but still faces stiff opposition from the local group.

‘WE SHOULDN’T BE IMPROVISING’

Peru’s coffers received a record amount in mining taxes in 2021 with the economy ministry expecting another record in 2022. The ministry expects higher metals prices to help fuel 3.6% GDP growth this year.

“Despite everything, the price of copper has sort of contained this political uncertainty,” said Eduardo Jimenez of consulting firm Macroconsult.

But sustaining high mining tax revenue requires new projects as older mines run out. Anglo American (LON:AAL) recently opened its $5.3 billion Quellaveco mine.

“For more than 20 years, we have had two or three projects (like Quellaveco) being developed simultaneously in Peru,” said Jacob, who is also the President of Peru’s mining chamber.

“But we now don’t see new ones, at least for now,” he added.

Southern Copper itself has delayed its controversial $1.4 billion Tia Maria site due to community opposition.

“To get (mining projects) up and running, the government should generate stability, fast-track permits and beef up conflict-resolution offices,” Compania de Minas Buenaventura Chairman Roque Benavides told Reuters.

Peru’s top conflict-resolution office has cycled through four different heads under Castillo, as has the Mining Ministry itself. Current minister Alessandra Herrera is in her second stint.

“We shouldn’t be improvising in the sector,” said Victor Gobitz, Antamina’s CEO.

Castillo also tried and failed to raise taxes on the mining sector, due to significant opposition from the industry.

“Paying more in taxes means putting new projects at risk,” Gobitz added.

Source

Related Articles

Leave a Reply

Back to top button
bitcoin
Bitcoin (BTC) $ 97,424.10 1.40%
ethereum
Ethereum (ETH) $ 3,330.57 2.79%
tether
Tether (USDT) $ 1.00 0.00%
solana
Solana (SOL) $ 247.83 4.47%
bnb
BNB (BNB) $ 652.93 2.72%
xrp
XRP (XRP) $ 1.37 11.67%
dogecoin
Dogecoin (DOGE) $ 0.418106 11.33%
usd-coin
USDC (USDC) $ 1.00 0.06%
cardano
Cardano (ADA) $ 1.00 8.75%
staked-ether
Lido Staked Ether (STETH) $ 3,331.35 3.18%
tron
TRON (TRX) $ 0.205301 6.66%
avalanche-2
Avalanche (AVAX) $ 40.24 6.75%
stellar
Stellar (XLM) $ 0.527585 20.43%
the-open-network
Toncoin (TON) $ 6.03 1.60%
shiba-inu
Shiba Inu (SHIB) $ 0.000025 9.10%
wrapped-steth
Wrapped stETH (WSTETH) $ 3,951.94 2.52%
wrapped-bitcoin
Wrapped Bitcoin (WBTC) $ 97,220.05 1.11%
polkadot
Polkadot (DOT) $ 8.54 4.85%
chainlink
Chainlink (LINK) $ 16.71 3.74%
bitcoin-cash
Bitcoin Cash (BCH) $ 494.87 8.16%
weth
WETH (WETH) $ 3,330.05 2.83%
sui
Sui (SUI) $ 3.28 8.96%
pepe
Pepe (PEPE) $ 0.00002 9.96%
leo-token
LEO Token (LEO) $ 8.68 1.14%
near
NEAR Protocol (NEAR) $ 6.46 0.32%
litecoin
Litecoin (LTC) $ 95.61 7.28%
aptos
Aptos (APT) $ 12.01 7.12%
uniswap
Uniswap (UNI) $ 10.55 1.58%
wrapped-eeth
Wrapped eETH (WEETH) $ 3,512.84 2.56%
hedera-hashgraph
Hedera (HBAR) $ 0.144529 4.69%
usds
USDS (USDS) $ 0.999907 0.10%
internet-computer
Internet Computer (ICP) $ 10.86 7.51%
crypto-com-chain
Cronos (CRO) $ 0.186921 6.22%
polygon-ecosystem-token
POL (ex-MATIC) (POL) $ 0.545787 3.58%
ethereum-classic
Ethereum Classic (ETC) $ 28.15 7.63%
render-token
Render (RENDER) $ 7.53 5.20%
ethena-usde
Ethena USDe (USDE) $ 1.00 0.13%
kaspa
Kaspa (KAS) $ 0.149308 7.49%
fetch-ai
Artificial Superintelligence Alliance (FET) $ 1.45 1.62%
bittensor
Bittensor (TAO) $ 503.43 5.83%
celestia
Celestia (TIA) $ 8.32 31.45%
whitebit
WhiteBIT Coin (WBT) $ 24.51 1.19%
dai
Dai (DAI) $ 1.00 0.00%
arbitrum
Arbitrum (ARB) $ 0.830119 3.78%
bonk
Bonk (BONK) $ 0.000045 12.29%
cosmos
Cosmos Hub (ATOM) $ 8.61 5.09%
mantra-dao
MANTRA (OM) $ 3.70 2.98%
vechain
VeChain (VET) $ 0.040882 6.88%
filecoin
Filecoin (FIL) $ 5.46 2.22%
okb
OKB (OKB) $ 53.19 4.76%