Peru’s Miners Not Satisfied with Government’s Ability to Boost the Industry

Peru’s mining executives who manage some of the world’s biggest copper mines are losing faith in President Castillo and his government’s ability to boost the mining industry, although he shifted away from his earlier proposals to raise taxes on mining. The executives emphasize the protests by Castillo supporters in particular, which caused a month long production curbs at two major copper mines. They also say his failure to quell uprisings delayed several new mining projects worth $53 billion at a time when copper prices are high.

Castillo took office a year ago after getting overwhelming support from mining districts, as he promised to redistribute the country’s mineral wealth. During his campaign, he accused corporations of “plundering” resources instead of sharing with local communities.

He has since moderated his position toward the industry, which accounts for 60% of Peru’s exports, even appointing an orthodox economy minister and meeting with industry executives in the country and during foreign trips.

Still, industry executives complain that he has not controlled his 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.

Phoenix based Southern Copper, a unit of Grupo Mexico, said foreign investors have lost faith in Peru’s ability to move forward with mining projects. The company’s Cuajone mine halted copper production for over a month due to a community protest.

The Latin American country is the world’s no.2 copper producer, but the output has fallen 10% so far this year from pre-pandemic levels, as production was dragged down by Cuajone and MMG Ltd’s Las Bambas, which also had to suspend operations.

Copper prices have fallen 30% since March but remain relatively high, filling the tax coffers of the Castillo administration, which is eager to fund social programs.

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

Antamina, Peru’s largest copper mine owned by Glencore and BHP, is waiting approval for a $1.6 billion expansion.

Newmont is close to making a final decision on its $2.5 billion Yanacocha Sulfides project.

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.

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

However, in order to sustain high mining tax revenue, development of new projects are required as older mines run out. Anglo American recently opened its $5.3 billion Quellaveco mine.

On the other hand, Southern Copper has delayed its $1.4 billion Tia Maria site due to community opposition.

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