Latin Finance - July/August 2010 - 44

Peru mining
Tía María should be in the preliminary development stage organization of principal mining companies, estimates that $35 billion could be invested in extractive projects through 2015. The by now, but opposition from farmers fearing they would lose water resources led to the disruption of a public hearing on the big focus is copper and gold, and to a lesser extent lead, zinc and proposed mine last August. The hearing has been postponed a range of other metals. several times since, most recently in April. The MEM put Tía Peru is the world leader in silver production, second in María on hold for 90 days starting mid-April to sort out local copper, in the top five in lead, tin and zinc, and number six in concerns. Flury says he is confident Tía María will be eventually gold, according to the US Geological Service. Local investment be approved by local residents. SCC may end up building a promotion agency ProInversión reports that foreign direct desalinization plant on the coast to pump water to the project. investment in mining surpassed telecoms for the first time in “If we cannot use water from the river, we will use water from 2009. FDI in mining was $3.9 billion at end-2009, followed by the sea. The water issue will be resolved,” says Flury. telecoms at $3.7 billion. Also in the south of the country, the regional council in “Peru is a world-class mining country. We expect many Cusco voted earlier this year to ban new mining, arguing that it projects that are in the planning stages to be developed in was incompatible with agriculture and tourism. Cusco is home the near future,” says Hans Flury, SNMPE president. “We to Peru’s principal tourist destination, Machu Picchu. are witnessing the next stage in the transformation of Peru’s economy.” Hijacked by Politics In addition to Toromocho, a $1.3 billion expansion is Another Chinese project, Zijin’s Río Blanco copper mine in underway by Antamina, which is operated by Xstrata, BHP Piura, in the north, has faced years of opposition and is moving Billiton, Teck and Mitsubishi. China’s Shougang is meanwhile at snail’s pace, with only a investing at least $1 billion skeleton crew. Río Blanco to expand its iron ore mine, Peru Investment in Mining Development ($m) would entail investment and there is a long list of Miners flock to opportunity estimated above $2 billion. projects with investments Even Chinalco’s ranging from $50m to $700m 3,000 Toromocho, which is in the in the pipeline. Several broadly embraced, has hefty projects are likely to be 2,500 faced opposition. The decided this year, including project requires the Xstrata’s $4.1 billion Las relocation of a small town, Bambas mine and Antapaccay 2,000 Morococha, and a group at $1.3 billion. Newmont of residents is resisting. Mining is meanwhile 1,500 This, despite the fact that spending close to $3 billion the town is one of two on Minas Conga, while Anglo 1,000 worldwide – the other is American’s Quellaveco, in Russia – that sit on top requires another $3 billion, of a toxic tailings heap. and Southern Copper 500 Chinalco actually broke Corporation’s (SCC) Tía María ground at the new town, will cost almost $1 billion. 0 which will require around There are more than 100 2005 2006 2007 2008(*) 2009(*) $50m in investment, late companies actively exploring * Preliminary data April. Barrenecha says only for minerals and the MEM Source: Peruvian ministry of mines and energy around 3% of residents are reports that in March there opposed and he expects a were 360 mines operating. solution with the holdouts to be resolved in the third quarter Mining claims cover 11.6% of the nation’s territory, but only of this year. The government Ombudsman’s office, which 796,000 hectares, or 0.62% of territory, were actually under monitors social conflicts, reports 260 conflicts, among active production in March. MEM calculates that Peru has only tapped and latent, in April. Slightly more than half are linked to about 5% of its mining potential. extractive industries, primarily mining. The possibility of an upswing in conflicts, especially Lack of Critical Mass opposition to extractive projects, is all the more real as Peru Sector analysts agree that Peru is certainly ripe for investment, heads toward local and regional elections in October, and but caution that there are other issues that could stifle national elections in April 2011. How best to take advantage of enthusiasm. Christopher Ecclestone, analyst at New York-based Hallgarten, says MEM’s projections “are high, because Peru does natural resources was an issue in 2006 elections. Leftist runnernot have that many mega-projects and it would take a lot of little up Ollanta Humala, who lost to president García, is making this projects, $100 million or less, to meet the projected investment.” a centerpiece of his second campaign. Humala says a new approach to extractive industries is There is also the potential for fallout from several highneeded. Among his proposals is a windfall tax and possibly profile projects that have met stiff resistance from local communities. Among these is Tía María, SCC’s potential copper public-private deals for natural resources similar to those in Bolivia. LF mine in Arequipa.
44 LatinFinance
July/August 2010



Latin Finance - July/August 2010

Table of Contents for the Digital Edition of Latin Finance - July/August 2010

Latin Finance - July/August 2010
Contents
Equity/Debt Fund Performance
European Investors
Brazil Domestic Buyside
Mexican Domestic Buyside
Mexico Venture Capital
CEMEX CFO Interview
Panama Investment
Canadian Miners
Peru Investor Report
Peru is Making Strides to Develop Gas and Oil
Microfinance Volume Rises at a Steady Clip
Latin Finance - July/August 2010 - Latin Finance - July/August 2010
Latin Finance - July/August 2010 - Cover2
Latin Finance - July/August 2010 - Contents
Latin Finance - July/August 2010 - 2
Latin Finance - July/August 2010 - 3
Latin Finance - July/August 2010 - 4
Latin Finance - July/August 2010 - 5
Latin Finance - July/August 2010 - 6
Latin Finance - July/August 2010 - 7
Latin Finance - July/August 2010 - 8
Latin Finance - July/August 2010 - 9
Latin Finance - July/August 2010 - Equity/Debt Fund Performance
Latin Finance - July/August 2010 - 11
Latin Finance - July/August 2010 - 12
Latin Finance - July/August 2010 - 13
Latin Finance - July/August 2010 - 14
Latin Finance - July/August 2010 - 15
Latin Finance - July/August 2010 - 16
Latin Finance - July/August 2010 - European Investors
Latin Finance - July/August 2010 - 18
Latin Finance - July/August 2010 - Brazil Domestic Buyside
Latin Finance - July/August 2010 - 20
Latin Finance - July/August 2010 - 21
Latin Finance - July/August 2010 - 22
Latin Finance - July/August 2010 - 23
Latin Finance - July/August 2010 - 24
Latin Finance - July/August 2010 - 25
Latin Finance - July/August 2010 - Mexican Domestic Buyside
Latin Finance - July/August 2010 - 27
Latin Finance - July/August 2010 - 28
Latin Finance - July/August 2010 - Mexico Venture Capital
Latin Finance - July/August 2010 - 30
Latin Finance - July/August 2010 - CEMEX CFO Interview
Latin Finance - July/August 2010 - 32
Latin Finance - July/August 2010 - 33
Latin Finance - July/August 2010 - Panama Investment
Latin Finance - July/August 2010 - 35
Latin Finance - July/August 2010 - 36
Latin Finance - July/August 2010 - 37
Latin Finance - July/August 2010 - 38
Latin Finance - July/August 2010 - Canadian Miners
Latin Finance - July/August 2010 - 40
Latin Finance - July/August 2010 - 41
Latin Finance - July/August 2010 - Peru Investor Report
Latin Finance - July/August 2010 - 43
Latin Finance - July/August 2010 - 44
Latin Finance - July/August 2010 - Peru is Making Strides to Develop Gas and Oil
Latin Finance - July/August 2010 - Microfinance Volume Rises at a Steady Clip
Latin Finance - July/August 2010 - 47
Latin Finance - July/August 2010 - 48
Latin Finance - July/August 2010 - Cover3
Latin Finance - July/August 2010 - Cover4
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