Chile and Peru join forces to bring back foreign mining investment
They don’t often see eye-to-eye, but representatives of the Chilean and Peruvian governments recently agreed to work together to attract declining investment to their copper mining sectors, and also increase their respective production.
At a meeting in Lima on the weekend, Chilean Mining Minister Hernan de Solminihac and Peruvian Minister of Energy and Mines Jorge Merino established the two countries could reach 50% global copper production from the current level of 40%, if they jointly develop their investment portfolio, reported Peru’s state-owned news agency Andina.com.
"There is a collective experience. It's about looking for synergies, opportunities and threats to our markets," Merino was quoted as saying.
Merino added both countries could help each other in areas such as consultation, compliance with environmental standards, certification of reserves and financing management through the stock market.
The agreement between the neighbouring countries came only a few days after several reports pointed to a dramatic decline in both investment and production in the Chilean and Peruvian mining sectors.
Three weeks ago, Chile's Codelco said its production had fallen by 6.4% in the first half from a year earlier to 767,000 t.
"The output produced in the first six months of 2012 is slightly below what was defined by the company in its budget," state-run Codelco, the world’s largest copper producer, said in a statement.
At around the same time, the copper giant also announced that Chile's goal of attracting $100 billion in mining investment by 2020 is unlikely to be achieved because of setbacks to several planned mining and energy projects.
"The portfolio of $100 billion appears very ambitious. Clearly it's a little optimistic to make it materialize within the time frame initially forecast," said Codelco's CEO Thomas Keller, as quoted by Reuters.
"Indeed some projects have already been delayed and likely won't be achieved in line with what was originally programmed," he added.
Chile, once Latin America's investor darling, is also experiencing an increasing environmental and social opposition to mega projects, which is gaining traction in courtrooms.
Meanwhile, Peru has seen its own share of very serious problems in the past few months. Peru’s mining, oil and energy society (SNMPE) said in early September that, as a result of almost a year of non-stop anti-mining protests in different regions of Peru, investors have started looking for greener pastures and so mining investment in the South American nation is expected to fall 33% next year.
The delays to Newmont Mining's (NYSE:NEM) controversial $4.8 billion copper-gold Conga project in the Cajamarca region is only one of the factors investors are taking into account when rethinking their portfolios. Mostly they worry over the large number of mining projects dealing with social conflicts, such as Swiss based-Xstrata’s Tintaya copper mine, near Cuzco, in Southeastern Peru.
Behind Chile, Peru is the world's second biggest producer of copper and silver and a major producer of gold, zinc, lead and other minerals.
With the contribution of Suzanne Soto, owner of Si! Corporate Communications, a Greater Toronto Area company providing public relations services in both English and Spanish.