Mine industry officials in Peru are looking to interim President Manuel Merino to assure stability ahead of elections in April as the world’s No. 2 copper producer seeks to bounce back from its worst economic crisis in a century.
Merino’s picks for energy and mining heads will be closely followed by miners suffering from the one-two punch of the coronavirus pandemic and now, a burgeoning political crisis, industry sources said.
Roque Benavides, chairman of Peruvian miner Buenaventura , called the situation “painful and regrettable,” reflecting the sentiments of many miners and analysts.
“Long-term activities like mining require legal, political and economic stability,” Benavides said.
Merino, who assumed the presidency on Tuesday after the ouster of Martín Vizcarra on Monday night, takes over as Peru’s economy is set to contract by 12.5% this year, stricken by the impact of the coronavirus pandemic. Merino will govern through July.
Benavides urged Merino’s administration to avoid surprises in its economic plan that could shake the sector before upcoming elections in April.
“It is a transitional government and its role is to keep things as they are, complying with the rule of law, but not make major reforms,” Benavides said.
Vizcarra’s ouster sent jitters through Peruvian markets on Tuesday, with bonds tumbling and the sol currency hitting an 18-year low. Market watchers were also concerned about a further drift toward populism under Merino.
“All this is doing is exacerbating uncertainty, which was already high,” said economist Carlos Anderson of local consulting firm Instituto del Futuro.
Peru’s copper miners were particularly hard hit by the pandemic.
Output was ravaged by a strict quarantine implemented in mid-March to stem the spread of the coronavirus. Output recovered to near pre-pandemic levels in July but has fallen off slightly since.
Mining exports account for 60% of the South American country’s total and are a vital economic engine and source of employment in Peru’s mountain interior.
(By Marco Aquino and Cassandra Garrison; Editing by Dan Grebler)