The Peruvian President’s leader is targeting the desired tax stability agreements of copper mining companies, which freeze tariffs. Եւ The program could have a major impact on Chinese miners, the world’s second-largest producer of red metal.
Socialist candidate Pedro Castillo, who is the narrow favorite to win Sunday’s second round of voting, has proposed new royalties for the sale of minerals and presented a plan to review long-term tax deals under previous governments.
A teacher who was a shock winner in the first round of voting, Castillo accused the mining companies of “robbing” Peru’s wealth. He spoke of more than doubling the state’s share of mining profits, bringing it to 70 percent, using the means to promote health and education, and reducing income inequality.
Analysis of government data by Reuters shows that it will hit Chinese mining companies, including MMG Ltd և Aluminum Corp. (Chinalco), hardest if Castillo wins the election և back to his plan.
Chinese mining companies have become a key player in Peru’s mining industry. The Asian country is far from the largest buyer of Peruvian copper, which is used for everything from construction to the development of electric cars.
Investments at risk
Peru has signed about 25 tax stability agreements since the 1990s, according to data shared by Reuters with the Ministry of Mines and Energy. The deals are designed to keep investors away from political or economic shocks, experts say, and provide a basis for investing in the country’s largest mines.
Castillo’s tax program could further destabilize markets, exacerbate uncertainty in the world’s leading copper-producing region. In neighboring Chile, the world’s largest copper producer, the lower house of Congress has already approved a plan to levy royalties on the mining industry.
MMG, which operates the Las Bambas copper mine in Peru, signed a contract in 2011 that guarantees that there will be no tax changes on its operations until the end of 2030.
The deal encouraged the company to invest $ 10 billion in a large-scale mine that now produces 350,000 tonnes of copper a year, according to the company.
Brokerage ff states that MMG has been heavily influenced by Peru, given the potential of the Las Bambas mine.
“So raising Peru’s taxes / royalties could be a problem depending on the outcome of the upcoming presidential election,” it said.
Chinalco has signed a tax stability deal with Peru since 2028, the data show. The company’s Toromocho mine produces 200,000 tons of copper concentrate annually.
Future plans may also be affected.
Mining giant Anglo American և partner Mitsubishi has signed a tax stability deal since 2037 for their soon-to-be-completed $ 5.3 billion Quellaveco copper mine, which plans to start producing 330,000 tonnes of copper by 2022.
The companies did not immediately comment on the story.
Record high prices
The victory of Castillo, who is running side by side in a poll with business-minded conservative Keiko Fujimori, will increase political risk in the region. Chile, a major copper producer, is also considering raising miners’ fees and has begun a constitutional review process.
This uncertainty supports world copper prices, which hit record lows as Chinese demand fell, while the rapid push of electric vehicles should boost copper appetite years ago.
Several other Peruvian miners could hold new talks with the Peruvian government if Castillo wins on Sunday, the figures show.
The Constance copper mine, operated by the Canadian company Hudbay Minerals, concludes a tax deal that expires in 2031.
Cerro Verde Mine, which controls Freeport McMoRan և Glencore’s Minera Antapaccay, will enter into similar deals in late 2028.