Mexico’s proposed higher mining royalties could block nearly $7bn in investments
The Mexican government proposed raising mining royalties under the argument that metal prices have risen in recent years.
Workers at Freeport-McMoRan’s (NYSE:FCX) Cerro Verde copper mine in Peru began Friday an indefinite strike over wages, adding pressures to a stressed global copper market already affected by stoppages at two of the world’s biggest copper operations.
Around 1,300 unionized miners downed tools at 7:30 am local time, demanding special benefit payments to protect their incomes against a downturn in the metal prices, as well as better working conditions, local paper La República reports (in Spanish).
Cerro Verde produced just under 500,000 tonnes of the red metal last year, making it Peru’s largest copper mine.
The mine, controlled by Freeport-McMoRan with a 53.6% stake, Sumitomo Metal (21%) and Buenaventura (19.6%), produced just under 500,000 tonnes of the red metal last year, making it Peru’s top copper mine.
Prices for the metal rose Copper rose on Friday after six straight sessions of decline as a result. Three-month copper on the London Metal Exchange closed up 0.7% at $5,732 a tonne. It had fallen to $5,652, their lowest since Jan. 10, in the previous session.
The stoppage comes on the heels of a strike at BHP’s Escondida mine in Chile, the world’s biggest copper operation, where some 2,500 workers walked out of the job over a month ago demanding higher pay.
It also coincides with Freeport’s decision last month to halt production at its Indonesian Grasberg mine, the world’s fourth largest copper operation. The Phoenix-Arizona-based firm took such measure in light of a concentrate export ban that kicked off in January, and its currently negotiating a new operating licence and ownership agreements with the Asian nation.
Mining investments in Peru, which drove economic growth during the past decade, has fallen dramatically in the past two years as violence linked to relentless anti-mining sentiment continues to scare investors away.
It is estimated that about $22 billion worth of mining projects have been cancelled or delayed in the South American nation in recent years as a result of social conflicts and red tape.
Peru is the world’s No.2 copper producer and mining accounts for about 60% of its export earnings.
3 Comments
Goldfinger
There isnt anti mining sentiment in Peru, there is anti mining company sentiment. The source of which is lack of sustainable development initiatives and community development programs developed during projects development and operation. There have been a couple of projects that have effectively managed these issues and their projects have been permitted and executed.
Laurie Cyr
A solid 80% do not proceed, even when they are properly permitted. Don’t try to make any sense out of this. This is beyond stupid. I asked some locals in Cajamarca what they were going to live on if the mine didn’t start up again. “Oh, well there’s always lots of food in the market!” replied the “smart” one. They want clean water, even though half the communities with mining possibilities don’t have a road yet. It’s still “Mining – No and Water – Yes”. Goldfinger, sounds like you’d fit right in there!
Luis Gómez
Peru is the world’s No 2 Copper producer behind Chile, its production is more than 2 million tonnes of copper per year.