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.
Just when this year’s copper rally seemed to have begun losing momentum, along comes another labour dispute, with unionized workers at Southern Copper’s (NYSE:SCCO) Peruvian operations downing tools at midnight on Nov. 21.
This is the third strike this year over profit-sharing staged by the company’s unions and it affects Southern Copper’s two mines in the country — Cuajone and Toquepala.
This is the third strike this year over profit-sharing staged by the company’s unions and it affects Southern Copper’s two mines in the country.
The company, a subsidiary of Grupo Mexico, is the world’s fifth largest copper miner in terms of output, and Peru is the second-largest producer. This means that any disruptions at the company’s mines, the country’s or both could further tighten supply in a market that’s already seen output restricted in the five months to July.
A six-week strike earlier this year in neighbouring Chile, affecting BHP and Rio Tinto’s Escondida, the world’s largest copper mine, helped fuel the deficits.
That one was followed by another major stoppage, affecting Freeport-McMoRan’s (NYSE:FCX) Cerro Verde copper mine in Peru.
Toquepala and Cuajone, both in the southern area of the South American country, together produced some 310,000 tonnes of copper last year, government data shows.
The current indefinite strike, involving only one of five unions for Southern Copper workers in Peru, has not affected normal operations, the company said in a statement to the country’s market regulator without providing additional details.
Mining is a key industry in Peru, which is also the world’s second-biggest silver producer, and the sixth when it comes to gold. The sector accounts for about 60% of the Andean nation’s export earnings.
