The Peruvian president’s pioneer is dangerous for Chinese mining companies Business and Economic News

A pioneer for the Peruvian presidency, copper mining companies are freezing rates that want tax stabilization agreements, and the plan could have a disproportionate impact on Chinese miners as the world’s second-largest producer of red metal.

Socialist candidate Pedro Castillo, a close favorite to win Sunday’s second ballot, has proposed new rights over mineral sales and launched a plan to renegotiate tax agreements in previous governments.

The professor, who was a huge winner in the first round of voting, accused Castillo of “plundering” Peru’s wealth by mining. The state of mining profits has talked about doubling it to 70 per cent and funding more than just boosting health and education and reducing income disparities.

Reuters ’analysis of government data showed that Chinese mining companies, like MMG Ltd and China Corp’s Aluminum Corp (Chinalco), would play hard if Castillo won the election and continued his plan.

Chinese mining companies have become key players in the Peruvian mining industry. The Asian country is Peru’s largest buyer of copper, which is used from construction to the development of electric cars.

Investments at risk

Peru has signed 25 tax stability agreements since the 1990s, according to data shared by the Ministry of Mines and Energy with Reuters. The agreements are aimed at causing political or economic turmoil to investors and experts say they have set a gap for investment in some of the country’s largest mines.

Castillo’s tax plan could tighten markets and increase uncertainty in the world’s major copper-producing region. Next to Chile, the world’s largest copper producer, the lower house of congress has already approved a plan to increase royalties on mining.

MMG, which operates the Las Bambas copper mine in Peru, signed a contract in 2011 to ensure no tax changes in its operations until the end of 2030, according to ministry data.

The deal prompted the company to invest $ 10 billion in the expanded mine, which currently extracts 350,000 tons of copper a year, according to company data.

Jefferies mediation said in a statement that MMG had suffered greatly in Peru, given the importance of the Las Bambas mine.

“Peruvian tax / royalty increases could be a problem, depending on the outcome of the upcoming presidential landing,” he said.

Chinalco signed a tax stability agreement with Peru until 2028, the data showed. The company’s Toromocho mine produces 200,000 tons of copper concentrate per year.

They can also have an impact on future projects.

Anglo-American mining giants and the Mitsubishi couple signed a tax stability deal until 2037, with the soon-to-be-completed $ 5.3 billion Quellaveco copper mine to be put into line in 2022 with 330,000 tonnes of copper production.

The companies did not immediately comment on the story.

Record high prices

With Keilo winning Castillo, who is on the back of the polls with conservative pro-business Fujimori, the political risk would go up in the region. Chile’s main copper producer is also debating whether to raise royalties on miners and has begun the process of revising its constitution.

This uncertainty protects global copper prices. China’s demand has set a record as it has receded, and a rapid push for electric vehicles should increase its appetite for copper over the years.

Several other mines in Peru could have new talks with the Peruvian government if Castillo wins on Sunday, the data show.

The Constancia copper mine, operated by Hudbay Minerals of Canada, has a tax treaty that expires in 2031.

Freeport McMoRan-controlled Cerro Verde Mine and Glencore’s Minera Antapaccay have similar agreements by the end of 2028.