Engineering & Mining Journal

AUG 2018

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Page 59 of 107

58 E&MJ • AUGUST 2018 MINING IN PERU Putting Investment in front of Political Drama The new government must prove that new mining projects can be developed under its watch The last months of Pedro Pablo Kuczynski's tenure as president of Peru were nothing but turbulent. When he narrowly avoided im- peachment on December 21st, 2017, one might have thought that the stars aligned to save him on that summer solstice. However, when just three days later, he allowed the release of former president Alberto Fujimori, who had spent over a decade in prison, the public figured out the nature of the agree- ment that Kuczynski, also known as PPK, had forged with Alberto Fujimori's son, con- gressman Kenji Fujimori. The efforts for a new start in 2018 were in vain. PPK's new cabinet, sworn in in Jan- uary, barely lasted two months. On March 21st, one day after the autumnal equinox, the stars were far from aligned in PPK's in- terests. A series of revelations about murky political agreements and Kuczynski's private finances added to the already known links project when he was governor of the Mo- quegua region, between 2011 and 2014. Luis Marchese, Anglo American's country manager, is the person who worked hand in hand with Martín Vizcarra during that pro- cess. Speaking as president of the SNMPE, the mining industry's main association, Mar- chese gave his impressions about Vizcarra's new cabinet: "This government is more pro- decentralization than the previous one. Both the new president and the new prime min- ister are former regional governors, which should help give impulse to mining activity, considering that mining is a decentralized industry." Víctor Gobitz, CEO of Buenaventura, de- clared: "The political transition was abrupt, but acceptable, because it followed the ex- isting legal framework." He also shared his opinion about the new president: "Martín Vizcarra may not have the same macroeco- nomic experience that Pedro Pablo Kuczyn- ski had, but he has more experience at the micro level, overseeing the relationships be- tween the mining companies and the com- munities. Quellaveco is a success case that should not be underestimated." New year, new projects? Before the political crisis, the Ministry of En- ergy and Mines, now led by former mining executive Francisco Ísmodes, defined five key objectives for 2018. These include mak- ing feasible the existing pipeline of projects, some of which have been pending for many years now. Speculation surrounding key po- tential investments continues to grow: there of PPK with Brazilian construction firm Ode- brecht. Just one day before a second im- peachment vote was to be held in Congress, Kuczynski resigned as president. Interestingly enough, in parallel to all of this, the mining industry continued its re- covery path, with solid commodity prices helping companies across the board reduce their debts and move their feasibility-stage projects towards a construction decision. Indeed, after three consecutive years of decline, total mining investment in Peru in- creased by 15.7% and reached US$4.92 billion in 2017. For 2018, the government expects an additional 20% growth. When Martín Vizcarra took over as head of state, the sector not only welcomed the end of PPK's political agony, but also the new president's proactive approach towards mining development, following his successful work with Anglo American at the Quellaveco Quellaveco is the largest investment in Peru's immediate project pipeline. Photo courtesy of Anglo American. Luis Marchese, president, SNMPE; country manager, Anglo American. Anthony Hawkshaw, president and CEO, Bear Creek Mining.

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