Thankfully, scco has plenty of Mexican expansion projects to spend capex on while Humala has a problem in Peru.
Peru Mining Protests Seen Hurting Investment Climate
Last update: 5/29/2012 12:41:57 PM
--Peru mining protests spread to southern Peru
--Observers say violent protests hurt investment climate
--Protests led by political opponents of government
By Robert Kozak
Of DOW JONES NEWSWIRES
LIMA (Dow Jones)--Violent protests in Peru, aimed at mining operations of Anglo-Swiss company Xstrata (XTA.LN), are giving another harsh blow against the investment climate.
Protest leader Herbert Huaman on Tuesday called on President Humala to lift the state of emergency and participate in talks with mine opponents. He said in a television interview that the state of emergency won't deter protesters, who are now demanding that Xstrata shut down its Tintaya mine.
Anti-mining opponents have recently halted investments in several planned mines, such as Southern Copper Corp's (SCCO, SCCO.VL) Tia Maria copper project and Newmont Mining Corp's (NEM) giant Minas Conga copper and gold project.
Late Monday, Peru's government declared a state of emergency in the southern province of Espinar, after two anti-mining protesters died. Protesters initially demanded that Xstrata's Tintaya operation increase funding for local projects, but now want that mine closed altogether, alleging it contaminates rivers.
Under the guise of being environmental activists, many anti-mining groups in Peru aim to increase political support and win government office. Political leaders have organized local residents to oppose mining projects by blocking highways, trying to take over mining installations and confronting police sent out to clear roads or protect mines.
The mayor of Espinar, capital of Espinar province, belongs to the Tierra y Libertad political party, the same party led by ex-Catholic priest Marco Arana, who led protests against the Minas Conga project in northern Peru.
"The protests are being led by the same groups. It is totally political," said Miguel Santillana, a Lima-based mining sector specialist.
Peru is one of the world's largest producers of precious and base metals, and has a number of large-scale projects on the drawing board. That includes the planned base metals mines at Xstrata's Antapaccay and Las Bambas.
The events in Espinar are just the latest blow against efforts to promote growth in a sector that has led Peru's impressive economic expansion over the last decade. "We expect harsh political consequences from the unfortunate events that led to the death of the protesters. And from an economic point of view, we believe that social unrest will cause investors to think twice before investing in mining districts that have a history of social discontent," Celfin Capital Managing Director Cesar Perez-Novoa said in a note to clients.
"We believe that a minority, far left, radical group is seeking to prevent large-scale mining projects from expanding and is looking to extend its political reach," he added.
Police this week found Molotov cocktails in a vehicle owned by the municipality of Espinar.
President Ollanta Humala, a centrist who took office in July last year, has supported the mining industry, gaining the ire of former hard-line supporters, many of whom reject the mining industry.
Political analyst Mariella Balbi, writing in influential newspaper El Comercio on Tuesday, noted that the object of the protesters "is to put the government on the ropes and their aimed for goal is to make mining withdraw from their areas."
-By Robert Kozak, Dow Jones Newswires; 51-99927 7269; firstname.lastname@example.org
--Ryan Dube contributed to this article.
(END) Dow Jones Newswires
May 29, 2012 12:41 ET (16:41 GMT)