Bloomberg News

Humala’s Finance Minister Wants Miners to Stay Competitive

August 01, 2011

(Adds official’s comment in third paragraph.)

Aug. 1 (Bloomberg) -- Peruvian President Ollanta Humala’s government is in talks with mining companies on a new mining windfall tax to ensure the country remains competitive even as it seeks to boost state control over its natural resources.

Mining companies are waiting for the outcome of the negotiations before moving ahead with about $40 billion in planned investment, Finance Minister Miguel Castilla said today. Peru is the world’s third-largest copper and zinc producer.

“This will be a new tax regime that maximizes government income while not endangering important new investment projects and ensuring legal stability for contracts,” he told Lima-based Radioprogramas. “Miners, which are posting fairly high profits, should contribute more to the country’s development.”

Humala, a former army rebel, is seeking to reassure investors that his plans to raise mining royalties and tighten state control over assets won’t erode economic growth that under predecessor Alan Garcia during the past 5 years was the fastest in Latin America. Anglo American Plc on July 29 delayed approval of its $3 billion Quellaveco copper project to 2012 from 2011.

Southern Copper Corp., Peru’s biggest copper producer, doubled second-quarter net income to $658 million, while precious-metals producer Cia. de Minas Buenaventura SA, Peru’s biggest, saw its profit jump 83 percent to $204.2 million.

Peru’s mining export revenue jumped 27 percent to $21 billion last year as copper tripled from 2008 and gold jumped 76 percent.

Copper futures for September delivery fell 7 cents, or 1.6 percent, to $4.41 a pound at 1 p.m. on the Comex in New York. Gold for December delivery fell $2.70, or 0.2 percent, to $1,628.50 an ounce after touching a record $1,637.50 on July 29.

--Editor: Dale Crofts, Robin Saponar

To contact the reporter on this story: Alex Emery in Lima at aemery1@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net


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