Bloomberg News

Xstrata Says Peru Copper Deliveries Unaffected by Protest

May 29, 2012

Xstrata Plc (XTA), the world’s fourth- largest copper producer, said its Tintaya mine in Peru is running normally after community protests that led to four deaths and prompted authorities to declare a state of emergency.

“Production from our Tintaya operation has not been impacted by recent protest action,” a unit of the Zug, Switzerland-based company said today in an e-mailed response to questions. “Tintaya is able to deliver to port.”

The state of emergency in the southern Andean community of Espinar will last 30 days as authorities seek talks with residents demanding compensation for alleged pollution, Cabinet Chief Oscar Valdes said last night on state television. Environmental protests in Peru have halted mining projects by companies including Newmont Mining Corp. (NEM:US), Anglo American Plc (AAL) and Southern Copper Corp. (SCCO:US) during the past year.

Protesters in Espinar near Cuzco burned company offices and took a local official hostage yesterday, while 76 police officers were injured, according to Valdes’ office. Four protesters were shot dead and 20 others were wounded in clashes with police, who arrested about six local leaders, Espinar Municipality spokesman Hugo Maquera said.

Riot Police

Several hundred riot police patrolled streets and highways in the area today, according to footage broadcast by Lima-based television Canal N. Some shops reopened today after the nine-day protest, while schools remained closed, Maquera said.

“The community has been demanding an investigation into pollution of their water sources for a long time,” he said today by telephone. “We trust a government delegation will be able to set an agenda for dialogue on Thursday.”

The protests, which followed attacks that suspended Newmont’s $4.8 billion Minas Conga gold project in November, may deter $50 billion in mining investment projects if President Ollanta Humala fails to solve the dispute quickly, said Cesar Perez-Novoa, a managing director at Celfin Capital.

“We expect harsh political consequences from the unfortunate events that led to the death of the protesters,” Perez-Novoa said today in a note to clients. “Social unrest will cause investors to think twice before investing in mining districts that have a history of social discontent.”

‘Less Optimistic’

Peru’s main risks are social unrest and the euro-zone crisis, central bank President Julio Velarde said today at a seminar in Lima. Investments are unlikely to continue without peace, Finance Minister Miguel Castilla told the same event.

“We’re probably less optimistic than we would have been six weeks ago” as the central bank evaluates growth prospects this year, Velarde said.

Tintaya, Peru’s third-largest copper mine, produces 90,000 metric tons a year and is scheduled to start a $1.5 billion expansion by the end of the August that will lift capacity by 78 percent, according to the company. The mine is meeting all environmental obligations and is willing to improve social programs, Xstrata said.

“We are committed to constructive engagement with all our stakeholders to address their concerns and we are working with national and provincial authorities to establish a dialogue with those involved in the protests,” Xstrata said.

Xstrata rose 1.9 percent to 957.8 pence in London today.

Peru’s benchmark stock index gained 0.8 percent while the yield on the government’s benchmark sol-denominated bond due August 2020 fell eight basis points, or 0.08 percentage point, to 5.26 percent.

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

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net


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Companies Mentioned

  • NEM
    (Newmont Mining Corp)
    • $18.85 USD
    • 0.28
    • 1.49%
  • SCCO
    (Southern Copper Corp)
    • $28.26 USD
    • 0.36
    • 1.27%
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