Over the weekend, Peruvian business journal La
República reported on comments made by Carlos Gálvez Pinillos, president of
the Peruvian National Mining Society, summing up this difficult year for the
Peruvian mining industry. According to Gálvez Pinillos, the administration of
Peruvian President Ollanta Humala and its “poor capacity for governance” led to
the paralysis or suspension of more than 10 mining projects, generating losses
of more than $25 billion.
Gálvez Pinillos added that investment in the mining sector
fell from $10 billion in 2014 to just $5 billion for this year, and a projected
investment of just $2 billion in 2016. He blamed the government’s poor handling
of the social conflicts between local communities and mining companies for the
collapse in mining investment. He also credited the mining industry for
lowering the poverty rates in communities with mining projects. Nonetheless, Gálvez
Pinillos made no mention of the collapsing commodity prices that have also had
a significant impact on mining investment in Peru.
Despite the high profile of the social conflicts with large mining
companies, small farming communities in the Peruvian department of Puno have scheduled
a 24-hour strike for this Wednesday to protest
illegal mining in their region. According to local protest leaders, illegal
mining has polluted the local Ramis River. The protestors are calling on the
government to take action against the illegal mining activities.
In related news, HR Ratings explained
that the biggest worries for investors in Peruvian debt are related to the
country’s mining sector: specifically, the social conflicts between large mining
companies and local communities, and the large number of informal miners
operating in the country. Nonetheless, Peru enjoys low public debt, strong GDP
growth, and a low rate of inflation.
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