Presidential election rattles Peruvian markets

So far, the Peruvian press has spent much time discussing the impact that the country’s upcoming election could have on the Peruvian mining industry. Argus media recently added to this conversation by turning its attention to the rise of “gas nationalism” in the Peruvian election. Argus noted that Peru has South America’s only LNG export facility and 14.6 trillion ft3 of gas reserves.

Leftist candidate Verónika Mendoza has recently started rising in the polls, and has pledged to change the basic model that powers Peru’s extractive sector. She wants to renegotiate export contracts – beginning with the gas contract - and, more broadly, rewrite Peru’s 1993 constitution. Mendoza’s policy positions have forced the other candidates to establish a position on the issue, with Kuczynski saying that he would support renegotiating the LNG exports contract, and Keiko Fujimori opposing renegotiation.

The Lima stock exchange continued dropping earlier this week on fears that Mendoza’s extreme policy position would endanger Peru’s mining-fueled economic growth. Mendoza has not changed her campaign rhetoric to dissuade this view, promising an “authentic revolution” in Peru, if elected President.

In mining-related news, a recent statement by Jerry Jiao, vice-president of China Minmetals, reassured observers of the Peruvian mining industry. Jiao stressed that China will continue to buy additional copper mines around the world to secure its supply, in spite of low commodity prices and few large mining projects.