(Bloomberg) – Peru’s mining industry is hopeful that the drastic measures that would stifle investment and future production dissipate when President-elect Pedro Castillo takes office at the world’s second largest copper producer.
That’s according to Victor Gobitz, president of Peru’s Institute of Mining Engineers, who said that while Castillo may have talked about taking extreme measures while campaigning, it is likely that once in office, he will take a more measured approach.
During a tense and polarizing electoral process, a rural union activist from a Marxist party vowed to nationalize energy assets, block certain projects and take a larger share of the mineral windfall profits to fight poverty. Castillo’s arrival surprised investors and fueled concerns that a more burdensome operating environment would jeopardize the projects needed to meet growing global demand for copper.
But being part of the opposition and campaigning is different from the responsibilities of governing and overseeing the growth necessary to close the gaps, Gobitz said. In addition, Castillo will also have to deal with a congress dominated by the center-right.
“I think the uncertainty is going to dissipate as there is dialogue,” Gobitz, who also runs the Antamina mine, owned by BHP Group and Glencore Plc, said in an interview Tuesday.
The stakes are high for the metals markets, given that Peru is already the main supplier of copper after Chile and a major producer of zinc and silver. Its rich mined deposits are also key to obtaining enough copper to connect an electrified global economy for decades to come.
Gobitz hopes to speak with Castillo’s team in the next few days and plans to invite the president-elect to lead a mining conference in September. He is confident that the new government will understand how crucial mining is to economic and community development. Even the Tía María project that Castillo opposes could still continue once his team evaluates all the benefits, Gobitz said.
Castillo, a rural teacher with no prior experience in national politics, will take office on July 28. It will inherit a nation that has suffered the highest death rate in the world from covid, as well as the deepest economic recession among the rest of the major economies in Latin America. Investors will stay tuned for your first steps, including the makeup of your cabinet.
For now, there are no signs that mining companies will delay spending, Gobitz said. All of the country’s major copper mines have returned to pre-covid production levels, with Mina Justa starting this year and Anglo American Plc’s Quellaveco in an advanced stage of development, he noted.