How bad is the economic crisis hurting mining concerns in Peru? It depends on who you’re asking.
Chris Kraul at the LA Times has the latest on Chinalco’s US$2 billion copper mine project at Toromocho, including an interview with the Chinalco Mining Peru’s president Gerry Wolfe. The gist: China is still cash-flush despite the global crisis and hungrier than ever for natural resources like copper. Wolfe is optimistic:
“They (China) went through the last 10 years selling things and piling up billions of dollars in surplus reserves, which they are now using to finance an expansion into the world.”
And, as for the issue of falling demand for commodities like copper, he takes the long view.
“They (Chinese people) want to become similar to the U.S. or Europe,” Wolfe said. “They have a long way to go, but it cannot be done without metals and other natural resources. Domestically, there are 1.3 billion Chinese, and all of them want cellphones, cars, appliances — just like you and me. And that takes copper, lots of it.”
Contrast this with another news story that broke late last week: Doe Run Peru, subsidiary of US-based metals producer Doe Run, halted all non-copper production at its giant smelter at La Oroya, Peru. The La Oroya smelter processses copper, zinc, lead, silver and gold, and is the country’s fourth-largest exporter. The company’s finances have been hit hard by a drastic drop in demand.
“The company doesn’t have any working capital despite making money over the past four years,” Castillo said. “We will meet with Energy & Mines Ministry officials to find out if the company can be saved.” Belaunde, the Doe Run Peru spokesman, said the company is working on a solution with banks and declined to comment further.
The company is not alone. Prices of copper, zinc, lead and silver have fallen at least 24% since last July. According to Bloomberg, the crisis has shuttered about 30 other mining companies across the Peruvian Andes. At Oroya, thousands of jobs have been cut, and confusion abounds.
“Everything’s apparently on hold pending a government bailout,” Roiberto Guzman, a Doe Run Peru metallurgical union spokesman, said by telephone from La Oroya, Peru. “The union has requested an interview with Doe Run management, as we can’t go on with this suspense.”