Peru's President Alan García has made a direct appeal to the president of Mexican miner Southern Copper (NYSE: PCU), demanding the company continue with the development of the Tía María copper project.
"Tía María cannot come to a halt, Mr Oscar González," García told roughly 800 business representatives gathered in Lima for the APEC CEO summit on Friday. "If it comes to a halt, we will have to look outside the country to sell it again."
Tía María, in southern Peru, is due to start producing by late 2010 at a rate of 120,000t/y while expansions at the company's Toquepala and Cuajone mines will contribute an additional 150,000t/y.
Press reports, however, have suggested Southern Copper may slow down planned investments worth billions of dollars in Peru and Mexico due to the financial volatility rocking global markets.
The company itself said at the end of October it will continue with investments for the expansion projects at its Peruvian operations, having already spent US$78.9mn of the US$580mn committed for Tía María and US$4.8mn of the US$86.9mn tagged for Toquepala.
Southern Copper is also developing the Los Chancas project in Peru, which is expected to produce 80,000t/y of copper by 2012 or 2013.
García called on business leaders at the summit to keep investing despite the financial crisis rattling the world. Although he hopes that Peru can achieve economic growth of 6-6.5% in 2009, investment banks place the figure at 4-4.5%.
Peru's president put a positive spin on the crisis. "This is a growth crisis," he said, referring to tensions caused by the transition from a "product-based" economy to a digital economy.
Foreign investment is essential to sustaining high growth rates registered in Peru in recent years and the international crisis threatens to weaken the country's momentum, especially in mining as metals prices plummet. Peru is home to a robust inventory of mining projects but most are greenfield or new projects which are seen as being more susceptible to delay.
In that aspect, García stressed the importance of companies continuing to invest with an eye to post-crisis opportunities. The president painted Peru as a haven for capital fleeing other countries.
García said that "whether people like it or not," he will open the doors even wider to foreign investors by strengthening public-private partnerships. Making an indirect reference to the nationalization of Argentina's private pension funds, which congress approved on November 20, he repeated his commitment to the country's private pension fund system and invited fund managers to invest in infrastructure.
The president said he is looking at the option of calling for bids to build a quality highway to the north of the country - where most of Peru's agricultural exports are concentrated - as a substitute for the current road, "which doesn't deserve to be called a highway."
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