By Marco Aquino
LIMA, May 27 (Reuters) – The president of Peru’s National Society of Mining, Petroleum and Energy (SNMPE) on Tuesday warned that opposing mining policies from the two presidential candidates heading into the June 7 runoff vote may jeopardize billions of dollars in investment.
Julia Torreblanca, SNMPE president, told Reuters that neither candidate’s proposals for the mining industry are sustainable.
• Right-wing candidate Keiko Fujimori and left-wing candidate Roberto Sanchez prepare to face off in a vote that could reshape the outlook for one of Latin America’s most important resource economies.
• Torreblanca said neither candidate’s proposal “works or is sustainable in the long term.”
• Fujimori proposes distributing 40% of mining royalties directly to communities near mines and creating a “fast track” for strategic mining projects with tax incentives for reinvesting profits.
• Sanchez has proposed raising taxes and royalties, reviewing large mining companies’ contracts, and seeking a referendum to draft a new constitution to expand the state’s role in the economy.
• Torreblanca said a higher tax burden could deter investment in Peruvian mining projects totaling some $63 billion, 70% of which is in copper projects in the country’s southern Andean regions.
• Total mining tax revenue reached approximately 26 billion soles ($7.59 billion) last year, a record high driven by elevated gold and copper prices, according to official data.
• Last year, the government transferred the equivalent of $2.93 billion to authorities in mining-affected regions for community development from income tax and royalties, official data showed.
• Torreblanca called instead for strengthening the state to ensure mining revenues are spent efficiently, citing more than 2,000 stalled public works projects.
• Moody’s Ratings said that a victory for Sanchez would be more likely to trigger policy changes which could weaken investor confidence and fiscal strength, whereas a Fujimori victory would likely preserve the country’s current macroeconomic framework and credit stability.
• However, it noted that regardless of who is elected president, the lack of a majority coalition in Congress will complicate efforts to push through change.
($1= 3.426 soles)
(Reporting by Marco Aquino, Editing by Iñigo Alexander)
