Peru Miners: Project Financing Drying Up On Lower Metal Prices
February 11 2009 - 1:32PM
Dow Jones News
Financing for mining projects in Peru is drying up because of
weak mineral prices that have made the industry less profitable,
the National Mining, Petroleum and Energy Society's vice president
said Wednesday.
"The international crisis is bringing new challenges," said
Carlos Santa Cruz, who is also a vice president with Newmont Mining
Corp. (NEM). "Financing is scarce and the decline in metals prices
has made projects less profitable.
"A large number of companies are looking to see what is
happening and are reviewing their production plans," he said at a
press conference.
Peruvian miners have shed thousands of jobs recently, Santa Cruz
said, adding that some mining companies have costs that are
currently higher than what they are receiving for their output.
"This is a serious problem, and we are looking at how we can
confront this," he added.
On a global level, the closing of less-profitable mines is
already taking place, Santa Cruz said.
He also cited a study that projected delays in various other
projects.
On Wednesday, the Ministry of Energy and Mines said that
investments in Peru's mining sector rose 9% in 2008 to $1.7 billion
from the previous year.
Peru's mining sector is already showing signs of slowing.
Sociedad Minera Cerro Verde SAA (CVERDEC1.VL) said recently that
it would suspend its molybdenum circuit, which produced 3 million
pounds of molybdenum in 2008, due to poor market conditions.
Base metals miner Southern Copper Corp. (PCU) said recently that
its capital projects have been put on hold or dramatically reduced
as a result of what it called the "drastic" reduction in metals
prices and unsettled economic conditions.
Peru is the world's largest producer of silver and in the top
five in gold, copper and zinc production. It also produces large
amounts of minerals such as molybdenum and tin.
Peru's National Mining Federation has threatened to hold a
strike vote soon, but Santa Cruz said that each specific mine would
have to decide how to deal with any work stoppages.
-By Robert Kozak, Dow Jones Newswires; 51-1-99927 7269;
peru@dowjones.com