Take physic, pomp

Peru Mining reality check (from IKN391)

A small sample of IKN391, out last night. Here we see how the new Peru government of Pedro Pablo Kuczynski is going down the old and tired road of over-promise, under-deliver.

Mining reality check
It’s time to start being very
careful about the overly bullish statements coming out of the new PPK
government, the “investment community” many like the man at the top but his
minions have started bloviating, which isn’t good for the longer run.
A prime example here came from
Peru’s Ministry of Energy and Mining, trying hard to fight back against the
perception that there’s a big gap in the project book in the country.  To that end its trumpeted its wares to the
media last week and here’s (10)
an example of the result, from
Peru’s major media channel (and number one news radio station) RPP which gave
us the headline, “Construction Will
Begin On Eight Mining Projects Worth U$9.033Bn”
. Here’s a paragraph from
inside the article (translated):
“The ministry specified that the
projects that will move into construction in the months to come are mainly for
gold and copper, though there are also iron ore and phosphate projects on the

That sounds
good, right? Well yes, right up until the moment you see the list of the projects
about to get going in the next few months:

On the bright side the Miski Mayo
(Vale) expansion project and the Ollachea project are likely to happen in good
order. Hochschild has its funding issues, but Crespo should happen eventually
too. And though I have my doubts due to the fact it’s copper, I suppose you
could even make the case for Milpo’s Pukaqaqa project because it’s fully
permitted and relatively small (as copper mines go, at least). BUT, over half
this imaginary basket of loveliness is the Anglo Quellaveco copper project in
Moquegua and that’s not going to see the light of day in years, let alone “a
few months”. Then there’s the marginally economic Pampa de Pongo iron ore
project, that’s $1.5Bn of the total and with serious doubts over its
development. Then add on the Pacasmayo Fospac phosphates project in Bayovar that is advanced, but even if it gets its
build decision currently slated for 2q17 won’t become a working mine until
2022 according to that company’s own timeline.
The problem with the perception in
Peru that there’s a big gap in the mining investment pipeline is precisely that
it isn’t a perception, it’s a stone cold fact. If the MEM decides to go the
happy marketing route and Everything Is Awesome this early into the PPK
administration, it’s just asking for trouble further down the line.

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