Copper mining has a new champion in the experienced Peruvian economist

Among them are top executives, who have reason to be stressed given recent market volatility, local political unrest and social unrest that have seen Peru slip back to hold its own in a new competitive index of mining countries. But the largely maskless attendees, as they watch over the current downturn, are quite optimistic about the future.

Part of that revival is attributable to Kurt Burneo, who last month became the third finance minister to leftist President Pedro Castillo. In a presentation in Perumin, Burneo reiterated the policy priorities that have endeared him to the industry, such as maintaining tax rates, offering tax benefits and cutting red tape to attract investment and boost the economy.

That sounds like music to administrators’ ears, as proposals from some circles of the ruling coalition include everything from sweeping tax reforms to nationalizations.

Person of action

“I see him as a person of action,” Abraham Chahuan, head of the mining group IIMP, said after listening to Burneo’s speech. “He’s a very experienced economist, and I think he’s generally respected.”

No tax hikes is “very good news,” said Raul Jacob, chief financial officer of Southern Copper Corp., which is ramping up production and trying to get several new projects off the ground. Jacob said Burneo understands that mining is important to Peru. “We’re seeing more common sense in certain parts of government.”

[SEE ALSO: Peru’s July copper output falls 6.6% after mines underperform]

Roque Benavides, the outspoken president of Buenaventura, Peru’s largest publicly traded producer of precious metals, is also pleased with what he sees from Burneo. While Benavides says more needs to be done to ensure safety in mining areas and streamline permits, he wants to continue investing given Peru’s mineral potential.

Still, Burneo has a tough job. Weak institutions and infrastructure in remote rural areas set the stage for tense community relations. At the same time, President Castillo faces investigations by prosecutors and the opposition-led Congress is preparing a third impeachment motion against him.

The appointment of Burneo — a former director of the Inter-American Development Bank, central bank board member and deputy treasury secretary under Alejandro Toledo’s presidency — also angers some coalition hardliners, who see him as a neoliberal threat.

5 million tons

The new minister’s ability to deal with political headwinds and improve the investment climate could affect the amount of copper Peru produces in the future.

According to IIMP, production in the No. 2 copper-producing nation will increase from about 2.4 million tons this year to 2.8 million tons next year as Anglo American Plc’s new Quellaveco mine expands. But after Quellaveco, there is not much in the way of building new mines.

An estimated $53 billion worth of potential projects that could double production would require companies to get local communities on board while dealing with slow permits and the global economic downturn.

Chahuan sees signs of local uncertainties easing, while long-term prospects for the wiring metal are bright as the world electrifies and moves away from fossil fuels.

“We can reach that level of 5 million tons,” Chahuan said. “I think it can be achieved. It is feasible.”

(By James Attwood and Maria Cervantes)

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