Sept. 28 (Bloomberg) -- Pan American Silver Corp. (PAA), the world’s second largest primary silver producer, said it expects to pay an additional 5 percent in tax in Peru after the country’s Congress approved a new mining law last week.
“It looks as if the impact to us, relative to our profitability, is fairly minor,” Steven Busby, Pan American’s chief operating officer, said today in a telephone interview from Vancouver. “We are not seeing the big increase you are seeing at the higher profits.”
Peru’s 130-member legislature approved a new mining law Sept. 22 to increase taxes based on companies’ profits. The country is the world’s second-largest silver producer after Mexico. President Ollanta Humala came to power earlier this year as the country’s new President, vowing to raise mining royalties and tighten state control over Peru’s natural resources.
Pan American’s Peruvian operations will produce about 6.7 million to 7 million ounces of silver in 2011, or about 29 percent of overall production, according to estimates on the company’s website. The company has three mines in Peru.
Fresnillo Plc (FRES) is the world’s largest primary silver producer. Primary producers are companies which focus on silver, rather than other metals.
Pan American rose 72 cents, or 2.6 percent, to $28.52 at 2:50 p.m. in Nasdaq Stock Market trading. The stock has dropped 31 percent this year.