Mining companies need to look for opportunities amid a looming "left-leaning" trend in South American politics that is expected to push up copper prices, Richard Adkerson, chief executive of Freeport-McMoRan Inc, said on Thursday.
On a conference call on the same day, he told analysts that policy uncertainty in Chile and Peru underpins future copper prices, which account for about 40 per cent of global production in the two largest copper producers. The shift in the political wind is one of many challenges that mining companies are facing in meeting growing demand as the world moves away from fossil fuels.
Adkerson, 74, a veteran miner, plans to work with Peruvian mining to get in touch with the government team of Peru's new president, Pedro Castillo (Pedro Castillo). Mr Castillo has vowed to take a bigger share of mineral revenues to eradicate poverty.
In Chile, Freeport McMullen postponed a massive expansion there as the country debated tax increases, drafted a new constitution and was about to enter the presidential election in November as voters sought to address inequality.
"We really don't know what the bottom line is," Adkerson said. "this will support copper prices in the future."
Copper prices hit an all-time high earlier this year as major economies lifted blockade restrictions on the novel coronavirus epidemic against a backdrop of supply disruptions and an accelerated transformation of clean energy, leading to a surge in demand for metals. Demand has continued to outstrip supply over the years as low prices have led to cuts in investment in exploration and development, as well as supply-side efforts to cope with rising social and environmental expectations.
Peru's new president, Pedro Castillo (Pedro Castillo), had previously proposed a heavy tax of up to 75 per cent on copper sales, following the example of neighbouring Chile. In may, the lower house of the Chilean Congress approved a copper royalty bill that would impose a floating tax on copper, with miners paying a marginal tax rate of up to 75% when the price of copper is above $4 / lb. In addition, the new bill also includes changes to corporate tax rates, up to 44%.
Still, Adkerson is hopeful that the industry will avoid drastic policy changes in Peru, citing candidates who tend to soften their attitudes after taking office.
Tom Palmer, CEO of (Newmont Corp), another mining giant, said Thursday that the company is expected to make a decision on the proposed investment in the Yanacocha mine in Peru by December. He also pointed out that Newmont is likely to start contact with the new Peruvian government within the next six months and is optimistic that it will be welcomed.
