Hochschild Mining will crack down on the “illegal” move to close Peruvian mines

Hochschild Mining has vowed to crack down on what it says is Peru’s “illegal” plan to close its two mines on environmental grounds, which has exacerbated the conflict between the mining industry and the left-leaning government.

After Peruvian Prime Minister Mirtavasquez said over the weekend that it would “close” four mines in the southern Ayacucho region as soon as possible, Hochschild’s stock price fell by 50% in early trading on Monday.

This South American country is the second largest copper producer in the world and an important source of gold, silver, zinc and tin.Government intervention headed by the president Pedro Castillo, Will bring chills to the mining industry.

In addition to Hochschild, which is listed in London, Anglo American, Newmont, Glencore and Freeport-McMoRan also operate mines in the country, including Chinese holding companies including Minmetals Resources and Chinalco, and Buenaventura The same goes for local producers.

Hochschild said in a statement on Monday that it will “vigorously defend its position” and that its mines are operating under “the highest environmental standards.”

Two of the target mines-Pallancata and Inmaculada-are owned by Hochschild controlled by the Peruvian billionaire Eduardo Hawkschild, Accounting for more than two-thirds of the annual gold and silver output of London-listed groups.

“At this time I want to announce, about these four mining companies,” Vasquez said in a statement. statement Over the weekend, “there will be no further development, exploration or even expansion of the mine closure. We will close the mine as soon as possible.”

Hochschild added on Monday that it “has not received any official notification from the government on this matter.”

When the Peruvian government issued the order, some right-wing congressmen, including the defeated presidential candidate Keiko Fujimori, had launched an effort to impeach Castillo.

He came Power this year Pledged to extract more money from the miners in Peru. His government has proposed to “impose a new profit tax” on mining companies and “end the tax incentives.”

The mining industry accounts for 60% of export revenue PeruHochschild employs 5,000 people in Peru and says its mine can support another 40,000 jobs.

Hochschild’s stock price has fallen 25% this year. Friday’s closing price was 164 pence, giving the FTSE 250 index company a market value of just over $1.1 billion. The company’s goal this year is to produce up to 372,000 ounces of gold and 32 million ounces of silver.

Patrick Jones, an analyst at JPMorgan Chase, said: “The potential reduction in these businesses poses significant downside risks to Hochschild stock.” “In addition, we believe this will have a negative impact on Anglo American, the flagship Quellaveco copper project of Anglo American. Located in Peru.”

“Our goal is to continue to invest in Peru,” said Ignacio Bustamante, CEO of Hochschild. “However, given the illegal nature of the proposed operation, the company will use all available legal means to vigorously defend its right to operate these mines”

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