Southern Copper Corp. (SCCO), the largest copper producer in Peru, said it expects a “positive result” from talks with the government of President Ollanta Humala on a new windfall tax the country plans to levy on miners.
The government, which took office last week, is likely to support new mining projects such as Southern’s $1 billion Tia Maria copper mine, Financial Planning Manager Raul Jacob said. Peru is the world’s third-largest copper and zinc producer.
“We think the government will establish the taxation but will maintain the cost-competiveness of the mining industry,” Jacob said today in a conference call. The company is “confident that good investment conditions, stability, social inclusion and growth will prevail in Peru,” he said.
Humala, a former army rebel, is seeking to reassure investors that his plans to raise mining royalties and tighten state control over natural resources won’t erode growth and postpone about $42 billion of planned investments in mining. The new tax “won’t endanger” new projects, Finance Minister Miguel Castilla told Lima-based Radioprogramas yesterday.
The company plans to meet with Peru’s Mining Minister Carlos Herrera this month in a bid to restart Tia Maria before the end of the year, Chief Executive Officer Oscar Gonzalez Rocha said on the call. Southern is “very optimistic” the government will help restart the project, whose permits were canceled in April after anti-mining protests, he said.
Southern’s board is studying a 2010 proposal by parent company Grupo Mexico SAB to merge Southern with its Americas Mining Corp. unit, Jacob said. The plan, which would lead to the delisting of Southern’s shares, doesn’t have a deadline.
The company, which on July 28 doubled a share buyback plan to $1 billion, paid $148 million through June for 4.6 million shares, an average price of $32.32 per share, Jacob said.
The stock fell 2.4 percent to $33.21 at 1:53 p.m. in New York Stock Exchange composite trading. The stock has dropped 32 percent this year.
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