Humala Vows to Back Resource Investment, Foster Peru Growth

Peruvian President-elect Ollanta Humala
Peruvian President-elect Ollanta Humala Photographer: Chris Bournocle/AFP/Getty Images

Peruvian President-elect Ollanta Humala said he’ll support investments in the country’s natural resources and back policies that won’t jeopardize the region’s fastest growing economy.

“I ratify my willingness to resolve and prevent social conflicts while guaranteeing investment and the sensible exploitation of natural resources with respect for the rights and freedoms of the indigenous population and local community,” Humala said at an event in Lima today where he was accredited as president by Peru’s national electoral board.

Mining investment in Peru is slowing amid concern Humala’s plans to introduce a mining windfall tax could make the industry less competitive. Central bank President Julio Velarde said last week he expects private investment to recover after Humala takes office July 28 and clarifies his policy on mining tax.

Peru, the world’s largest silver producer and third largest in copper, will lead the region with 6.6 percent economic growth, after expanding 8.8 percent last year, according to the International Monetary Fund.

Resources, Prosperity

Protestors calling for a ban on all mining and hydrocarbons activity in the southern Andean region of Puno today blocked a highway linking the area with the Brazilian border.

The government last month suspended an environmental study for Bear Creek Mining’s Santa Ana silver mine in an effort to appease protestors after government offices in Puno were looted and buildings and cars were set on fire.

Humala, a former lieutenant colonel, in 2000 led 50 soldiers who seized and occupied for a week one of Phoenix-based Southern Copper Corp.’s mines to protest corruption in the government of former President Alberto Fujimori.

The 48-year-old president-elect won the June 5 election, beating Congresswoman Keiko Fujimori by 3 percentage points. Peruvian stocks plunged the most on record June 6 on concern Humala will raise mining royalties and increase state control over natural resources.

In trading today, Cia. De Minas Buenaventura, Peru’s biggest precious metal producer, reversed earlier declines of as much as 4 percent, to rise 1.4 percent to $37.60. Volcan Cia Minera SAA, Peru’s largest zinc producer, which fell as much as 2.2 percent, rose 2.2 percent to 2.85 soles.

The Lima General Index fell 0.7 percent to 19,013.57 at today’s close.

Vision, Diplomacy

Humala, who brought along his 5-month-old son to today’s ceremony, said he is seeking economic growth with social inclusion as Peru has ample resources to spread prosperity across South America’s sixth-biggest economy.

Peru needs a “strong” government that will protect the democratic gains of the last 10 years, said Humala. His government will guarantee economic growth while implementing the changes he promised Peru “gradually,” Humala said.

Saying that he’s seeking to build a government of consensus, Humala insisted that he won’t be rushed or pressured into announcing his Cabinet choices.

The president-elect and leader of Peru’s Nationalist Party, has postponed a trip to Venezuela after his one-time ally, President Hugo Chavez, underwent unannounced surgery in Cuba.

Humala is scheduled to meet Ecuadorian President Rafael Correa in Quito on June 28 and Colombia’s Juan Manuel Santos in Bogota on June 29, said his spokeswoman Cynthya Montes in a telephone interview. He won’t travel on to Venezuela if Chavez remains out of the country, she said.

The president-elect may travel to Washington in the first week of July, following an invitation from President Barack Obama, said Montes.

The sol fell 0.2 percent to 2.7595 per dollar, from 2.7551 yesterday.

The yield on the nation’s 9.91 percent sol-denominated bond due May 2015 fell five basis points, or 0.05 percentage point, to 5.49 percent, according to prices compiled by Bloomberg.

The bond’s price rose 0.19 centimo to 115.18 centimos per sol. Prices have risen for seven straight days, the longest winning streak since October.

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