Latin Finance - March/April 2012 - 60

Andean peru investments

estimates that $2.3 billion could be raised in IPOs and new bond placements this year. Peru’s Andino Investment Holding, which operates airports and ports locally, raised $42 million with an IPO in early February. Cementos Pacasmayo, the country’s third largest cement producer, launched its first ADR on February 8, raising $264 million. Also in early February, Peru’s Ferreyros SAA, a heavy machinery distributor, offered 75 million common shares. It is the company’s first offering since 1997 and raised slightly more than $60 million. The Volcan mining company, the top lead and zinc producer, placed $600 million in international bonds in February. It followed the successful placement of $125 million in bonds, through the Luxembourg exchange, of Peru’s principal agroexport company, Camposol, in late January. Andino and its partner in Peru, Portugal’s Mota-Engil, also plan to launch a $110 million bond before April. Monsante expects another three to four IPOs this year. “The IPOs will not be very large and there is room in the market to absorb several more placements,” he says. That’s not including offerings by the Peruvian state in public companies, such as state oil company, Petroperu, which is considering floating the equivalent of 20% of the company’s value in shares in the second quarter. However, the country’s positive economic news and subsequent capital raisings could be dampened if Humala’s

government does to deal properly with social conflicts, many related to the strategic sectors that have been targeted for private investment.

Mining Dilemma

The Humala administration at the end of 2011 reported that $52.2 billion of investments were in the pipeline for mining, a massive jump from 2011, which was already a banner year for the country. Investment in mining between January and November, the last month for which official numbers are available, was $3.5 billion, up nearly 72% compared to the same 11-month period in 2010. The numbers, however, fail to tell a broader story about how a series of social protests have already led to the suspension of several large projects and threaten to impact the appetite of local and foreign investors. Humala’s predecessor, Alan García, cancelled in 2011 two projects, the $900 million Tia Maria copper mine planned by Mexico’s Southern Copper Corporation (SCC) and the $600 million Santa Ana silver project planned by Canada’s Bear Creek. Both moves are under appeal. Anglo American has put on hold the $3 billion Quellaveco copper mine in the south while it sorts out water issues, and SCC is facing a backlash over a $1.6 billion expansion of the components that form its mining complex. The conflict that has attracted the most attention, however, involves the $4.8 billion Minas Conga copper and gold project

Mining Projects in Peru
Expansion of existing operations Company Southern Copper Corporation (Mexico) Vale (Brazil) Antamina (Australia, Canada, Japan, Switzerland) Barrick (Canada) Shougang (China) Cerro Verde (US, Peru) Votorantim (Brazil) Approved projects Anglo American (Britain) La Arena (Canada) Marcobre (China) Chinalco (China) Yanacocha (US, Peru) HudBay (Canada) Xstrata (Switzerland) Xstrata (Switzerland)
Source: MEM, LatinFinance

Project Toquepala & Cuajone mines, Ilo refinery Bayovar phosphate Antamina Lagunas Norte Hierro Peru Cerro Verde Cajamarquilla refinery Quellaveco La Arena Mina Justa Toromocho Conga Constancia Las Bambas Antapaccay

Estimated investments ($m) 1,600 300 1,300 400 1,200 3,500 500 3,000 360 750 2,200 4,800 1,000 4,200 1,500

Status Partly behind schedule, faces community, local authority opposition On schedule On schedule On schedule On schedule Planning stage On schedule On hold, community, local authority opposition Planning stage On hold, investor issues Work in progress On hold, community, local authority opposition Planning stage Work in progress Work in progress

60 LatinFinance

March/April 2012
Latin Finance - March/April 2012

Table of Contents for the Digital Edition of Latin Finance - March/April 2012
