MAC: Mines and Communities

Peru: China bank agrees $2 bln mine loan to Chinalco - Banco chino financiará proyecto Toromocho de Chinalco en Perú

Published by MAC on 2008-11-24

Two weeks ago, MAC posted a comment on the global crisis by José De Echave, who stated: "In this difficult context, some of the large corporations will have more possibilities [to mine], as well as Chinese companies, new actors who are ever more influential, and who are accustomed to back their investments with their own banks".

As confirmation of this, Chinalco - China's largest alumining produder - has received a $2 billion loan to develop the Toromocho copper project in Peru. The Chinese are also negotiating to build a US$3 billion steel plant in Brazil.

President Hu Jintao arrived in Lima last week for the Asia Pacific Economic Co-operation forum, poised to sign a bilateral trade agreement that could see China overtake the US as Peru's main trading partner.

Slowdown doesn't shrink China's LatAm ambitions



18th November 2008

LIMA, Peru) - China isn't letting the global financial crisis shrink its ambitions in Latin America, where it has sunk billions into mining and replaced the United States as Chile's top trading partner.

Chinese trade with Latin America has grown more than tenfold since 2000, and shows little sign of slowing. The world's fourth-largest economy is now racing to seal a free-trade deal with Peru ahead of this weekend's Pacific Rim economic summit of 21 nations. "Some foreign companies are basically canceling their projects in Peru," said China's press attache in Lima, Zhu Jingyang. "That's not the case for China."

China is known for thinking long-term - and long-term, there's no sign that its voracious appetite for raw materials will diminish. Top on its shopping list is the copper and iron that South America's Andean ridge so abundantly possesses. It continues to buy: In May, it signed a $2.2 billion deal to extract more than 7 million tons of copper ore from a single bald Peruvian peak known as Toromocho.

China is also negotiating to build a $3 billion steel mill in Brazil, where the Bank of China plans to open a branch next year with $100 million in initial lending capital. And it has invested in oil exploration in Ecuador, Colombia and Venezuela.

But it's not just raw materials the Chinese crave. It's also markets.

Chinese President Hu Jintao is bringing a delegation of about 600 people, including 12 ministers, to this weekend's Asia-Pacific Economic Cooperation summit, known as APEC. That's every bit as big as the one that accompanied him to Chile four years ago, when a global slowdown wasn't crimping his economy. That delegation is mainly made up not of mining officials, but of business leaders in telecommunications, agriculture and other sectors.

Chinese and Peruvian officials say they hope to have a free-trade agreement ready for signing at the summit, though Peruvian manufacturers of textiles, shoes, machine tools and other products fear the agreement could decimate their industries.

The pact would be China's second with a Latin American nation. It signed the first with Chile in 2005, and last year China eclipsed the United States as the top trading partner of Peru's southern neighbor.

Hu stopped off on his way to APEC in Costa Rica, the first Central American country to recognize China diplomatically, and said Monday the two countries would begin free-trade negotiations in January and hope to wrap them up by early 2010. "China's relations with Latin America and the Caribbean have never been so close," Hu told Lima's leading newspaper, El Comercio, in a full-page interview published Monday. More than 400 Chinese companies are now registered to do business in Latin America.

China is a low-key diplomatic presence in these countries, far from a political or military rival to Washington in a region the U.S. has long considered its backyard. But China's commercial clout is growing in leaps.

China's trade with Latin America was $102 billion last year, but already in the first nine months of this year it reached $111 billion, Chile's ambassador to Beijing, Fernando Reyes, told The Associated Press. That compares with U.S.-Latin American trade of $560 billion last year.

Hu's government insists its interests are not just commercial. In its first policy paper on ties with the region, China's foreign ministry suggested it might help Latin American countries reduce their debts. It also said it wants to help Latin American nations narrow the gap between rich and poor.

To that end, China last month bought into the Interamerican Development Bank with a very modest $350 million investment for social, anti-poverty related projects. That compares to Washington's 30 percent stake in a fund that exceeds $100 billion.

The money may be small, but the symbolism is big: The United States isn't the only world power Latin America can turn to for help. "The reality is that to some degree the fate of Latin America has been decoupled from the United States. Or at least it's not as tightly entwined as it used to be," said Daniel Erickson of the Inter-American Dialogue, a Washington think tank.

Analysts are nevertheless skeptical that China could become a political counterweight to U.S. influence in the region. It's simply not Beijing's style. "The United States maintains deep cultural and economic ties in Latin America that the Chinese won't come close to matching," said Washington-based Nicholas Consonery of the Eurasia Group. "I don't think the Beijing paradigm is to undermine U.S. influence in the region. Instead, it's about gaining access to resources."

Many economists believe China's economy will continue healthy growth as more developed economies retract, and that China could show leadership by offering lines of credit to the developing world from its $1.9 trillion in cash reserves.

IDB President Luis Alberto Moreno told the AP that he anticipates Latin America's economic growth rate to drop from 4.5 percent this year to 2.5 percent in 2009, which he said could trigger greater unemployment.

That's worrisome for opponents of a China-Peru free-trade agreement, considering how others in the region have fared in commerce with China. Mexico has a 16-to-1 trade imbalance with China, although APEC's third Latin American member, Chile, has fared well in bilateral trade because of its well-developed economy.

Peru's external trade minister, Mercedes Araoz, says the still-unfinished trade pact would protect 20 percent of Peruvian products - including textiles, shoes and clothing - with import duties.

But critics still fear it would cost jobs. And the president of the Peruvian Congress' external trade commission, opposition Rep. David Waisman, is also concerned about an absence of environmental and labor safeguards. "Ninety percent of what Peru exports to China are goods without added value, purely minerals," he said. "The people who create jobs in Peru are the small and medium-sized companies. Not the mining industry."

Associated Press writers Andrew Whalen and Carla Salazar in Lima; Eduardo Gallardo in Santiago, Chile; and Marianela Jimenez in San Jose, Costa Rica, contributed to this report.

(This version CORRECTS that Moreno said slower growth could, sted would, trigger greater unemployment.)

Chinalco, China bank agree $2 bln Peru mine loan


18th November 2008

LIMA - China's Chinalco and a Chinese bank will announce this week a $2 billion loan to develop the Toromocho copper project in Peru, a Peruvian government official said Tuesday.

Peru is the world's second largest producer of copper and the Toromocho mine could lift the country's annual output by as much as 25 percent. "China's bank of foreign financing and Chinalco are set to finalize a finance operation for the development of Toromocho," Foreign Minister Jose Antonio Garcia Belaunde said on local radio.

The project is Chinalco's first investment in Peru.

Twenty-one heads of state are gathering this week in Lima for the Asia Pacific Economic Cooperation forum, or APEC, and China and Peru are expected to announce a free-trade deal during the summit.

The state-owned Chinese company expects its Toromocho mine to start production in the first quarter of 2012, while construction should start in mid-2009.

Toromocho, in the Andean province of Junin, has reserves of 2 billion tonnes, with a copper grade of 0.08 percent. Annual copper output from the pit mine would be 210,000 tonnes for the first 10 years of the mine's expected three decades of operation.

State-owned Chinalco, the world's third-largest aluminum producer and China's second-largest copper company, is the parent of Aluminum Corp of China.

The Chinese government at times has encouraged the use of the country's huge foreign exchange reserves to secure access to natural resources, and Chinese miners could have an advantage, if other financing for the sector dries up.

(Reporting by Marco Aquino; Writing by Dana Ford; Editing by Walter Bagley)

China leader set to sign Peru trade deal, arrives in Lima today

By Naomi Mapstone in Lima

Financial Times

19th November 2008

When Hu Jintao, China's president, arrives in Lima today for the Asia Pacific Economic Co-operation forum he will be accompanied by the biggest delegation. Twelve ministers and almost 600 business leaders and support staff are escorting the Chinese premier, who is poised to sign a bilateral trade agreement that could see China overtake the US as Peru's main trading partner. The scale of China's delegation underscores expectations in the region about the country's future role.

"It is inevitable that China will become Peru's number one trading partner," said Juan F. Raffo, chair of Apec's business advisory council. "China now has 300m people that are comparable to US citizens in their consumption . . . That figure is growing. Their 1.3bn citizens, minus the elderly, are sooner or later going to jump the fence and consume at developed-world levels."

Luis Valdivieso, Peru's finance minister, told the Financial Times that China would be crucial in helping Peru to diversify its markets. "We are very concerned about the recession that is going on in the US [and] Europe and the slowdown in Japan. So for us, China becomes an important partner," he said. "The US will remain an important partner because we are also starting to implement a free-trade agreement with them. I think what is important is that we diversify."

China already has significant investments in Peru, including Chinalco's $2.2bn investment in the Toromocho copper mine. Mercedes Aráoz, Peru's trade and tourism minister, said Peru was "very close" to signing the China trade deal and would also announce the start of talks with South Korea this week. The deal with China would bring opportunities for Peru in agriculture and manufacturing. Exclusions and an agreement on customs co-operation would protect sectors such as textiles with dumping concerns, she said.

Chinalco, banco China financiarán proyecto cobre Perú


18 de noviembre, 2008

LIMA - La firma Chinalco Perú, una filial de la minera estatal Aluminium Corp de China, y un banco chino concretarán esta semana en Lima un préstamo de 2.000 millones de dólares para desarrollar el proyecto de cobre Toromocho, dijo el martes el Gobierno peruano.

El compromiso de crédito se realizará en el marco de la cita de líderes de los 21 miembros del Foro de Cooperación Económica Asia-Pacífico (APEC), que también reunirá a ejecutivos de las más importantes empresas del bloque.

"Se va a concretar una operación de financiamiento entre el Banco de Financiamiento Exterior de China y Chinalco para la explotación de Toromocho", dijo el canciller peruano, José Antonio García Belaunde, a la radio local RPP.

El volumen del préstamo sería la señal más importante de China de apoyo a los proyectos de inversión en América Latina, en un momento en que la crisis financiera global ha afectado la oferta de liquidez en los mercados de capitales.

China es un voraz consumidor de materias primas, de la cual América Latina es un importante productor.

La matriz Chinalco firmó en mayo con el Gobierno peruano un contrato de opción para desarrollar Toromocho, con lo cual el país sudamericano podría elevar en un 25 por ciento su producción anual del metal rojo.

Perú es el segundo productor mundial de cobre.

Para la cita del Foro del APEC llegará a Lima el presidente de China, Hu Jintao, quien se reunirá el miércoles con el presidente peruano, Alan García, y se espera el anuncio de un Tratado de Libre Comercio entre ambos países.

Chinalco tiene planes para iniciar la construcción de Toromocho a mediados del 2009 y que la producción en la mina comience en el primer trimestre del 2012. Toromocho está ubicada en el distrito de Morococha, en la región andina de Junín.

Según informaciones previas, la producción promedio anual alcanzaría unas 210.000 toneladas de cobre en los primeros 10 años del yacimiento, que tendrá una vida útil de 32 años. La mina, que será explotada a tajo abierto, también producirá 5.200 toneladas de molibdeno, según las estimaciones.

Chinalco es la tercer mayor productora de aluminio del mundo y la segunda cuprífera en China.

(Reporte de Marco Aquino, Editado por Patricia Vélez)

El Nuevo Imperio Chino

19 de Noviembre, 2008

En el poder desde el 2003, Hu Jintao acompañado de su esposa Liu Yongqing realizará una visita de Estado de cuatro días en Lima. El primero de los 20 mandatarios en pisar la rampa del Aeropuerto Jorge Chávez hoy miércoles será el presidente de China, Hu Jintao.

Se trata de la primera visita de Estado de un mandatario chino al Perú. Y se prolongará durante cuatro intensos días. La visita tiene prevista una apretada agenda de anuncios. El más cantado es el Tratado de Libre Comercio con el Perú que se anunciaría en Palacio de Gobierno, las turbinas del avión presidencial chino aún calientes. La suscripción dará pie para proyecciones elípticas y mayúsculas sobre la magnitud del mercado chino que abre sus puertas a los productos peruanos.

De hecho, el gigante asiático es el principal importador de harina de pescado peruano y uno de los mayores consumidores de nuestros metales.

Con Jintao se consolidaría el compromiso chino en varios proyectos mineros en los Andes, desde el yacimiento de hierro de San Juan de Marcona en Ica, hasta el problemático yacimiento de oro y cobre de Majaz en Piura.

El crecimiento productivo de China la ha convertido en un voraz consumidor de metales. Y el Perú es una potencia mundial en esa materia.

Pero la drástica caída en los precios de los minerales ha puesto en duda el futuro de varios proyectos mineros.

De hecho, parte urticante de la agenda bilateral será los contratiempos múltiples, particularmente de carácter social, de algunas de las inversiones mineras chinas en el país.

Aún así, Jintao llegaría con un grueso talonario de cheques para financiar estos proyectos.

Yaqing Xiao, presidente de Chinalco, cerrará en Lima el compromiso de inversión de US$ 2,000 millones para Toromocho, gigantesco yacimiento de cobre en las alturas de Ticlio.

Otros US$ 4,000 millones en inversión se concretarían en los próximos días. La delegación china a APEC suma 600 hombres de negocios - sin contar los 400 agentes de seguridad.

Jintao aterriza a Lima proveniente de La Habana, Cuba, y San José de Costa Rica, donde realizó sendas visita de Estado tras su participación en la Cumbre G - 20 en Washington D.C., el fin de semana pasado.

Jintao lleva cinco años en el poder y durante ese periodo la China se ha consolidado como uno de los motores de la economía mundial. El año pasado, sintetizó el desafío político que significa gobernar China, durante el Foro del Consejo Ejecutivo Empresarial de APEC (ABAC), en Australia.

"En China los problemas se multiplican por 1,200 millones, pero los logros se dividen entre 1,200 millones", explicó.

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