Hochschild Mining, a British mining concern, will challenge Peruvian government plans to speed up the closure of numerous mines in the southern Ayacucho area due to environmental concerns.
Hochschild owns Pallancata and Inmaculada, which account for 80% of the British company’s yearly gold and silver output. The firm expects to generate more than 60% of its production from the Inmaculada gold and silver mine. About 17% of its production is likely to go from Pallancata, in process since 2007. Shares in the firm fell by more than 40% in the immediate aftermath, wiping off more than £300 million from the company’s worth. The firm closed the day 27 percent down for the first time since April 2020.
Government officials in Peru said that a panel had been formed to establish a timeframe for the closure of specific mining operations, citing “claimed environmental problems” as the reason. The company claims the Peruvian government had not contacted the firm before the decision, which was learned via news reports over the weekend. Hochschild’s plan in Peru’s gold and silver mining might have serious repercussions.
Two gold and silver mines, Pallancata and Inmaculada, will be “vigorously defended” by London-listed mining corporation Glencore, which claims to operate under “the greatest environmental standards.” Following a statement made by Peruvian Prime Minister Mirtha Vásquez over the weekend, which stated that four mines in the southern Ayacucho region would be closed “as soon as possible,” the value of shares in the company Hochschild plunged nearly 40% on Monday morning, wiping out more than £300 million. They fell 27%, the lowest level since April 2020, when they were still in business.
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President Castillo’s decision to shut the mines comes as certain right-wing members of Congress are attempting to impeach him. Castillo vowed to use Peru’s rich resources to serve the whole population when he became an office. His administration has already suggested a new tax on mining company earnings and an end to tax benefits.
Criticism has already begun to fall on this new choice, which some say is ill-advised. Peru’s export earnings are mainly derived from the mining sector. In all, Hochschild employs 5,000 people in the nation, directly and indirectly, supporting an additional 40,000. We have not received any official contact from the government addressing this topic,” stated Hochschild. When it comes to Peruvian gold and silver, the strategy might have severe ramifications for Lima-based Hochschild.
Anglo American, Newmont, Glencore, and Freeport-McMoRan are just a few major mining companies operating in Peru, the world’s second-largest copper producer. Local manufacturers like Buenaventura, MMG, and Chinalco are also involved in Peruvian mining. Deforestation, pollution, and the abuse of environmental activists have all been connected to Peru’s mining sector in recent years.
In line with Peruvian law, Bustamante stated: “Our objective is to continue investing in Peru, expand our resources, and lengthen mine life.”
According to Hochschild, the company has long-term investment ambitions for the area, employing more than 5,000 people directly and roughly 40,000 others in a supporting role.
To clear up any misconceptions about our mining activities, we’re ready to engage in a conversation with the authorities.” “However, given the illegality of this planned action, the business intends to actively pursue all legal channels to protect its rights to operate these mines.”