not a good time to be investing in peruvian projects..... Peru...

not a good time to be investing in peruvian projects.....


Peru heading for rough times
Rebecca Lawson
Tuesday, 24 April 2007

PERUVIAN miners are threatening to launch an indefinite, nationwide strike early next week if the government does not meet a series of demands and fulfil its campaign promises.

However, the country's largest gold producer Newmont Mining is not too worried, saying the strike may not impact production at its Yanacocha gold operation.

A possible nationwide strike in the country, seen as a major force in copper production worldwide, would add further impetus to the strong copper market. London Metal Exchange copper stockpiles have been dwindling over the past year, and in the past month alone have fallen from 183,650 tonnes to 168,150t – less than a week's global consumption.

Talk of the strike helped copper up another $US55 per tonne to $US8010/t despite news that the dispute at the Grasberg mine in Indonesia had been resolved.

According to MarketWatch, the country's National Federation of Mining, Metallurgy and Steel Workers said the strike will begin at midnight on April 30 if the president does not eliminate outsourcing, improve labour rights, declare a more equal distribution of company profits and heed calls for a shorter working day.

Among other things, the federation is calling for mining companies to put contract workers on the payroll. According to the federation, only 20% of the 110,000 people working in the sector are on a stable payroll.

The federation reported that at least 48 out of 80 unions have declared they will join the strike on Monday.

If the nationwide strike does go ahead, it will be the first since 2004 when the federation lobbied the government to regulate or eliminate subcontracting for 48 hours.

Meanwhile, Newmont told Bloomberg unionised workers at its Yanacocha mine may join the nationwide strike following a breakdown in talks over wages late last week.

The gold miner said the strike would not reduce production unless there were road blocks or property destruction by striking employees.

Newmont is currently offering union workers a 14% increase in base salary, which is reportedly the largest increase of any mining operation in Peru.

"We believe that part of the motivation for breaking off negotiation in light of the progress we were making is because the union would like to participate in the nationwide strike of mining workers," Newmont spokesperson Omar Jabara told the newswire.

The mining major has forecast gold production at Yanacocha to drop 38% this year to 1.6 million ounces as production reaches ore containing less gold.

Peru is heavily reliant on the mining sector, which is one of its main drivers of the economy and accounts for more than half of Peru's export earnings. The country is the world's third-largest copper and zinc producer.