#Peru #copper # tin #zinc #lead
So I tweeted a thread a couple of months back on how the election of a Communist President of Peru would seriously deter future mining investment, and put at risk existing production levels.
So I tweeted a thread a couple of months back on how the election of a Communist President of Peru would seriously deter future mining investment, and put at risk existing production levels.
I have quietly watched developments since, including the burning of mining camps, road blockades and this week's uncertainty on maybe cancelling some mine permits. Sadly for the long-term prosperity of the Peruvian people my fears are playing out.
Investors crave certainty - there is currently none. #Peru is now uninvestible for new foreign Western World capital going in.
So what is the Govt's game plan here? Here is what I think they are doing / will be doing:
So what is the Govt's game plan here? Here is what I think they are doing / will be doing:
Hypothesis: The Peruvian Govt's long term goal is the common ownership of the means of production - i.e. nationalisation of all of the mining industry
1. Create confusion
2. Make operation increasingly difficult - mobilise your supporters in the local communities in protests
1. Create confusion
2. Make operation increasingly difficult - mobilise your supporters in the local communities in protests
3. Create more confusion and uncertainty - cancel some permits
4. Ramp up the protests
5. Massively increase royalties and taxes in the name of social justice
6. Ramp up the protests and demonstrations further
4. Ramp up the protests
5. Massively increase royalties and taxes in the name of social justice
6. Ramp up the protests and demonstrations further
7. Acquiesce to the demands of the protestors and increase taxes further - go South African and Zimbabwean style and insist on 51% local ownership
8. Institute capital controls to stop profits returning to investors in the existing mines
8. Institute capital controls to stop profits returning to investors in the existing mines
9. Watch production levels crater as mining companies starve their mines of sustaining and working capital
10. Blame the mining companies for the job losses and the reduction in taxes and royalties
11. Nationalise everything in the name of saving the Peruvian mining industry
10. Blame the mining companies for the job losses and the reduction in taxes and royalties
11. Nationalise everything in the name of saving the Peruvian mining industry
Consequences:
Mines will be run for cash and capital starved by an incompetent communist Govt that fundamentally does not understand capital
Corruption
Syphoning off of the remaining profits
Production craters further
By year 5 Peru mining looks like the Venezuelan oil industry.
Mines will be run for cash and capital starved by an incompetent communist Govt that fundamentally does not understand capital
Corruption
Syphoning off of the remaining profits
Production craters further
By year 5 Peru mining looks like the Venezuelan oil industry.
So what is the Communist playbook here?
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