MINING IS ECOCIDE
UK’s Hochschild fights Peru’s plans to close mines over environmental impactLondon-listed firm says it will ‘vigorously defend’ plan to continue mining gold and silver
Peru’s Yanacocha goldmine, a joint venture that includes Newmont Mining Corp. Hochschild is threatened with the closure of two of its mines. Photograph: Bloomberg/Getty Images
Jillian Ambrose
Mon 22 Nov 2021
The UK metals company Hochschild Mining is to fight plans by Peru’s government to hasten the closure of several mines in the southern Ayacucho region because of concerns over their environmental impact.
The London-listed mining company has promised to “vigorously defend” its plan to continue mining gold and silver from two mines – Pallancata and Inmaculada – which it claims operate under the “highest environmental standards”.
Ignacio Bustamante, the Hochschild chief executive, said he was “surprised” by the “illegal nature” of the government’s planned action and would “vigorously defend its rights to operate these mines using all available legal avenues”.
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Shares in Hochschild plunged nearly 40% on Monday morning, wiping more than £300m off the value of the company, after the Peruvian prime minister, Mirtha Vásquez, told local media over the weekend that four mines in the southern Ayacucho region would be barred from further expansion, and would be closed “as soon as possible”. They closed down 27%, the lowest since April 2020.
Hochschild said it had “not received any formal communication from the government regarding this matter”.
The plan could have severe consequences for Lima-headquartered Hochschild, which sources more than two-thirds of its gold and silver from its Peruvian mines.
The announcement is likely to raise hackles throughout the mining sector in Peru, the world’s second largest producer of copper, which includes UK miners Anglo American, Newmont, Glencore and Freeport-McMoRan. Peru’s mines are also operated by China’s MMG and Chinalco alongside local producers such as Buenaventura.
Peru’s mining industry has been linked to a string of environmental issues in recent years including deforestation, pollution and the mistreatment of environmental activists.
Bustamante said: “Our goal is to continue investing in Peru, growing our resources and extending mine lives, in accordance with the Peruvian legal framework.”
Hochschild said it was a significant employer in the region, employing more than 5,000 people directly and about 40,000 indirectly, and has long-term investment plans for the local region.
“We are prepared to enter into a dialogue with the government in order to resolve any misunderstandings with respect to our mining operations. However, given the illegal nature of the proposed action, the company will vigorously defend its rights to operate these mines using all available legal avenues,” Bustamante added.
Jillian Ambrose
Mon 22 Nov 2021
The UK metals company Hochschild Mining is to fight plans by Peru’s government to hasten the closure of several mines in the southern Ayacucho region because of concerns over their environmental impact.
The London-listed mining company has promised to “vigorously defend” its plan to continue mining gold and silver from two mines – Pallancata and Inmaculada – which it claims operate under the “highest environmental standards”.
Ignacio Bustamante, the Hochschild chief executive, said he was “surprised” by the “illegal nature” of the government’s planned action and would “vigorously defend its rights to operate these mines using all available legal avenues”.
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Shares in Hochschild plunged nearly 40% on Monday morning, wiping more than £300m off the value of the company, after the Peruvian prime minister, Mirtha Vásquez, told local media over the weekend that four mines in the southern Ayacucho region would be barred from further expansion, and would be closed “as soon as possible”. They closed down 27%, the lowest since April 2020.
Hochschild said it had “not received any formal communication from the government regarding this matter”.
The plan could have severe consequences for Lima-headquartered Hochschild, which sources more than two-thirds of its gold and silver from its Peruvian mines.
The announcement is likely to raise hackles throughout the mining sector in Peru, the world’s second largest producer of copper, which includes UK miners Anglo American, Newmont, Glencore and Freeport-McMoRan. Peru’s mines are also operated by China’s MMG and Chinalco alongside local producers such as Buenaventura.
Peru’s mining industry has been linked to a string of environmental issues in recent years including deforestation, pollution and the mistreatment of environmental activists.
Bustamante said: “Our goal is to continue investing in Peru, growing our resources and extending mine lives, in accordance with the Peruvian legal framework.”
Hochschild said it was a significant employer in the region, employing more than 5,000 people directly and about 40,000 indirectly, and has long-term investment plans for the local region.
“We are prepared to enter into a dialogue with the government in order to resolve any misunderstandings with respect to our mining operations. However, given the illegal nature of the proposed action, the company will vigorously defend its rights to operate these mines using all available legal avenues,” Bustamante added.
Hochschild shares tank after Peru nixes key mine extensions
Henry Lazenby | November 22, 2021
Hochschild Mining’s Inmaculada mine in Peru. Credit: Hochschild Mines.
London-based Hochschild Mining (LSE: HOC; US-OTC: HCHDF) says it will fight what it claims are “illegal” efforts by Peru to close and block extensions of its Pallancata and Inmaculada silver mines on environmental grounds.
The company said in a statement Monday it had learned via media reports that Peru’s head of cabinet, certain vice-ministers and regional authorities in the town of Coracora in the Ayacucho region had signed minutes of a meeting that detailed alleged environmental complaints.
The minutes also state that a commission has been established to negotiate the timetable and terms for the closure of specific mining projects in southern Ayacucho, including the company’s Pallancata and Inmaculada mines.
According to Hochschild, the Peruvian head of cabinet subsequently indicated that approvals would no longer be granted to facilitate additional mining or exploration activities concerning these mining operations.
Hochschild said it had not received any formal communication from the government regarding this matter. The news was enough to scuttle the value of the company’s London-listed shares, sending them down nearly 60% in early morning trading.
ShareCast News reported over the weekend that Peru’s Prime Minister Mirtha Vasquez said that four mines in the nation’s Ayacucho region would be closed “as soon as possible.”
However, Hochschild said it would defend its position in Peru and asserted that its mines operated under the “highest environmental standards.”
“Our goal is to continue investing in Peru,” Hochschild chief executive Ignacio Bustamante said in a statement. “However, given the illegal nature of the proposed action, the company will vigorously defend its rights to operate these mines using all available legal avenues.”
He said the company would seek to enter dialogue with the Peru government to resolve any “misunderstandings” concerning its mining operations.
The communities close to the affected operations and the trade unions representing the operations’ workforce have issued formal statements supporting Hochschild. The company employs more than 5,000 people directly and about 40,000 people indirectly in Peru.
Hochschild’s Inmaculada mine is the company’s most significant, representing more than 60% of its cash flows, according to its latest 2020 annual report.
Both the mines account for the bulk of the company’s output. In 2020, the Immaculada mine produced 15.14 million silver-equivalent ounces and the Pallancata mine produced 4.79 million silver-equivalent ounces.
BMO Capital Markets said in a research note the announcements over the weekend would probably cast a cloud of uncertainty over the future of the operations.
“Although Hochschild will not go down without a fight, it is very difficult for us to envision a scenario where the stock outperforms, given the current government’s stance on the operations; we are therefore moving to the sidelines with a ‘Market Perform’ rating until more certainty emerges,” said analyst Ryan Thompson.
Hochschild shares tumbled on the news and were down 57.5% at 70p each by 08:30 GMT.
Henry Lazenby | November 22, 2021
Hochschild Mining’s Inmaculada mine in Peru. Credit: Hochschild Mines.
London-based Hochschild Mining (LSE: HOC; US-OTC: HCHDF) says it will fight what it claims are “illegal” efforts by Peru to close and block extensions of its Pallancata and Inmaculada silver mines on environmental grounds.
The company said in a statement Monday it had learned via media reports that Peru’s head of cabinet, certain vice-ministers and regional authorities in the town of Coracora in the Ayacucho region had signed minutes of a meeting that detailed alleged environmental complaints.
The minutes also state that a commission has been established to negotiate the timetable and terms for the closure of specific mining projects in southern Ayacucho, including the company’s Pallancata and Inmaculada mines.
According to Hochschild, the Peruvian head of cabinet subsequently indicated that approvals would no longer be granted to facilitate additional mining or exploration activities concerning these mining operations.
Hochschild said it had not received any formal communication from the government regarding this matter. The news was enough to scuttle the value of the company’s London-listed shares, sending them down nearly 60% in early morning trading.
ShareCast News reported over the weekend that Peru’s Prime Minister Mirtha Vasquez said that four mines in the nation’s Ayacucho region would be closed “as soon as possible.”
However, Hochschild said it would defend its position in Peru and asserted that its mines operated under the “highest environmental standards.”
“Our goal is to continue investing in Peru,” Hochschild chief executive Ignacio Bustamante said in a statement. “However, given the illegal nature of the proposed action, the company will vigorously defend its rights to operate these mines using all available legal avenues.”
He said the company would seek to enter dialogue with the Peru government to resolve any “misunderstandings” concerning its mining operations.
The communities close to the affected operations and the trade unions representing the operations’ workforce have issued formal statements supporting Hochschild. The company employs more than 5,000 people directly and about 40,000 people indirectly in Peru.
Hochschild’s Inmaculada mine is the company’s most significant, representing more than 60% of its cash flows, according to its latest 2020 annual report.
Both the mines account for the bulk of the company’s output. In 2020, the Immaculada mine produced 15.14 million silver-equivalent ounces and the Pallancata mine produced 4.79 million silver-equivalent ounces.
BMO Capital Markets said in a research note the announcements over the weekend would probably cast a cloud of uncertainty over the future of the operations.
“Although Hochschild will not go down without a fight, it is very difficult for us to envision a scenario where the stock outperforms, given the current government’s stance on the operations; we are therefore moving to the sidelines with a ‘Market Perform’ rating until more certainty emerges,” said analyst Ryan Thompson.
Hochschild shares tumbled on the news and were down 57.5% at 70p each by 08:30 GMT.
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