Exclusive-Hochschild sees Peru’s approval early next year for silver mine extension
By Marco Aquino
LIMA (Reuters) – Hochschild Mining expects Peru’s regulators to approve in the first half of 2022 a plan to extend the life of its Inmaculada silver mine, an executive said, after the firm’s shares were hammered by a dispute fuelled by locals opposed to the extension.
If approved, the life of the mine would run to 2042, a vital move for unlocking investment worth about $4.4 billion in the deposit, which represents more than 60% of the London-listed firm’s cash flows. The mine is now scheduled to close in 2023.
“This request is in the evaluation stage by (environmental regulator) SENACE and is expected to be approved in the first half of 2022,” José Augusto Palma, Hochschild’s vice president for legal and corporate affairs, told Reuters by email.
The timeline for any extension approval has not previously been reported.
The mining ministry in Peru, the world’s No. 2 producer of silver and copper, and SENACE did not immediately respond to requests for comment.
The firm’s Inmaculada and Pallancata mines have been the target of protests by communities in the Andean region of Ayacucho in southern Peru, who oppose any extension, saying the mines pollute local water sources. Hochschild denies this.
The firm’s shares plunged more than 50% in November after the prime minister said Peru would not back extensions for those mines and two others facing community opposition. The government later said it would let miners to seek extensions.
Local communities say they will keep pressing the government to stick with its initial pledge to shut the mines without changing existing schedules for closure. They say they will renew protests if the closure plans are not drawn up.
Parties involved in the dispute over Inmaculada, Pallancata and the two other mines meet for talks on Wednesday.
Under existing environmental permits, Inmaculada can operate until the end of 2023, with the closure process starting in 2022, while Pallancata’s closure process is also set to start in 2022 but the mine can continue operating until 2024.
Palma said Hochschild would present a new plan to the mining ministry to push back the Pallancata closure process by three years, so that it starts in 2025. He said the firm would later seek another extension to go beyond that date.
“Hochschild has no plans to close Inmaculada and Pallancata,” Palma said.
Tensions over the permit extensions have rattled Peru’s mining industry, which is facing broader community protests that have hit production at some major mines in Peru.
(Reporting by Marco Aquino; Writing by Adam Jourdan; Editing by Edmund Blair)