The coppercalled to be the main link in the post-pandemic economic recovery, fell 4.7% this Tuesday afternoon to US$7,627 a ton on the London Stock Exchange, its lowest level since the beginning of December 2020, in what It represents the worst quarterly decline for metals since the 2008 financial crisis.
Luis Arias Minaya, former head of Sunat, maintains that copper, which reached its best price of US$4.7 a pound in mid-2021, has begun to drop in price in recent weeks as a result of the withdrawal of fiscal stimuli in developed countries, such as the US -where the FED persists in raising its interest rate-, in addition to fears of recession due to a possible slowdown in China, the main global consumer.
For the also professor at the University of Lima and the PUCP, these factors cause the bullish cycle to be in the descending part, which will impact the collection for Peru, which last year was growing thanks, in large part, to the rise of the red metal.
“Copper has cycles up and down. The rise began in 2003 and then fell due to the global financial crisis of 2008-2009. Then it went up again in 2010 and in the middle of 2011 the downward cycle began, where we have been with low prices in 2015-2016. Now, with the pandemic, we begin a new cycle. the price of this metal it is cyclical: when it goes up or down, it does so hand in hand with the collection”, he points out.
Indeed, the Association of Exporters (Adex) emphasizes that the export of the red metal represented 34% of total Peruvian exports of all kinds in 2021, with FOB values above US$20.76 billion shipped. But, if we take it only to the mining sectorreached ratios of 55% of the total volume exported.
Epifanio Baca, principal investigator of the Grupo Propuesta Ciudadana, considers that, aside from these fluctuations, Peru has lost an incalculable opportunity to improve the collection system in the mining sector, like other countries with similar problems caused by the pandemic.
“It has not been seen that this price boom is accompanied by a more dynamic investment trend, with proposals stalled by the high social conflict and the instability of our economy for years”, he subscribes.
The specialist says that “it remains to be seen” if this setback marks a real trend or is part of the “volatility that characterizes the global commodity market.” However, he assures that this stumble in the international price of the main metal that Peru exports should not divert attention from the budding reform that has yet to be implemented.
“I believe that it is necessary to address an update of the set of regulations, not only fiscal and tax, but also environmental and labor. If we take into account the importance of mining for Peru, it is necessary to modernize the framework. There are many gaps still to be resolved, it is something that has been left aside. There are proposals”, he affirms.
Production to May with slight fall
According to the Mining Statistical Bulletin (BEM) of the Ministry of Energy and Minesthe copper production in May registered 174,258 TMF, reflecting a decrease of 11.2% compared to May 2021.
The accumulated production to the fifth month of the year reported a total of 898,175 TMF, which meant a slight accumulated interannual decrease of 0.3% (900,799 TMF).
Copper is not the only metal that showed a downward fluctuation the day before: gold fell 2.3%, while silver weighed down 4.2% and platinum 2.6%. Aluminum fell 3% and tin, 5.3%.
Luis Arias Minaya, PUCP professor and University of Lima
“Copper not only generates foreign exchange, but also direct and indirect jobs. If what happened with gold happens to him, whose production levels are getting lower, we will have fiscal problems in the future”.
Epifanio Baca, Citizen Proposal
“A new regulatory framework for mining activity is still pending. Regarding the crisis that occurred with Tía María, in Arequipa, this high-level commission was appointed for it, but it was left aside.
Copper comes off historical peaks: collection in suspense