Peru's government softens stance on mining permits

Leftist President Pedro Castillo is seeking to shake up the Andean nation's huge mining sector after pledging to redistribute mineral profits more evenly and empower indigenous groups and farming communities. In what was the toughest measure yet from the government late last week, Prime Minister Mirtha Vasquez said the government would not approve operational extensions for a number of mines, including London-listed Hochschild Mining's flagship Inmaculada silver project.

Peru's government said on Wednesday that mining companies could seek permission to extend operations, marking a shift in stance as the government seeks to balance local community opposition with the economic benefits that the sector can deliver. Leftist President Pedro Castillo is seeking to shake up the Andean nation's huge mining sector after pledging to redistribute mineral profits more evenly and empower indigenous groups and farming communities.

In what was the toughest measure yet from the government late last week, Prime Minister Mirtha Vasquez said the government would not approve operational extensions for a number of mines, including London-listed Hochschild Mining's flagship Inmaculada silver project. However, on Wednesday, it softened.

"Mining companies can request extensions and modifications to their permits to explore and exploit in strict adherence to current regulations," the government said in a statement. It did not name Hochschild specifically. Hochschild's shares sank by as much as 57% on Monday, before recouping some of those losses to end down 27%. It fell a further 4.5% on Tuesday before gaining 6.6% on Wednesday.

Earlier this week the government and the National Society of Mining, Energy and Oil held "productive" talks, though no specific agreements were announced. On Wednesday the industry body called the government statement "a positive measure". "It is urgent to seek consensus and build the necessary trust between the state, the private sector and civil society to guarantee the development of a modern, socially and environmentally responsible mining sector," it said.

Mining operators play a major role in the economy of the world's No. 2 producer of copper and silver. However, some operators have repeatedly faced opposition from local communities.

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