LIMA/SANTIAGO (Reuters) – In South America’s copper-rich Andes political risk is rising as high poverty and debt levels amid the COVID-19 pandemic drive potentially sharp policy shifts and put mining wealth into the crosshairs of angry citizens and political leaders.
In No. 1 copper producer Chile, an overhaul of its market-orientated constitution is underway, and it is debating whether to hike royalties on miners.
Peru, the No. 2 producer, is heading for a polarized June presidential election with a little-known socialist leading in the polls who wants to redistribute mining wealth.
“Some 42% of world copper mining production is under political uncertainty that could entail risks on future production,” said Juan Carlos Guajardo, head of the Chilean consulting firm Plusmining.
That uncertainty is helping support global copper prices that have hit record highs as post-pandemic Chinese demand bounces back, as well as rapid development of a green revolution of electrification seen as driving further appetite for the metal in years ahead.
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