Peru miners say campaign tax talk deters investors

Peru miners say campaign tax talk deters investors
Wed Mar 9, 2011 2:56pm 
* Peru slips from 48 to 39 on mining investment survey

* Miners say campaign talk could hurt mining investment

LIMA, March 9 (Reuters) - Peru's mining society warned on Wednesday that political campaign talk about mining royalties and taxes could scare away investors, after the Andean country slipped nine spots on a survey ranking countries' attractiveness to mining companies.

The Fraser Institute, a Canadian research group, recently released a survey of 494 global mining companies that ranked Peru 48 out of 79 countries or jurisdictions, down from its 2009 ranking of 39.

While candidates in the April 10 presidential race pledge to continue economic policies that brought economic growth to a blistering 8.8 percent in 2010, they all say more must be done to spread the gains to the one-third of Peruvians still living in poverty.

Front-runner and former President Alejandro Toledo proposes to "negotiate for a higher contribution from miners' windfall profits" and has said miners must "give back" to local communities. To some miners, that sounds like a royalties tax. [ID:nN13104573]

Leftist Ollanta Humala, who spooked investors by nearly winning in 2006 but is now in fourth place in polls, says he would raise taxes for international mining firms.

Such rhetoric could put at risk some of the $42 billion of foreign mining investment that is destined for Peru in the next 10 years, Pedro Martinez, president of Peru's Society of Mining, Oil and Energy, said in a press release.

"Candidates should set aside populist promises and focus on policies that guarantee contractual stability and sustained economic growth," said Martinez.

Peru is the world's No. three copper producer and ranks second in silver and zinc output. The mining industry accounts for 60 percent of its exports and generates much of its fiscal revenues.

The campaign has thus far not caused a stir in financial markets or rattled Peru's business community. [ID:nN26163676] (Reporting by Caroline Stauffer and Teresa Cespedes; Editing by Walter Bagley)