LIMA: Peru’s Congress on Friday rejected the government’s plan to hike taxes on mining companies, although it allowed for taxes to be raised in other smaller areas of the copper-rich country’s economy.
The result was a blow to the four-month old administration of leftist President Pedro Castillo, whose flagship plan is to hike taxes on mining companies in order to fund higher social spending. Peru is the world’s No. 2 copper producer.
Earlier this week, lawmakers had removed any mention of a modification to the mining tax regime during committee discussions, and the final text voted on by Congress did not mention mining.
Peru’s mining industry had vigorously opposed the tax hike plan, arguing that it was already paying as much or more than in other countries with large mining industries.
Congress’s decision to reject the mining tax hike occurred as one of Peru’s largest copper mines, MMG Ltd’s Las Bambas, is set to suspend production indefinitely starting on Saturday due to a road blockade by local residents who are demanding jobs and higher economic contributions from the company.
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Three-month copper on the LME rose 0.6% to $9470.5 a tonne, as of 0230 GMT, while the most-traded January copper contract on the Shanghai Futures Exchange edged 0.3% higher to 69,400 yuan ($10,897.56) a tonne.
The U.S. central bank’s two-day policy meeting is due to wrap up later on Wednesday, with investors expecting the Fed to announce a faster end to its bond-buying programme and then proceed with an interest rate increase.