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3/21/17

Peru weather news and views (from IKN409)

Find below a brief comment that was carried in IKN409, last Sunday evening, on the weather situation in Peru as pertains to the mining industry. Since Sunday evening we've heard of Force Majeur decrees from several mining companies due to the blocked and washed out road infrastructure.



Peru weather news and views
The bad weather that’s hit Peru so far in 2017 has got much worse in the last week or ten days, with selective emergency decrees being issued by the government for areas badly affected, schools closed until further notice, roads blocked all over the place and landslides/mudslides/river flooding killing people and making headline news, even on a world level.

Things are pretty bad generally but part of the brief of The IKN Weekly is to be hard-nosed and mining-focussed so I’m not going to go too deeply into the human and country cost angles, here we think mines and here’s the need-to-know:

  • Not all of Peru is affected and even in the heavy rain zones, impact will vary. Most of the big infrastructure problems have been in the strip of geography between the coast and the highlands, with floodwater running down the mountains and causing havoc to people and residences, rather than mining company assets directly.

  • Some main artery roads are cut off at the moment, due to floods, landslides and bridges being taken out. Of chief concern this weekend are the roads that lead up to mines in the Ancash/La Libertad/Cajamarca provinces in the North (e.g. La Arena, , Shahuindo, San Simon, Michiquillay) and the Central Highway that runs up the Cordillera from Lima (e.g. Toromocho, Volcan’s mines, Coricancha, La Oroya, plenty of others). Those roads are blocked this weekend and traffic is zero, but as long as the forecast holds and rains die down as from Tuesday, logistical problems are likely to be temporary and not affect mining operations too much.

  • However, heavy rains typically affect open pit heap/dump leach operations and we may see warnings on production from mines in those areas. Either that or excuses offered when quarter-end production numbers are announced.

My best advice is, don’t assume the worst. If you have exposure to producer companies in Peru, call the IR department and find out the on-ground situation for them, rather than guess the mine’s been flooded or totally closed.