Franklin Templeton’s Mark Mobius recently visited copper mines in both Peru and Chile where, despite the perceived China slowdown, there was optimism about copper prices and demand:
Some executives at the mine we visited were optimistic that there would be strong economic recovery in the United States and Europe, and estimated demand growth in China would be about 3% in 2016. They expected that copper used in automobile manufacturing and electric grids would increase the demand for copper cables, offsetting the weak housing market demands. A scarcity of scrap copper was another factor they saw limiting the supply and potentially boosting prices. Also, with copper prices low, the incentive for mining companies around the world to start new mines has declined, which will also eventually impact supply. Nevertheless, the copper company’s profits were under pressure in view of the low mineral prices.
Mobius also had this to say about Peru:
Peru is generally a good jurisdiction for mining but politics have created some heightened uncertainty, with social unrest and protests halting some mining projects. However, the managers we talked to prior to Peru’s presidential election felt the government could be incentivized to approve projects in order to improve employment numbers in view of recessionary forces. While we were in Peru, the government announced that it would be dropping corporate tax rates from the current 30% to 26% by 2019. Since then, the victory of Pedro Pablo Kuczynski, who takes office in July, is viewed as supportive for the industry going forward, as he has pledged pro-business policies and efforts to attract wider foreign investment.
To read the whole post, Mining for Opportunities in Peru and Chile, go to the Mobius. go to the Investment Adventures in Emerging Markets – Notes from Mark Mobius blog. In addition, check out our Chile ADR list, Peru ADR list, Chile Closed-End Funds list, Chile ETF list and Peru ETFs list.
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