Grupo México’s Operations Unaffected by Peruvian Political Crisis

Amid a political crisis taking place in Peru, several mining companies reported that their operations suffered from blockades and damaged communications infrastructure. In this scenario, the Mexico-based mining company Grupo México reported its Peruvian projects remained largely unaffected.  

Several mining companies said they struggled with the fallout of the political instability caused by a coup, resulting in President Pedro Castillo being removed from power. Las Bambas, Peru’s third-largest copper mine, reported that it has been forced to store its processed copper at the mining site because protestors make it impossible to move the metal via the country’s highways. 

Similarly, the Compañía de Minas Buenaventura, Peru’s largest publicly-traded metals company, reported that even though its assets are operating normally, off-site logistics are delayed, and its Julcani and Orcopampa assets reported blockades in their communication routes. The company said that it took preventive measures and reduced the number of employees to the minimum to carry out only essential work, as well as temporarily stop operations at Julcani and Orcopampa. 

In this complicated scenario, Grupo México has not yet reported any significant problems. Currently, the company possesses two mining projects in Peru via its subsidiary Southern Perú Copper Corporation: the Toquepala and Cuajone mines in southern Peru. It also owns the Ilos melting plant, where it processes extracted minerals. Grupo México also co-owns the Tantahuatay gold project with Buenaventura. Grupo México told Bloomberg Linea that all its assets are operating normally. 

However, while operations seem to not be affected by the political crisis, investors remain cautious. On Dec. 7, 2022, after former president Castillo announced the dissolution of Peru’s Congress, Grupo México’s stocks fell 4.3 percent. At the end of the session, the company’s stocks were valued at US$3.93, around 2.5 percent lower than the previous session. “In our view, there is no real impact yet, but it surely creates uncertainty among investors,” said Brian Rodríguez, Financial Analyst, Monex. 

According to Alain Jaimes, Economic Analyst, Signum Research, Mexican companies with operations in Peru may find the political environment in the South American country difficult to navigate. 

Grupo México’s stocks have not recovered from the Peruvian crisis’ effects. At the time of writing, the company’s stocks are sold at US$3.67, which shows that the downward trend is continuing for now.