Could Petroperú drag down Peru's mining sector?

Peru’s new energy and mines minister, Rómulo Mucho, will have to set his mining expertise aside to solve the crisis at state oil company Petroperú.

Mucho assumed the post on February 13 and has emphasized that he will focus on unlocking projects. He previously served as deputy energy and mines minister in 2005 and 2006.

Former energy and mines minister Miguel Incháustegui told BNamericas that the crisis at the company should be sorted out rapidly or the mining sector risked losing out on Mucho’s expertise because of a problem in the hydrocarbons industry.

Petroperú reported losses of US$823mn in 2023, well above the US$271mn seen in 2022, which led to criticism and the eventual ouster of Mucho’s predecessor, Óscar Vera.

“What we see from a distance is that, due to a lack of corporate governance, investment decisions were made that had no financial justification and which led the company into the situation it is currently in,” the president of mining, oil and energy association SNMPE, Víctor Gobit, told a local broadcaster.

In a filing with securities regulator SMV, Petroperú claimed the crisis was due to political instability and the aftermath of the pandemic.

“Petroperú is not bankrupt, it is in the midst of a restructuring process, which involves optimizing costs and strongly re-entering fuel production, since it had to paralyze the operations of the old Talara refinery,” the filing read.

The company reported an operating profit of US$29mn for January, while revenues fell from US$5.58bn in 2022 to US$4.01bn last year.

But local media reported Mucho as saying the company was bankrupt, although the ministry does not contemplate a privatization process. The focus will instead be on administrative and governance reform.

MINING

Mucho was also appointed to deal with greenfield bottlenecks. He “has been a great promoter of the relationship between agriculture and mining. And his messages on unlocking [projects] are focused on regional development. We believe he has a good relationship with unions and academia to change the current narrative,” Gobitz said.

In recent media reports, Mucho highlighted the importance of restarting and unlocking the Conga gold-copper and the Tía María copper projects.

Incháustegui said the sector is on a positive path, but dialogue and collaboration must be promoted further. While brownfield projects are set to advance this year, no major investments have been announced to enable Peru to regain competitiveness.

So far this year, the Toromocho expansion has continued, work on the new Chalcobamba pit at Las Bambas has started, Antamina's environmental impact study was approved and the digital one-stop shop has been improved.