Peru's Volcan mulling sale of valuable property to tackle financial problems

In financial distress, Peruvian polymetallic mining company Volcan seeks to sell non-core assets, and an 870ha plot of land it owns near the US$3.6 billion Chancay megaport currently under construction captured the market's attention.

Previously, Volcan planned to develop an industrial park, dubbed Chancay Park, in the area, but selling the land, plus it's 16% stake in Chilean cement company Polpaico, could yield up to US$200 million, CEO Luis Fernando Herrera told local media.

However, while the company confirmed in a filing with securities regulator SMV that it was evaluating the sale, “to date, we can report that no preliminary or definitive agreement has been signed in relation to a sale of the land we own located in the vicinity of the Port of Chancay. Likewise, a final decision has not been reached on the best destination for these assets.”

The port's US$1.3bn first phase is expected to start operations in November and would boost the value of the plot, especially since the government is considering declaring the port a special economic zone to attract foreign capital. 

Apart from its five mining units, Volcan also owns 40% of Cosco Shipping Ports Chancay Perú (CSPCP) which is building the first phase.

Previously, CSPCP executives expressed interest in a logistics complex at the port.

"Around the entrance complex, an 870ha logistics project is being worked on that will include storage and transformation areas... with the advantage of having all the activity nearby for greater logistics efficiency," deputy general manager Carlos Tejada told an event last year.

He added that 50-70ha of the park will come into operation together with the start of activities at the port. Yet, detailed engineering and permitting for the logistics project are still underway, local media reported.

The port is 84% complete and expected to generate business opportunities related to trade with China.

In April 2024, Volcan formalized a spin-off to separate its port from the mining business, creating Inversiones Portuarias Chancay.

Despite the valuable assets in its portfolio, Volcan is undergoing a restructuring due to financial problems and credit ratings downgrades.

In early February, the company informed the market that it hired external financial advisors to evaluate the best refinancing options, including assets sales.

Volcan sold its stake in electricity generation company Río Baños in May and is in the process of selling its hydropower subsidiary Hidroeléctrica Huachor.