Showing posts with label Capital Of Peru. Show all posts
Showing posts with label Capital Of Peru. Show all posts

Saturday, July 30, 2011

Newmont expects talks on higher royalties in Peru

Newmont Mining Corporation NEM -3.67% ("Newmont" or the "Company") today announced that its second quarter 2011 attributable net income from continuing operations increased 37% to $523 million ($1.06 per share)(1) compared to $382 million ($0.78 per share) in the second quarter of 2010. Adjusted net income(2) increased 18% to $445 million ($0.90 per share) in the second quarter of 2011, from $377 million ($0.77 per share) in the second quarter of 2010.

As previously announced, based on the Company's average realized gold price of $1,501 per ounce for the second quarter of 2011, Newmont's Board of Directors approved a third quarter 2011 gold price-linked dividend of $0.30 per share(3), an increase of 50% over the $0.20 dividend paid in the second quarter of 2011, and an increase of 100% over the $0.15 dividend paid in the third quarter of 2010.

Second Quarter Highlights:

Consolidated revenue of $2.4 billion, an increase of 11% from the prior year quarter;

Average realized gold and copper price of $1,501 per ounce and $3.78 per pound, up 25% and 62%, respectively, from the prior year quarter;

Attributable gold and copper production of 1.2 million ounces and 44 million pounds, down 5% and 45%, respectively, from the prior year quarter, impacted by processing lower grade stockpiles at Batu Hijau and lower grade ore at Nevada;

Operating cash flow from continuing operations of $414 million, 45% lower than the prior year quarter due primarily to approximately $300 million in tax payments in Indonesia related to 2010 earnings;

Gold and copper costs applicable to sales ("CAS")of $583 per ounce and $1.34 per pound, respectively ($588 per ounce and $1.41 per pound, respectively, on an attributable basis(4));

Net attributable CAS(4) for gold of $499 per ounce; and

Maintaining 2011 outlook for production, CAS, and capital expenditures.

Newmont does expect there will be discussions about higher mining royalties, O'Brien told analysts on a conference call.

“I think it will be industry wide. And I think we have a pretty good sense of what that will be, and we've incorporated it into our economics,” he said.

“I won't tell you what our assumption is, but we have made some assumptions,” O'Brien said.

Newmont has been operating in Peru for decades, “through several changes of not just presidents but political styles”, he commented.

The company also takes a longer term view of its investment decision, beyond the current political climate, because the Conga project is expected to be in production for some 20 to 30 years, he said.

Newmont's annual attributable production from the Conga mine in the first five years is forecast at 300 000 oz to 350 000 oz of gold and 80-million to 120-million pounds of copper, at estimated costs of $400 to $450/oz of gold and $1.25/ob to $1.75/ob of copper in the same period.

Production is expected to start up in late 2014 or early 2015.

Newmont and Buenaventura already operate the Yanacocha mine in Peru.

Newmont, which has mines in the US, Australia, Peru, Indonesia, Ghana, Canada, New Zealand and Mexico, reported second-quarter adjusted net income of $445-million, 18% higher than a year earlier, after higher gold and copper prices offset lower production and increased costs.

Tuesday, December 22, 2009

Perenco takes its hunt for black gold to the depths of Peru's rainforest

The mosquitoes carry malaria – but the sand flies are even worse. If one of these flying horrors bites you, there's a strong chance of catching flesh-eating bug leishmaniasis – and you really don't want that.


Perenco is doing all it can to prevent environmental problems from its oil exploration in the Amazon
Even worse, it's 95 degrees Fahrenheit and the humidity is stifling, but the disease-carrying insects mean you have to dress head to toe in thick, impenetrable clothing to be sure you don't end up as lunch.

Imagine having to work a 12-hour manual shift at a drill rig under these conditions, seven days a week for six weeks in a row. This is the reality of oil exploration today. Most of the world's easy oil was pumped long ago and energy companies have to go to the frontiers of human endurance in order to get the job done.

From the deep oceans off Brazil, to the frozen tundra of Siberia – oil companies are testing the limits of engineering and project management to sate our unquenchable thirst for black gold. But, as can be expected in the oil industry, none of this is without controversy.

Deep in the Peruvian Amazon, Franco-British oil group Perenco is drilling three wells in an area that could produce up to 100,000 barrels of oil a day.

The Amazon has become synonymous with environmental destruction all over the world and any sort of activity will stoke the ire of even the mildest of environmentalists. Oil exploration is near the top of the eco-warriors' hit list. It's dirty, requires masses of equipment and any spill or mishap can cause significant and long-lasting environmental problems. So should it be allowed at all?

"Europeans should concentrate on reducing their own CO₂ emissions instead of telling Peru what to do," says Antonia Brack, Peru's charismatic and plain-speaking environment minister, echoing the view of other developing nations expressed in Copenhagen last week. "It is our forest and we can look after it ourselves.

"There are activities that are more damaging than oil exploration, such as migratory agriculture and alluvial gold mining." This, he says, destroys 150,000 hectares of forest a year, compared with the 7.5 hectares that have been cleared for Perenco's drilling.

The problem for Peru is that it has to import almost 150,000 barrels of oil every day. The costs involved in this are a massive strain on its fledgling economy. After the 2008 oil price spike, energy security is high on the agenda for every country in the world, so why should a country remain impoverished if it has the resources to meet its own needs and generate those
all-important petrodollars to fund its growth? That is the clear message of the Peruvian authorities.

Perenco's operations are in the Loretto region of Peru. This vast area is mostly rainforest, with its administrative centre in Iquitos on the Amazon River.

Ivan Enrique Valera is president of the Loretta region. From his offices in Iquitos he pays close attention to all the companies operating in the area.

When The Daily Telegraph met Mr Valera late one evening, he had just returned from inspecting a drilling programme in the south of Loretto to make sure all water was being injected back into the well and not being discharged into the environment. He is vocal about the importance of drilling for oil in region.

"The Amazon should not be maintained as a museum," he argued. "Those who think it should can come over here and pay for the development of the people."

The royalty revenues generated from licences and oil production are going to significantly help the country develop. In Iquitos alone, Mr Valera plans to completely rebuild the City's sewerage system and rebuild all its roads with the money it generates – and 90pc of the funding for this plan will come from oil revenues.

The oil industry is also becoming a major employer in the region. Of the 900,000 people who live in Loretto, Peru's largest administrative region, about 10,000 are employed directly by the oil industry. With an average family of five people, about 50,000 individuals rely on the oil industry for their income.

Iquitos is said to be the largest City in the world that is completely inaccessible by road. You have to fly in from the capital Lima or spend weeks sailing up the Amazon tributaries to reach it. This has created a logistical nightmare for Perenco.

To protect the forest, no roads have been constructed to the site. All of the equipment is shipped on the Amazon and its tributaries to a logistics base cleared at the side of the river. A fleet of helicopters is based at the site to ferry all personnel and equipment to the drill sites. The logistics have to be timed to perfection as it takes about a month to get equipment shipped up the river. Company staff are flown in on a seaplane.

Each of the three drill sites has been cleared of trees, but they are not much larger than a football field, at 2.5 hectares each. The forest floor has been lined with heavy duty plastic to prevent potential spills leaking into the ground and the company will inject any water that is pumped from their operations back into the reservoir.

The company is doing all it can to prevent any environmental problems, but as Shell has learnt in Nigeria, if the indigenous people feel their home is being exploited it can lead to conflict.

Father Ricardo Alvarez, a Dominican friar now living at a monastery in Lima, has spent more than half a century living with indigenous communities in the Amazon, working more than 20 years ago as a liaison between local communities and oil companies such as Royal Dutch Shell and Total. He is cautiously positive about the future of the forest and its people. However, he believes that oil companies need to learn from past mistakes in order to keep local people on side.

"When oil companies first came to the Amazon more than 20 years ago, no politicians were involved and Shell dealt directly with the local people, says Fr Ricardo Alvarez. "Engineers came in and built schools for the local people and taught them all about the local oil industry."

This then stopped as politicians started to get involved in the process. "In my 57 years in the forest I saw indigenous people marginalised," says Fr Alvarez. "The key to the future is exploration not exploitation."

He believes oil companies need to establish a dialogue with native people, eliminate their marginalisation by helping to provide social services and education. He also believes engineers from large cities need to make sure they are fully briefed on the history and cultural aspects of the people in the local area. "A lack of proper community relations is what creates the problem," he says.

Perenco has certainly learnt lessons from the priest. It has rebuilt and refurbished a hospital boat for the area that will constantly sail around the Amazon tributaries in the area and provide medical and dental care for communities.

As oil companies generate profits local people need to feel the benefits too. "That's the only way it will work", says Fr Alvarez. Perenco's model appears to be working well, with government ministers, the regional president and the local community fully behind what they are doing.

Of course, it is early days. A pipeline needs to be constructed to take the oil out and there is plenty of scope for an accident that could be environmentally destructive. But the development of fledgling economies will not stop – and, as Fr Alvarez says "rich Westeners with their polluting ways are in no position to lecture the people of Peru over what they can do."

Source:telegraph.co.uk/

Friday, December 4, 2009

Getting Puno With It In The Folklore Capital Of Peru


Though I didn't plan it, I arrived to Puno, called the folklore capital of Peru, on the eve of its anniversary day. In a region that lays claims to 4,000 distinct traditional dances, you better believe there was some fierce dancing. From 2-9 p.m. the next day, Puno elementary and high schools performed choreographed street parades in lavish costumes.

Puno is a port of Lake Titicaca and is way high up: 3,800 meters, or 2.3 miles. It was so high up that I had a headache upon arriving. After I found decent lodging (Hotel Arequipa, on Arequipa with Oquendo, has private rooms, a computer room with Internet and a clean, shared bathroom for 15 soles), my altitude problem seemed cured by a couple of coca leaf teas at a bar on Calle Lima.

In the morning, there was an impressive theatrical procession of the Incas. Legend has it that the Inca empire was founded by a couple that was born from Lake Titicaca. The royal couple comes back from the lake on Puno Day, carried on a platform by young men and throwing potatoes out to a large crowd.

The procession of servants in colorful one-piece garbs arrived to a stadium, where the royalty and shamans made long pronouncements in Quechua (Peru's official language along with Spanish) and Aymara. They were checking up on their descendants and praying for a good harvest, a Quechua-speaker explained to me.

Hundreds of indigenous Peruvians and plenty of camera-laden foreigners looked on while kids selling Coke yelled “Gaseosa!” along with other vendors. The hawking seemed kind of sacrilegious – I wonder if that type of behavior was allowed at 14th century Inca ceremonies. The ceremony ended with the sacrifice of a llama, whose blood was drunk by the royal couple. (Ed. Note: Llama blood??)





Then began the never-ending street parade, each group of school kids with spectacular matching outfits and a loud brass band trailing behind. (Again, this was no ordinary Thursday – it was Puno Day. The next large celebration is the Fiesta de la Candelaria starting February 2. People start rehearsing for those traditional dances months prior.)

I ducked into the Museo de la Coca. Coca leaves are the main ingredient of cocaine, of course, but in Puno and many highland regions of the Andes, it was used in Precolombian times – and still is used – for religious ceremonies, medical purposes, and as a mild stimulant. Basically a miracle leaf (it did help my altitude acclimation, I think). Coca's now mostly chewed on by campesinos trying to stay awake in their fields and it's legal to grow, sell and buy in Peru. I bought a bag for one sol while in Cabanaconde.





Anyway, the Coca Museum is tiny, but has two interesting twenty-minute videos, one on coca and another about all those traditional Puno dances. It's only five soles to enter and worth the visit.

At night the dancing finally ended and tourists flocked to bars and restaurants on Calle Lima. It gets cold in Puno, in the low 40s so I settled for a hot coca leaf tea.

Source: jaunted.com/