To the Mines

LIMA/BERLIN |

LIMA/BERLIN (Own report) - German business associations are demanding better access to the South American mining industry. In the coming weeks, corresponding initiatives will focus primarily on Peru, one of the world's largest producers of copper, silver, gold and zinc. In business circle discussions about profit opportunities for German companies, one hears that "investments in mining projects in the Andes are becoming increasingly attractive because of the rising world market prices of metals." Moreover, Berlin is hoping to acquire a greater quota of Peruvian metal exports. That Andean state is currently already one of Germany's most important copper suppliers and, in the future, is supposed to account for even more to cover the growing needs of German industry. To improve Germany's competitive standing, Berlin is insisting on the conclusion of a free trade agreement between the Andean states (among them Peru) and the EU. Whereas the protest against the social and ecological consequences of the mining boom is growing stronger within the Peruvian population, the German Chancellery intends to underscore German claims with Angela Merkel's visit to Lima.

Because of Peru's considerable natural deposits, German interest in that country is steadily growing. As the world's most important producer of silver, the third largest producer of copper and zinc as well as the sixth largest of gold, this Andean nation has a considerable significance for the global metal market. According to information provided by the German Office for Foreign Trade (bfai), the metal molybdenum is becoming one of Peru's most important mining products for export. Molybdenum is a relatively rare component for the production of airplanes and rocket parts. The Peruvian deposits are considered to be the most significant.[1] In 2006, mining products accounted for 61.7 percent of the total value of all Peruvian exports. And the boom is continuing. The mining industry is achieving high growth rates (peak values: 53.3 percent in September 2006) with an even higher increase in the turnover of single metals: Peruvian companies sold 70 percent more silver, 114 percent more copper and 122 percent more zinc than previously.[2]

Insufficient

Until now, the German economy "could but insufficiently benefit from the Peruvian economic upswing" deplores the state-controlled bfai.[3] Last year with exports to Peru valued at 506 million US dollars, Germany, the export champion of the world - despite high economic growth (26 per cent) - found itself far back in the race, lagging far behind the main competitors USA (2.5 billion) and China (1.6 billion). German business associations are supporting the sprint to catch up. The German ministry of economics is subsidizing a business trip to Peru, scheduled for next week, at which German company representatives will have a close look at several mines. In October, the Hamburg-Latin America Association will organize this year's Latin America day -focussing on Peru. Several ministers from Lima are scheduled to attend. According to mining experts, this Andean state is at present "one of the most popular countries for mining investments".[4] Investments valued at seven billion US dollars are expected to be made within the next five years. German companies are demanding their share.

Main Suppliers

Furthermore Peru has considerable significance as a raw material supplier for the German industry. Exemplary data published September 5 by the Federal Statistical Office confirm this. According to these data, a total of 1.1 million tons of copper ore and concentrates were imported into Germany in 2006 to meet the growing demand of German companies. This is a 60 percent increase since 2000.[5] "Germany's main suppliers of copper ore are located in South America" notes the Federal Bureau of Statistics. Berlin is worried that a further increase of German Latin American imports will no longer solely collide with the growing demands of the United States, but now also with sales agreements made with the People's Republic of China. For example, Beijing has secured for itself more than half of the copper extracted from Chile's largest underground mine. Until now, Chile is, by far, Germany's main copper supplier. Peru is currently in third place - with increasing volumes.

Clear Disadvantages

But Berlin is threatening to lose ground. Peru's Minister of Foreign Trade, Mercedes Aráoz, recently announced negotiations with China on a bilateral free trade agreement, due to start at the beginning of 2008 and to be concluded at the end of next year.[6] Already last year, Lima and Washington agreed on a wide ranging reduction of customs tariffs in their bilateral trade. Chambers of commerce and umbrella organizations of German industry are warning that "besides some improvements" the treaty with the United States would mean "clear competitive disadvantages for European companies."[7] Already at the beginning of the German EU Council presidency, they had been calling on Berlin to stand up to the North American and Chinese rivals and reach an agreement between the EU and the so-called Andean Community of Nations [8] - which includes Peru.[9] Previous attempts to conclude free trade agreements with Latin American states, have so far, almost without exception, failed due to Brussels' demands issued as an ultimatum.

Conflicts

New free trade agreements and the amplification of the extraction of raw materials could also intensify social tensions in Peru. Already last year's treaty with the United States triggered wide protest. It finally had to be approved in a blitz operation, just before the constitution of the newly elected parliament, in which the opponents of the free trade agreement comprise the largest group.[10] Just recently, strikes, protesting the so-called liberalization measures of the Peruvian government were organized in all industries. Because of social and ecological consequences (resettlements), mining projects are also encountering resistance. At the beginning of the year, the Federal Agency for Foreign Trade had already warned that a number of projects would be encumbered by "conflicts with the population", "which, so far, the central government had been unable to solve."[11] German party foundations do not exclude the reinvigoration of rebellious structures, which, in the past, had already started a civil war against the state authority.[12]

Canasta Alemana

In spite of this conflict situation, the German embassy in Lima initiated, in the summer of 2006, an association of German enterprises ("Canasta Alemana", "German Basket"), "ranging from BASF on up to VW, who organize, together with the German embassy and the chamber of commerce abroad, trips to the mines."[13] As the Latin American press announced, next year the German Chancellor is going to personally intervene in the disputes. Thus, Angela Merkel is planning a visit to Peru in Mai 2008.[14]

[1] Wirtschaftsentwicklung Peru 2006; www.bfai.de 30.07.2007
[2] Wirtschaftsrahmendaten und Marktinformationen; www.bhk-international.de/projekte/lat_extemin_2007.html
[3] Wirtschaftsentwicklung Peru 2006; www.bfai.de 30.07.2007
[4] Wirtschaftsrahmendaten und Marktinformationen; www.bhk-international.de/projekte/lat_extemin_2007.html
[5] Wert und Menge der Kupferimporte kräftig gestiegen; Pressemitteilung des Statistischen Bundesamts 05.09.2007
[6] Ein Freihandelsabkommen mit Peru wäre das zweite seiner Art, das Beijing mit einem südamerikanischen Land abschließt, nachdem sich vor zwei Jahren die chinesische Regierung mit Chile auf ein Handelsabkommen geeinigt hatte. Dem angekündigten peruanisch-chinesischen Freihandelsabkommen ging im Januar 2005 bereits eine Einigung zwischen Peru und China auf eine bilaterale "Assoziation einer integralen Kooperation" voraus. Insgesamt acht Verträge wurden im Rahmen dieser Zusammenarbeit abgeschlossen, darunter eines über eine Verbesserung gegenseitiger Investitionen. Ein weiteres regelt die Ausweitung der Zusammenarbeit bei der Prospektion und der Förderung von Petroleum und Gas sowie die Raffination und Petrochemie. Im nördlichen Küstengebiet Perus sowie im Amazonasbecken werden 120.000 Barrel Öl pro Tag produziert, von denen rund 49.000 Barrel täglich exportiert werden - bei geschätzten Reserven von 370 Millionen Barrel Öl.
[7] Die Beziehungen zwischen der Europäischen Union und der Andengemeinschaft. Empfehlungen der Deutsch-Kolumbianischen Industrie- und Handelskammer (AHK) und den Spitzenverbänden der deutschen Wirtschaft (DIHK, BDI, BGA, IAV); www.lateinamerikaverein.de
[8] Mitglieder der "Andengemeinschaft" sind: Bolivien, Ecuador, Kolumbien, Peru.
[9] see also Geo-Strategic Partnership and Arrondierung
[10] Das Abkommen wurde unmittelbar nach der ersten Runde der Präsidentschaftswahlen vereinbart, bei der mit Ollanta Humala ein ausgewiesener Gegner des Freihandelsabkommens die meisten Stimmen erhalten hatte. Im Juli peitschte dann die damalige Regierung von Alejandro Toledo das Abkommen durch den peruanischen Kongress - wenige Tage vor der Konstituierung des neuen Parlaments, in dem eine Humala nahe stehende Fraktion die meisten Abgeordneten stellt.
[11] Perus Erzbergbau treibt Projekte voran; www.bfai.de 02.02.2007
[12] Angehörige der maoistischen Guerilla-Organisation Sendero Luminso treten inzwischen wieder "aktiv und unbehelligt (...) in einigen Teilen des Landes auf", stellt die CSU-nahe Stiftung Hanns-Seidel-Stiftung in ihrem jüngsten Monatsbericht über Peru fest. In den 1980er Jahren, insbesondere während der ersten Präsidentschaft Garcías, erlebte das Land einen blutig ausgetragenen Bürgerkrieg zwischen der Staatsgewalt einerseits sowie verschiedenen Guerilla-Gruppierungen andererseits. Dem Abschlussbericht der peruanischen Wahrheitskommission zufolge fielen zwischen 1980 und 2000 schätzungsweise 69.280 Menschen zum Opfer, und zahlreiche Investoren verließen aufgrund der Sicherheitslage das Land.
[13] Wirtschaftsentwicklung Peru 2006; www.bfai.de/ext/anlagen/PubAnlage_3547.pdf
[14] El secretario general de la OEA fue recibido en Berlín; El Universal 16.05.2007