Peru’s Prime Minister Salomon Lerner is creating a new mining plan of action that phases out illegal miners and promotes sustainable mining development.
The support of foreign investment can help rally the local market and single country exchange traded fund if this plan can play out. A recent credit upgrade from Fitch Ratings may also help attract investment.
“We are very clear that informal mining should not exist in the country and we’re fighting it,”Prime Minister Salomon Lerner said on PeruThisWeek. “And we want to do justice with sustainable mining, which is an example to the world, to ensure water resources and resolve problems with agriculture,” he said.
The goal Lerner is aiming for is to ensure the growth of responsible mining in which both the environment and the community is respected. In turn, this will help to develop communities.
The government is already in talks with foreign and local investors about social funds which could hep be the catalyst this country needs to move to the net phase of development.
“We are telling foreign and national investors that we must have social funds. That means that the first thing to do around the community is rural electrification and and water for agricultural products,” Lerner said. [Peru ETF: Rising Economy and Gold Prices]
The iShares MSCI All Peru Capped Index Fund (NYSEArca: EPU) could advance on the news. EPU has gained 3.7% for the past month. If foreign investment flows in this can help the fund as well as the mining industry. Mining and mining operations account for most of this ETF. [Gold Prices Impacting Single-Country ETFs]
Peru also earned a credit rating upgrade from Fitch Ratings, which will support the country’s reputation as a viable investment destination. This upgrade may also lead to greater capital flow, as the country now has a BBB rating. Less uncertainty surrounding macroeconomic policy and the changes in the fiscal contributions of the mining sector during Humala’s administration have contributed to the upgrade.
Tisha Guerrero contributed to this article.