Peru copper, gas projects await after impeachment fails

Peru's business-oriented president Pedro Pablo Kuczynski survived an impeachment vote late yesterday, but his government will be under pressure to persuade investors that the gas and minerals-rich country has fully dispelled political uncertainty.

Legislators in the 130-member congress cast 79 votes to impeach him, nine less than needed, after a 14-hour marathon session in which the president said the process was not an impeachment hearing, but a thinly veiled coup against democracy. He was saved with 19 votes against impeachment and 21 abstentions.

While the president has survived, questions were immediately raised about his capacity to govern and remain in power through the end of his term in July 2021.

On 15 December, the congress moved on a motion to remove Kuczynski on the grounds that he was "morally unfit" to govern because he had allegedly lied about links to Brazilian contractor Odebrecht, which has been at the heart of Latin America's largest corruption scandal.

The president denied to a congressional investigative committee that he had any professional relations with Odebrecht. He later amended that to claim that a company he founded, Westfield Capital, did do work for Odebrecht in 2004-07, but he had farmed out management to a business partner and knew nothing about the work.

After the closely watched vote, the president said his administration was given a fresh start and he called for "reconciliation and reconstruction", but many questions remain. Kuczynski survived because 10 members of the dominant party, Fuerza Popular with 71 seats, abstained. The renegades were led by congressman Kenji Fujimori, who has been feuding for months with his sister, Keiko Fujimori, the party leader and the candidate Kuczynski defeated in June 2016 elections.

Analysts are waiting to see if a deal was struck to pardon aging former president Alberto Fujimori (1990-2000), father of the two, who is serving a 25-year sentence on human rights charges.

Kuczynski will have to move quickly to contain any concerns that political turmoil could derail Peru's economic growth. GDP is forecast to expand by 2.8pc this year and by 4pc in 2018.

The government had planned a 20 December tender for the $2bn Michiquillay copper project, the largest tender in years, but postponed it until February because of the political storm. The mine has a potential to produce close to 200,000 t/yr.

Peru, the world's second largest copper producer, is hoping that construction on three new copper mines gets underway in 2018. Iron ore and silver mines are also on the wishlist.

In the hydrocarbons sector, the government wants to conclude a deal in early 2018 with Ireland's Tullow for five offshore exploration blocks. Peru signed contracts for three offshore blocks with US independent Anadarko in October.

Lima also wants to re-tender the $7.3bn southern gas pipeline that had been awarded to a group led by Odebrecht in 2014. The contract was voided last January. The government had hoped to offer the project in the first quarter of 2018, but recently pushed it back until the end of next year.

Peru is South America's only LNG exporter.