WRAPUP 1-Peru's leftist government says pulling in investment

Wed Sep 28, 2011 5:30pm EDT

 * Humala government says getting $5.7 bln new investment
 * PM Lerner working to avert protest over water resources
 By Terry Wade and Teresa Cespedes
 LIMA, Sept 28 (Reuters) - Peru's leftist government is
attracting billions of dollars in foreign investment, will
build new energy projects and try to avert social conflict over
natural resources, the prime minister said on Wednesday.
 Salomon Lerner, a businessman who was the architect behind
President Ollanta Humala's election in June, said companies
have pledged $5.7 billion in investments in the last few days,
mainly in the mining, natural gas and hydroelectric sectors.
 The investments equal about 4 percent of gross domestic
product and are a sign that Humala, a former military officer
who once railed against capitalism, has reassured investors by
appointing conservatives to run the central bank and finance
ministry.
 "We are very enthusiastic about these visits by important
companies," Lerner told Peru's foreign press association.
 But he made clear that the new government is focused on
fighting poverty and wants to make sure rural towns get a slice
of the country's natural resources boom.
 Mining and oil projects, he said, "need to be for the
well-being of everyone, not just one company," said Lerner, who
was behind a new law that raised taxes on mining companies.
[ID:nS1E78L27Y]
 Despite the changing tax environment, Brazil's Votorantim,
the world's No. 3 zinc producer, plans to invest $3.2 billion
in Peru over the next five years, mostly on its existing zinc
operations and a lead refinery, Lerner said. [ID:nS1E78R0W2]
 Votorantim controls Peruvian miner Milpo (MIL.LM) and
operates the Cajamarquilla refinery in Peru, a top metals
exporter and one of the world's fastest-growing economies,
forecast to expand about 6 percent this year.
 He also said a private company, which he declined to name,
will soon announce a $1.7 billion investment to build a 750
megawatt hydroelectric plant in the jungle region between the
Apurimac and Ene rivers known as the VRAE.
 Lerner said the state would likely invest a stake in the
project, in part because the VRAE is a virtual no-man's land
rife with coca leaf plantations and cocaine production.
 Grupo Brescia, a Peruvian conglomerate, will also invest
$800 million in a nitrates and natural gas project, he said.
 TRYING TO BROKER A PEACE
 Lerner, who took the job running Humala's cabinet in July,
is trying to avert a massive protest that is slated to start on
Monday against Southern Copper (SCCO.N), one of the world's top
copper mining firms. [ID:nS1E78R19O]
 Authorities in Tacna region say they want Southern Copper,
a unit of Grupo Mexico, to stop using groundwater that it
relies on to operate two copper mines -- Toquepala and Cajone.
 Tacna's president, Guillermo Chocano, said miners in the
desert region should rely on desalinated seawater instead.
 He and provincial mayors have said they will strike
starting on Monday to press their demands. Leaders in the
region say they need more water for agriculture and residents.
 But Lerner said the strike, which would likely block roads
and access to mines, will be averted and water deliveries to
one of the world's biggest copper miners will not be affected.
 "We are ready to open a working group on this," Lerner told
reporters. "The strike won't go forward."
 If the protest is called off it would be a crucial success
for the government, which was elected on promises to calm
debilitating social conflicts over natural resources in Peru
that often turn deadly and delay new mining and oil projects.
 Humala this month passed a "consultation law" that aims to
make mining companies and communities negotiate settlements to
thorny environmental and economic issues, but it has not been
implemented yet.
 Southern Copper, which declined to comment, runs the Ilo
smelter in Tacna and the Toquepala and Cajone mines. It is
currently trying to expand Toquepala and win approvals for
another mining project, Tia Maria, which has faced strident
opposition over water supplies.
 (Reporting by Terry Wade and Teresa Cespedes; editing by
Anthony Boadle)


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