Chinese demand has lifted many Latin American economies over the past decades. But it has buoyed Peru’s economy, in particular, so extensively that President Pedro Pablo Kuczynski’s first official state visit will be to China.
Roque Benavides, chairman and chief executive of Compañía de Minas Buenaventura, will accompany him. The publicly-traded Peruvian company owns five mines on its own, holds majority stakes in three more, and has minority interests in a number of others.
China’s infrastructure build-out will continue that country’s strong demand for raw materials, Benavides says. The trip to China will be an opportunity to better understand consumption dynamics in the country and the investment mood of the biggest strategic players, he says.
“My interest is to have a feel for the Chinese consumption on the one hand, but also the Chinese players in the Peruvian economy,” he tells LatinFinance.
The following is an edited transcript of Benavides’ recent conversation with LatinFinance.
LF: Would you expect more acquisitions by Chinese players in Peru?
RB: I would not be surprised. In Peru, we have investors from everywhere in the world. Peru has been blessed with mineral resources and I do expect more foreign investment in general into the country, but also the local companies developing projects – as is the case of Buenaventura with our own projects.
LF: Tell me about what you expect from the China visit?
RB: China is a very important player in the global market. President Kuczynski is looking to increase our exports to China from the agricultural front and the mining sector. A good relationship with China is always good. In a global world, politicians have to travel and be in contact with their markets.
LF: It seems we’re seeing in the developed world a trend towards protectionism, a bit of an anti-globalization movement. I’m referring to Brexit and support for Donald Trump. Is that a concern for you? Does it make you consider the export strategies?
RB: It’s obvious that Brexit and Mr Trump are moving in the other direction. I’m not saying good or bad – but just in the other direction. It doesn’t sound logical in a globalized world where borders really mean less than they used to, that we could go against that trend.
I think it’s something to be observed. From a small country standpoint, I don’t know if there’s much we can do other than try to integrate with the rest of the world. Maybe the US can have the luxury of isolating themselves. I wonder whether the UK can isolate themselves. It’s a smaller country with a limited population.
LF: Regarding financing for new developments. Buenaventura was in the syndicated loan market recently. Have you see changes in the financing conditions over the past year?
RB: We tried to issue bonds a couple of years ago and it came when market conditions were not right for us. Then we started looking for a bank loan and we reached this syndicate. It’s not been all that easy. But we reached a good deal and we’re very pleased about that.
The market conditions were not there and it took us longer than we expected. Probably because of the Peruvian elections, conditions for the metal industry. I tend to think there are reasons in the long term – but also in the very short term – that sometimes make financing not all that easy.
LF: Do you have other financing or capital markets plans for the year ahead?
RB: Not that we can mention specifically. Certainly, we do have projects and we will be looking for opportunities depending on the time. Financing without having the project is not the right thing to do. First we need to look at the projects and work out whether we need financing, or a joint venture partner. It depends on the project. LF