Peru's Miners Strike; Claim Companies Not Sharing Profits
30 März 2010 - 8:14PM
Dow Jones News
A series of strikes in Peru's mining sector are linked to
demands by workers who want more cash, in some cases claiming that
mining companies are under-reporting their profits.
The National Federation of Mining, the group representing
unionized miners in Peru, charges that some companies have
under-reported profits from last year, leading to a smaller payout
for workers.
Company officials, however, deny there has been any hiding of
profits.
Peruvian mine workers are entitled to an 8% share of company
profits as reported to Peru's tax agency Sunat. An economist for
the National Federation of Mining said profit-sharing for workers
at major mining companies could be worth an entire year's wages,
and two to three months at medium-sized companies.
Strikes are under way at an iron mine owned by Shougang Hierro
Peru SAA (SHPC1.VL), a gold mine owned by Compania de Minas
Buenaventura SAA (BVN), and a copper mine owned by Doe Run
Peru.
Workers at copper producer Sociedad Minera Cerro Verde
(CVERDEC1.VL), majority controlled by Freeport McMoRan Copper and
Gold (FCX), are expected to go on strike Wednesday.
"The main point is that workers want a bigger share of profits,"
said Gustavo Urrutia, a mining analyst with brokerage Inteligo
SAB.
He said profit-sharing was weak in 2008 as lower metal prices
limited company earnings. That set the stage for complaints this
year by workers who expected the rebound in metals prices would
lead to greater profit-sharing for 2009.
Hans Flury, head of Peru's National Mining, Energy and Petroleum
Society, told the newspaper Gestion Tuesday that he didn't know of
any particular cases of under-reporting of profits.
"I don't know the specifics, but I doubt very much that formal
companies could have conducted a fraud of this nature," Flury said
in comments confirmed by a spokesman for Southern Copper Corp.
(SCCO), where Flury is a director.
A spokesman for Sunat said the agency couldn't comment on any
ongoing investigations for legal reasons, but that part of its
remit was to continually check for tax reporting irregularities. To
date, no company in Peru's mining sector has been found to have
under-reported profits, the spokesman added.
Cerro Verde said Tuesday in a report to Peru's securities
regulator it had complied with required distribution of profits to
workers in line with a collective agreement signed by workers.
Buenaventura has also denied any irregularities in profit
sharing, or in its earnings report to Sunat. No one at Shougang was
immediately available for comment.
Peru is the world's largest producer of silver, its second
largest copper producer, and sixth largest gold producer. It also
produces large amounts of other minerals, such as zinc, tin and
molybdenum.
-By Sophie Kevany, Dow Jones Newswires; 51-198-903-8043;
sophie.kevany@dowjones.com
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