Hochschild Mining PLC (LSE:HOC, OTCQX:HCHDF), which halved in value recently following potential threats of mine closures, appears to be on a path of reconciliation with the Peruvian government.
The new President of Peru is frequently described in the media as a Marxist, and so reports that licences for Hochschild to continue to operate two major mines in Peru would be withheld appeared to have a real legitimacy.
Hochschild itself issued a statement addressing the matter in a rather pugnacious tone at the end of last week. Amongst other things, Hochschild pointed out that it is a major employer in the country, and that tens of thousand of people also depend on it for secondary employment.
Peru has been facing regular protests against the mining industry in recent months, as environmental practices have been called into question and greater compensation for land use has been demanded.
But the jobs and the tax revenues that the industry provides are also useful to the government, and now Hochschild says that it has received official communication that the government is committed to upholding the rule of law and allowing the continued rights of mining companies to request extensions and modifications to existing licences.
Hochschild’s Peruvian mines will therefore continue to operate as before, and unsurprisingly shares in the company bounced by more than 15% on the news, to 141p.