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Chancay Fits China Investment Strategy

Friday, 01 February 2019 | 12:00

COSCO SHIPPING Ports’ 60% acquisition of Chancay Terminal in Peru, South America is a natural move in line with China’s economic strategy, a ports expert has said.

Aegir Ports’ Franc Pigna told Port Strategy that there are clear benefits for COSCO Shipping Ports investing in Chancay, which is 40% owned by Peruvian mining company Volcan, as it is a well located, Greenfield site with all development permits in place, however it also fits in with China’s goal of investing in Peru and expanding the ‘Silk Road’.

He said this is a “strategic acquisition by COSCO/CHINA Inc,” adding “Peru (and the Western side of South America) has a dearth of modern terminal infrastructure and capacity to handle the ever growing size of ships in shipping fleets.”

Peru in sight

The acquisition by COSCO Shipping Ports, its first in South America, further falls into China’s goal to invest US$10bn in the next three years in Peru, within mining, telecommunications, energy, construction and infrastructure, according to Mr Pigna.

Volcan, is one of the largest mining company’s in the region, mining zinc, silver and lead and an operator of hydroelectric power plants, he pointed out.

An example of its commitment to investment in Peru is “is Cinalco’s (ie, China Aluminium Company) US$1.3bn expansion of the Toromocho copper mine in central Peru to increase production by 45% by 2020.”

China is the largest consumer of copper globally, while Peru is the world’s second-biggest copper producer. China also imports most of the minerals Peru produces, Mr Pigna stated.

“It would therefore seem that this investment by COSCO did not require much thought to proceed with, as it falls well within their foreign direct, supply chain and other national and international strategies,” he said.

The acquisition may have an impact on DP World and APMT in El Callao, Lima, Peru’s main seaport but regionally not much, added Mr Pigna. The main reason being that “South America is not well integrated yet as economic region or from a logistics/supply chain perspective. Therefore, the infrastructure required to rationalise supply chain, logistics and transport assets is not adequate yet to create ‘regional gateway ports’.”
Source: Port Strategy

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