RE:RE:NEW REGIONAL PRESIDENT IN PUNO Walter Aduviri has been elected regional president of Puno with almost 50% of the votes, but like all the elected authorities on October 7, he will take office on January 1, 2019. He was in hiding until a few hours since he was sentenced to seven years in prison by the Aymarazo (2011), a quite violent protest caused by the concession of Santa Ana to Bear Creek, which as long as I know violated the Consitution.
Although some polls showed Aduviri as a potential winner, they said the same in 2014 and that’s why no one trusted the Puno polls. I was surprised by this result and recognize I couldn’t see what was happening and as a result I misunderstood the trend in the sp. As of July, some well-informed investors "sold the rumor" of the election of a anti-mining regional president, and as a result they brought the sp to a level that seemed largely unjustified at that time. Neither the "cave paintings" nor the absence of a uranium law nor the sale of shares from the private placement justified such a pronounced correction, but still served as excuses for these investors, and even insiders preferred to wait for the result of the election before buying more shares.
The good news is that we finally know what has been happening since mid-July, because the admission of Aduviri's candidacy (1) despite its judicial situation coincides with the change in the trend of the sp and with the moment in which insiders stopped buying. Although he had a firm sentence, Aduviri's defense filed an appeal (recurso de casacin in spanish) (2), which was resolved on October 5 with the annulment of his prison sentence, and thereafter he participated in the elections held on October 7. Again we see that when the sentence was annulled by the Supreme Court (3) the sp resumed the downtrend from which apparently had left the previous days.
(1) https://elcomercio.pe/peru/puno/elecciones-2018-puno-admite-candidatura-walter-aduviri-gobierno-regional-noticia-536107
(2) https://elcomercio.pe/peru/puno/walter-aduviri-proximo-5-octubre-resolvera-recurso-casacion-noticia-558562
(3) https://elcomercio.pe/peru/puno/judicial-declara-nula-sentencia-condenatoria-walter-aduviri-noticia-564783
As mentioned in another post, a project of this magnitude in Peru tends to attract opportunists, and Aduviri’s undoubtedly one of them. This is how the mismanagement of the Santa Ana project was used. Now, without a doubt, he will seek to obtain a political return from Macusani and Falchani. But I do not think that will happen in the short term, because the project is still in exploration and Aduviri’s bargaining power is not so strong at this point. What I believe is that he’ll wait until the explorations and studies are completed to demand, shortly before the start of construction, that communities or even the region as a whole participates as shareholders, for example with 30% or even half of the profits. With a "conquest" like that he woud have good chances to run for president later on. In fact, his recent statements support my hypothesis:
https://gestion.pe/peru/politica/aduviri-antimineros-queremos-recursos-esten-servicio-246571
https://gestion.pe/peru/politica/puno-gobernador-clandestino-walter-aduviri-246604
"I have my arguments and I believe that resources should benefit all Peruvians. (...) I have a critical opinion in front of the great transnational mining (...) We are not radical, we are not anti-mining, we are not anti-investment, what we want is the natural resources in the service of us".
https://larepublica.pe/politica/1332233-suprema-anula-sentencia-walter-aduvir-deja-libertad
“In Puno was doscovered the largest reserve of lithium. Are you going to oppose its exploitation, as you opposed to the Santa Ana project, in Huacullani, and was judge by the consequences?
The Government has to comply with the right to consultation. You have to listen to the people. I have a critical opinion of transnational mining. We support the mining of “the people”. (with “mining of the people” he refers to illegal or informal mining).
As you can see, his anti-mining discourse has recently been moderate, but it is also possible that his discourse has never been entirely anti-mining. In fact, when in 2011 he talked about canceling mining or oil concessions, he always clarified that he was refering to the southern region of Puno, which does not include the Minsur, Corani and Macusani mines and deposites, which are located to the north, near the limit with Madre de Dios, other region. Perhaps this is one of the reasons why the price of the Minsur share has hardly changed today in the LSE (Lima Stock Exchange).
Now it is clear to me that the more important risk in this project is by far a hasty, premature and un-strategic interference by Walter Aduviri in PLU projects. Although, as I have already explained, I do not believe this is going to be his strategy, it's still possible he might try to incite communities in the area of influence of Macusani and Falchani in order to hide inefficiencies (and probable corruption) from his management and non-compliance of his own promises. But even in this case I would like us to see things with a little perspective. I remember that something similar happened with Alejandro Toledo when he won the 2001 elections, presenting himself as the candidate in favor of the poor and against corruption, and with apparent desires for racial and social vindication. Many investors interpreted his speech as anti-market or anti-investment and as a consequence the LSE's actions sold off strongly reaching surprisingly low levels. But the reality turned out to be completely different, the Toledo government was center-right-wing and as a result the IGBVL (LSE general index) increased from around 1,500 points to more than 20,000 points in about 5 years, while Toledo was certainly charging millionaire bribes to Odebrecht. I think something similar can happen with PLU. As then happened with the LSE, things could have gone wrong and you could have lost, say, 40-50% of your investment, but if you analyzed the stocks you would have seen that if things in Peru and in the world (especially in China) ) went well many of the shares in LSE could give you returns of more than 10,000% (yes, 10 thousand percent), and that was just what happened.
Personally, I do not think we’ll have much news on this subject in the following months and, as a result, we will reach a floor (possibly again at 0.87) in a short time and after that the sp will be influenced again by the PR of the company and by what may happen at the corporate level. I think that in 2019 Q3 we will have an official report with substantially higher reserves of uranium and lithium (and maybe some other rare metals) and in 2019 Q4 we will have the PEA of Falchani, so at the latest by the middle of next year we should have a good rally, if this Aduviri does not come up with major problems. It’s also not a bad idea to see closely what Minsur and Bear Creek have to say about this affairs in the following weeks/months.