DavyMarkham secures Peru deal despite market fall

Posted on 8 Jun 2011 by The Manufacturer

Sheffield heavy engineering company, DavyMarkham, has secured a $5.4 million contract for the supply of two heavy duty mining hoists to Volcan Compañía Minera of Peru.

The order, announced last month, is for production and service hoists for Volcan’s latest Pique Andaychagua mining project in the Yuauli province, some 150km northeast of the Peruvian capital Lima. The hoists will be designed for an estimated production rate of 4,000 tonnes per day from depths of up to 970 metres.

This is DavyMarkham’s first contract gain in Peru, which occupies a leading position in the global production of silver, gold, lead, copper and zinc, with the potential of soon becoming the mining industry leader in Latin America, according to market experts.

On Monday shares in mining companies operating in Peru fell sharply following the election of populist candidate Ollanta Humala as the country’s next president. Humala campaigned as a moderate during the campaign but has previously called for the re-negotiation of agreements with mining and energy companies.

Analysts fear that Humala’s victory could result in a wave of nationalisations and higher taxes on foreign companies. It has been suggested that Peru could impose a windfall tax of up to 40% on mining companies, and also raise the 30% tax rate that miners currently pay.

Trading was suspended after Peru’s stock market plunged more than 12% with shares in Volcan Compañía Minera falling 8%.