Shougang Hierro strike approaching its end as an agreement is reached

Progress is being made down in Peru between Chinese miner Shougang Hierro and the workers who have been protesting for weeks now against unfair wages and treatment by their Chinese owners. Nothing new… for the record, there are few international companies which invest in the Peruvian mining industry and thereafter roll out the red carpet for their workers. It’s mining, not investment banking…

The 1200 striking workers have begin working again according to manager Julio Ortiz, who said they returned to work because the company said it would commit to some of the workers demands.

Currently workers earn a salary of 1,770 ($614) Peruvian soles a month and the company has released a statement saying Shougang is willing to raise the daily salary by 5.50, or 165 soles a month—bringing the new total to 1935 soles ($677).

According to this Reuters article (in Spanish), Shougang earned a solid 417 million soles last year ($144.7 million dollars), a increase over the year before of 50%.

All in all, it seems Shougang won this battle… CSA will continue to bring you updates on this matter in the weeks to come.

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Reuters Update: Strike at Shougang Peru mine enters fifth day

A strike of some 1,200 workers at Shougang Hierro Peru (SHP.LM), a unit of China’s Shougang Group, entered its fifth day on Friday with no end in sight, union leaders said.

“We don’t see a solution, there’s no dialogue with the company,” said Julian Sulca, a union official.

Click here to access the full article from Reuters

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Protests erupt in Peru at Chinese owned miner Shougang

Reuters reported a few days back that workers at the Chinese owned Shougang Hierro Peru (SHP.LM), which happens to the only iron producer in the country of Peru, were planning a strike.

Well today the workers took action. A leader of the workers union told Reuters reporters “that all 1,200 workers at the mine had joined the labor action.”

More updates to come in the days to come. Click here to access the Reuters wire on this story directly.

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Newswire: China South America

[Peru – China] — Peru, China relations “at best moment”

Chinese ambassador to Peru, Gao Zhengyue, said that relations between his country and Peru “are at their best moment” in history.

According to him, both countries have deepened the confidence in the political, economic, technological educational, cultural, tourism and justice areas, among others.

The Chinese diplomat noted the increase of the economic, trade flow and bilateral investments, and highlighted the increase of the Chinese investments in Peru, with over seven billion dollars.

“I am convinced that with joint efforts the relations between our two brotherly countries will enter a new stage of development and reach a higher level in the two peoples’ benefit,” said Zhengyue.

[Latin America – China – Africa] — China’s new frontier

Chinese telecom-gear makers Huawei and ZTE have already conquered Africa and Asia. Next stop: Latin America.

(Fortune Magazine) — At phone operator Movistar’s sales offices in Buenos Aires, customers line up to buy high-speed wireless services to access the web on their mobile phones. Most Argentines don’t realize, though, that the company providing the gear for their broadband connections isn’t a longtime supplier to Latin America like Alcatel-Lucent, Ericsson, or Motorola, but a relative newcomer called Huawei.

China’s telecom suppliers are coming to the Americas. Pursuing the same formula they’ve used to win business throughout Asia and parts of Africa (selling cheap gear in low-income countries), equipment makers Zhong Xing Telecommunication Equipment (also known as ZTE) and Huawei are now getting a foothold in countries such as Argentina, Chile, and Colombia. Says Leandro Musciano, project director at Movistar Argentina, a unit of Spain’s Telefónica: “Price is important.”

[Caribbean – China] — China’s expanding relations with Latin America and the Caribbean

Commentary
By Odeen Ishmael

The recent visit of Brazil’s President Luiz Inacio “Lula” da Silva to China in May 2009 reflected the Asian nation’s expanding economic and political influence in Latin America and the Caribbean (LAC). One year ago, the Brazilian government had announced that China would surpass the United States as its major business partner. The results of da Silva’s visit verified this after the two nations signed 13 agreements, including a $10 billion loan from the China Development Bank to Brazil’s state oil company Petrobras. Petrobras also concluded a deal with a subsidiary of China’s oil refiner Sinopec for the export of crude oil. A major commercial agreement will also see the beginning of huge poultry exports to China.

Brazil’s two-way trade with China, one of the few economies still growing despite the global crisis, reached US$3.2 billion in April, surpassing the $2.8 billion trade total with the US. So far this year, Brazilian exports to China grew 65 percent over the same period in 2008, rising from $3.4 billion to $5.6 billion.

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Peru ETF to start trading this month reports Bloomberg

Are you a international investor with a global perspective? Are you looking to get in on all the action down in Latin America? Well now is the time to consider jumping on board the “Peruvian growth miracle?”

Before you do however, I implore you to proceed with caution if you decide to park your hard earned currency in Peru. As always, it would be a good idea to do your own due diligence and listen to what your textbook, academic gut feeling has told you about Latin America since you started reading about continent in economic and finance classes you took in college.

Peru’s Lima General Index has sky rocketed a whoppin’ 95% this year due to the following reasons in particular (in my opinion)

a) The country’s investment grade debt rating

b) Rising metals prices; copper, gold, silver, etc (note I did not include Zinc here)

c) Optimism in Peru’s metropolitan middle and upper-middle class residents of Lima who partially feed the international excitement by telling stories of economic boom. Ask a university student of la Universidad de Lima, UPC, Universidad Pacifico or a employee at Banco Santander and they will probably (some of them at least) tell you of rising apartment buildings, new beach houses and cafes so full of customers you must wait to get a table. Yes, it is still difficult to find a job that pays well, but if you know anything about Peru this has been the case since the beginning of time…

d) Shrinking investment opportunities in the region because of western fears and dislike of Chavez in Venezuela, Correa in Ecuador, Morales in Bolivia and more recently Cristina Fernández de Kirchner in Argentina.

e) LIES… LIES… oh and yes, more LIES. Farid Matuk the previous head of INEI (Peru’s statistics office) and Otto from IncaKolaNews have been telling readers for months that you simply can not trust economic data from Peru. Alan Garcia has replaced the people working at the statistics office with those loyal to his political party and they have inherently changed the way statistics are collected and the way GDP and other economic indicators are calculated.

Here are some links to Farid Matuk and Otto’s recent observations of Peru’s economic picture. I will stick to English, but I highly recommend if you can read Spanish that you check out some of Matuk’s non-English posts.

Doubts grow about accuracy of Peru GDP numbers — Reuters Terry Wade

Peru’s Economic Model and Poverty Reduction: Is it Working — Farid Matuk

Farid Matuk Explains Peru’s False GDP Figures — INK

Now that you know one side, here’s the other. GAINS AND LOTS OF THEM.

Peru Lima General Index – 2 yr performance as of 6/4/09

It seems to me the majority of the international financial community have bought into Garcia’s lies and have come to believe Peru is a solid place to park your money.

This is despite, as Otto says, demand for base metals just simply does not add up. The Chinese are stockpiling their metals and eventually prices will have to go back down to reality. Check this article.

Despite this reality, investors and what they perceive can go a long way in financial markets. If investors jump on board, this new Peruvian ETF might begin to soar… albeit temporarily until reality sets in.

Benito’s conclusion: Invest with caution. I’ve included the Bloomberg article below, but if you like to access it directly, please click here.

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Peru ETF to Start Trading This Month, Global X Says (Update1)

By Veronica Navarro Espinosa

Peru’s first Exchange Traded Fund will start trading on the New York Stock Exchange by the “middle of June,” said the chief executive officer of Global X Management Company LLC, a New York-based asset manager.

“The stock market has risen a lot, investors are bullish, and that’s helping us,” Bruno del Ama, the New York-based CEO of Global X, said in a phone interview. “We’re giving access to the Peruvian market and in the future people can go short in Peru, which is an option that doesn’t exist today.”

Global X and Barclays Plc have been competing to introduce the first Peruvian ETF, aiming to lure global investors to the world’s best performing stock market this year. The funds issue a number of shares and trade throughout the day like stocks. Most are designed to passively track a benchmark equity index.

Peru’s Lima General Index has jumped 95 percent this year on speculation a rebound in prices of the country’s commodity exports will fuel growth amid the global recession. The index’s advance is the biggest among 92 world benchmarks tracked by Bloomberg, reversing a 60 percent plunge in 2008 that was the steepest in Latin America.

“It will create liquidity and that’s what this market lacks,” Carlos Rojas, who manages $160 million in Peruvian stocks and bonds for Compass Peru, said in a phone interview from Lima. “But it’ll all depend on the size. If it attracts less than $150 million, it’ll be a non-event.”

FTSE Peru 20

The new ETF will track the FTSE Peru 20, which will include the nation’s biggest commodity producers such as Maple Energy Plc., an oil and natural gas producer that has gained fourfold this year, the best performer in the index. Del Ama said other members include Austral Group SA, Peru’s biggest fishmeal producer, and Cia. de Minas Buenaventura SA, the largest precious-metals producer.

Resource companies account for 21 of the 36 stocks in the Lima index because Peru is the world’s third-largest producer of copper, zinc and tin, the biggest miner of silver and the fifth- largest of gold.

IShares, a unit of Barclays, is working on introducing its own Peruvian ETF, said Barclays spokeswoman Christine Hudacko in an e-mail today. There’s “no news on timing,” she said.

The iShares MSCI Brazil Index Fund, managed by Barclays, is among the 10 most-traded ETFs in New York, with daily volume of about $1 billion, Barclays Global Investors’ chief executive for Latin America Daniel Gamba said in December. Trading in ETFs in Mexico now accounts for about 20 percent of average daily volume, Gamba said.

[Source] — Bloomberg

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