Antamina Faces Peru Protests Over Expansion Funding Plans

LIMA -(Dow Jones)- Protests have erupted against a proposal by Antamina, one of Peru's largest base metal miners, to reduce tax payments to regional governments to fund a planned expansion project.

People familiar with regional government in Peru said Antamina's funding proposal could leave Peru's central region of Ancash without an estimated total of $178 million of tax revenue.

Half the income tax paid by mining companies in Peru goes to governments of the regions where they mine. The regional tax payment is known as the "mining canon."

The protests Thursday by thousands of people in Ancash, coincided unintentionally with the company's signing of a new three- year wage agreement with workers.

In a statement Antamina said it was reviewing financing options for its planned expansion, and one of them was the reinvestment of profits, which could mean a reduction in the tax it pays to the region.

The statement said the reduction would only apply in the first two years of the expansion project, the biggest private investment project planned for Peru in 2010.

Antamina said the project, which has yet to be approved by shareholders, will increase the Antamina complex's ore processing by 38% and could extend the life of the mine until 2029.

The mine in Peru's central highlands is a joint venture between BHP Billiton Ltd. (BHP), which holds a 33.75% stake, Xstrata PLC (XTA.LN), with another 33.75%, Teck Resources Ltd. (TCK) with 22.5% and Mitsubishi Corp. (8058.TO) with 10%.

Antamina produced 252,756 metric tons of copper and 340,552 tons of zinc during the first nine months of this year.

-By Sophie Kevany, Dow Jones Newswires; 51-198-903-8043; sophie.kevany@dowjones.com

(END) Dow Jones Newswires

November 27, 2009 12:51 ET (17:51 GMT)

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