Hochschild shares plunge by a third as Peru moves to shut down silver mines

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Amid environmental protests and political turmoil, Peru’s socialist government has expedited the closure of the mines, the market value of the Atles miner Hochshield is almost halved today.

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The FTSE250-listed company, headed by billionaire Eduardo Hochschild, said it would vigorously defend its position, calling the ruling “illegal” and insisting its mines be operated under the highest standards.

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The sell-off in London came after newly-installed Peruvian PM Mirtha Vasquez – an environmental and human rights activist – indicated that four mines in the Ayacucho area would be closed “as soon as possible” and no further exploration would be allowed .

Hochschild operates two mines at risk – Pallankata and Inmaculada – which employ 5,000 people and account for about two-thirds of the group’s annual production of gold and silver.

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Ignacio Bustamante, head of Hochschild’s subsidiary, Minera Ares, said: “Hochschild is shocked by this unilateral announcement.

Copper concentrate plant in Yarbamba, owned by the Mining Society of Cerro Verde

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Copper concentrate plant in Yarbamba, owned by the Mining Society of Cerro Verde

, AFP via Getty Images

“We are ready to hold talks with the government to resolve any misunderstandings. However, given the illegal nature of the proposed action, the Company will vigorously defend its rights to operate these mines by using all available legal means.”

Peru, the second largest producer of copper in the world after Chile, has been troubled by political turmoil since the ouster of President Martin Vizcarra last year (pictured above).

His successor, former union activist Pedro Castillo, pledged to raise taxes on mining groups in order to improve health care and education.

Mines have been blocked and set on fire across the country. Anglo American, Glencore, BHP and Freeport-McMoRan also operate mines in the country.

The mining sector has criticized Castillo for taking a soft stance on the protesters. Raul Jacob, president of the Peruvian Society of Mining, Energy and Oil, said: “We are legalizing violence as an appropriate measure of social coercion.”

Shares of Hochschild are down 25% this year and plunge as much as 70p as the market opened, wiping away more than £300 million from the company’s value, before settling down 34% at 108.20p.

Bank of America downgraded Hochschild to underperform, setting a price target of 90p, saying: “While the company will dispute this decision, we do not see equities outperforming until the dispute is resolved.”

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