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Peru Election Raises Specter of Mining Tax

Like many other global mining companies, Freeport is staking much of its future copper growth on developing new mines in Peru. Action taken by Humala's government to raise taxes and squeeze miners' profits could, therefore, curtail foreign investment in Peruvian mining projects and reduce future copper supply, analysts say. "Any disruption to the expectations of Peru would mean a higher copper price for longer," Radclyffe said.

The metals markets have come to rely on the expansion of Peruvian copper mining to meet projected demand for the red metal, largely fueled by rapid growth in Asia. As existing copper mines age, ore grades the world over have deteriorated, leading to speculation about "peak copper."

Other companies with Peru exposure include the British miner Xstrata, BHP Billiton (BHP) and Canada's Teck Resources (TCK - Get Report), which all own a stake in the big Antamina copper and zinc mine.

Adding to the near-term uncertainty, a national strike by the country's miners was set to begin this week. Workers are demanding better retirement benefits.

-- Written by Scott Eden in New York

>To contact the writer of this article, click here: Scott Eden.

>To follow the writer on Twitter, go to http://twitter.com/ScottEden.

>To submit a news tip, send an email to: tips@thestreet.com.a

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.
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