May 17, 2019 / 11:08 PM / 2 months ago

Peru's Vizcarra says China might partner on mega South American railway project

PERU PRESIDENTIAL PLANE (Reuters) - Peruvian President Martin Vizcarra said on Friday that China could partner with Bolivia and Peru on a massive intercontinental railway project that Peru once dismissed as too costly when pitched by China more than two years ago.

Peru's President Martin Vizcarra speaks during an interview with Reuters on board the presidential plane returning from Madre de Dios to Lima, Peru May 17, 2019. REUTERS/Guadalupe Pardo

In an interview with Reuters on the presidential plane, Vizcarra said China might still be a natural fit as a partner to help finance and build the project, because it would likely buy the goods the railway would deliver to a port on Peru’s southern Pacific coast.

“Between the two of us (Peru and Bolivia) we need a third partner to help turn it into reality,” Vizcarra said. Asked if China could be that partner, he said, “Yes, of course, because we need a partner that benefits from the project ... Is it the only one? No.”

China first proposed a railway to link Brazil’s Atlantic coast with Peru’s Pacific coast several years ago to help it reduce costs of importing commodities from resource-rich South America.

But in 2016 Peru balked at the $60 billion price tag China estimated to build it, including $35 billion for the Peru leg. Since then, landlocked Bolivia has taken the lead on reviving talks on alternate routes that would pass through its territory, which would help reduce its reliance on historic foe Chile to ship its exports.

In December, Peru’s government put the cost of the Peruvian portion of the revised project at about $7.5 billion.

“We’re going to take another look, because since then studies have continued, so we’ll have more elements to make decisions,” Vizcarra said, adding that he plans to discuss the project with Bolivian President Evo Morales later this month.

Vizcarra, who was previously vice president and transportation minister, took office a year ago when his predecessor resigned in a graft scandal. Since then, he has governed as an investor-friendly pragmatist in the midst of an increasingly heated rivalry between China and the United States.

Last month, despite U.S. warnings in Latin America against tightening ties with Beijing, Peru signed onto China’s global Belt and Road infrastructure initiative.

Vizcarra stressed that Peru would continue to be a strong partner of both countries.

“There’s a hegemonic competition at a global level. We see it. We understand it. We respect it. But we’re not going to take sides,” Vizcarra said. “They’re countries we work with to generate investments and development projects for our country.”

China overtook the United States as Peru’s largest trade partner years ago, thanks largely to its imports of minerals from the South American country, the world’s No.2 copper producer.

Peruvian copper production has been partly impacted by community resistance to large projects. Vizcarra said there was not yet enough support from surrounding communities for Southern Copper Corp’s long-delayed $1.4 billion Tia Maria project to start construction.

The project, a 120,000-tonnes-per-year proposed copper mine derailed by deadly protests in 2011 and again in 2015, could face at least another year of delays if the government does not issue a construction license for it before its approval for an environmental permit expires in August.

Reporting by Mitra Taj; Editing by Rosalba O'Brienand Leslie Adler

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