8 May 2024 (Lloyd's List) - COSCO Shipping has insisted on its exclusive operator rights at Peru’s Chancay Terminal after local regulators moved to revoke the Chinese state giant’s status over the $3.5bn port project, its first foothold in South America.
Cosco Shipping Ports, which became embroiled in a dispute over the major port project it is building in the country, said in a statement that it will defend its lawful interests in operating its own terminal, “in the manner that was agreed upon at the beginning of this investment”.
The company agreed in 2019 to acquire the Chancay Terminal and planned to transform the facility, which was mainly handling zinc and silver and located just 58 km from Peru’s capital Lima, into a gateway hub that can handle large containerships.
The terminal marked the first time CSP extended its footprint into South America. Two years later, Peru’s National Port Authority (APN) granted it the exclusivity to run the terminal.
However, in March this year, APN surprisingly announced it would revoke the previous decision, claiming it never had the legal authority to grant such status. The authority also said the intended annulment was simply to correct an “administrative error”, and should not affect operations on the ground.
The first phase of the port expansion project, with an investment of $1.3bn, is at least 70% complete and scheduled to begin service by the end of this year.
CSP said the regulatory change and the interpretations of it has “seriously affected” the project, which is being developed “through a fully private investment with no risk to the state”.
Last month, the Chinese company sent a letter to Peru’s Ministry of Economy requesting six months of negotiations to amicably resolve the dispute without resorting to international arbitration. Minister Jose Arista said he had received the letter.
Arista previously said the existing port agreement should be respected, while Peruvian lawmakers have pushed to allow for exclusivity by private port companies.
However, in its latest statement, CSP said it has yet to receive a reply from the ministry and proposed going through an “institutional dialogue channel to resolve the controversy”.
“We believe that this should be the priority for the future of a port, which is not only the largest private investment in port infrastructure in Peru but also constitutes a significant contributor and driver for the activation of various productive chains that impact the country's economic development,” it said.
If completed, the Chancay Terminal project would help establish a direct passage between the west coast of South America and China, providing an important alternative for bilateral trade in minerals, agricultural goods and industrial products that could bypass the Panama Canal.
In 2023, China’s trade with Latin American countries hit a record high of over $480bn, becoming the second-largest trading partner in the region. Brazil, Chile and Peru were among the key contributors to that relationship.
