180 181 cerro de pasco The greatest investment of the XXth century Pesqueros (EPSAP) in 1969 –which would be split into two in 1970: EPSA for the agricultural part and EPSEP for the fishing part– and others. Thus, by 1975, all these public companies controlled 50% of total Peruvian imports and 85% of total exports. With the tremendous weight of state companies in the national economy, the government could not distract its appetite for also controlling the prices of staple foods such as rice, wheat, meat and dairy products, subsidising them and causing a host of populist distortions In parallel, prohibitive and differentiated rules were created for foreign investment and new forms of ownership were enacted in industry and agriculture, based on the mistaken assumption that the participation of workers in the decisions and profits of the companies would end poverty. In reality, what they achieved was to lay the foundations for one of the most serious crises in our republican history, the most painful consequences of which would be unleashed only a decade later. In the case of Cerro, in addition to the expropriation of the estates, the government continued with its process of nationalising assets. For example, it issued Legal Decree No. 18880, which allowed the State to take a leading role in mining activity, opening a broad and unlimited framework for public intervention in the sector. Additionally, in September 1972 the Electricity Regulatory Law was enacted, which reserved for the State all business activities in the electricity sector that were of public benefit, such as the generation, transformation, transmission, distribution and sale of electricity. The real interest behind this was for the State to operate in the entire electricity business. The same decree created Electroperú as a decentralised public body that would exclusively conduct the activities of the State in the sector. In parallel, Law 19521 established that all those concession-holding companies that provided public electricity service, and that were in the power of foreign investors, be immediately acquired by the State. Between a rock and a hard place The scope and spillover of the economic restructuring that the government intended and the speed of its implementation contributed to a climate of uncertainty prevailing in the business environment, especially among large foreign investors and in the national business community. This lack of predictability slowed down the pace of investment and commercial activity in the country. Added to this confusion was the appearance in 1970 of a new legal framework for mining, which had a special impact on unexploited properties, including those that were under the Cerro de Pasco umbrella. This new regulation did not affect its six large operating mines, but did directly affect other projects that had awaited better conditions for their development, such as Antamina, Chalcobamba, Ferrobamba and Tintaya. On September 2 of that same year, Legal Decree No. 17792 was enacted, which required that all mining concessions not exploited at a minimum rate of one sixtieth of their mineral reserves per year revert to the State. However, the companies had the possibility of submitting, no later than the last day of the year, a schedule of operations for the exploitation of these concessions, on the condition that activities begin before April 1975. Among other requirements it was emphasised that if the company did not comply with presenting that schedule, or worked outside the proposed timetable, or if it did not reach the minimum production target each year, the concession would be definitively terminated. In order to protect its interests, the corporation presented to the government the schedules of its properties not yet exploited and looked for partners abroad to speed up investments in those projects, but knowing that time and the new regulations were totally against it. In Antamina, 160 kilometres northwest of Cerro de Pasco, the first explorations had already been made for the exploitation of almost six million VELASCO'S DRASTIC REFORMS CREATED A CLIMATE OF UNCERTAINTY IN THE BUSINESS COMMUNITY, THE PACE OF INVESTMENT SLOWED, AND BUSINESS ACTIVITIES IN THE COUNTRY DECLINED.
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