China’s COSCO Urges Peru to Grant Special SEZ Status to Chancay Port

On Novem­ber 10, reports emerged that Chi­nese state-owned ship­ping com­pa­ny COSCO Ship­ping Ports is lob­by­ing the Com­mis­sion on For­eign Trade of the Peru­vian Con­gress to clas­si­fy the country’s Chan­cay mega port project as a tax-free, Spe­cial Eco­nom­ic Zone (SEZ).  If SEZ sta­tus is grant­ed, the port’s capac­i­ty for pro­duc­tion and export would increase sig­nif­i­cant­ly, ele­vat­ing its region­al sig­nif­i­cance as a Pacif­ic trade hub.  A more robust Chan­cay Port would be expect­ed to link direct­ly South Amer­i­can and Chi­nese mar­kets with­out a need for trans­ship­ment via Mex­i­can and U.S. ports.  Avert­ing stops in Mex­i­co and the Unit­ed States could ulti­mate­ly offer strate­gic ben­e­fits.

COSCO Ship­ping, which is devel­op­ing the $3 bil­lion port com­plex under a 2018 joint agree­ment with Peru’s Vol­can Min­ing Com­pa­ny, main­tains a 60% con­trol­ling stake in the project it acquired for $225 mil­lion in 2019.  At present, leg­is­la­tion on Chancay’s reg­u­la­to­ry frame­work draft­ed by Peru’s Min­istry of Econ­o­my and Min­istry of For­eign Trade is await­ing con­sid­er­a­tion by the country’s leg­is­la­ture. Although no major polit­i­cal oppo­si­tion to this leg­is­la­tion is evi­dent, the bill appears to have recent­ly stag­nat­ed. COSCO’s lat­est out­reach appears to be in an effort to breathe new life into the bill’s and raise its pro­file among Peru­vian law­mak­ers.

The Chan­cay ter­mi­nal is a nat­ur­al deep-water har­bor with a max­i­mum of 16-meter water depth, mak­ing it capa­ble of han­dling the world’s largest Triple‑E type ship­ping ves­sels.  Once com­plet­ed, it could fore­see­ably become Peru’s most strate­gi­cal­ly impor­tant port of trade.  The first phase of the port devel­op­ment appears to be ongo­ing, how­ev­er, an exact com­ple­tion date remains unclear.  In 2018, it was report­ed that the project would take 28 months to com­plete.