Peru's president throws cold water on Chinese railway proposal

September 13, 2016 4:00 PM EDT

Peru's President Pedro Pablo Kuczynski waves to the audience after receiving the presidential sash during his inauguration ceremony in Lima, Peru, July 28, 2016. REUTERS/Mariana Bazo

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LIMA (Reuters) - Peru President Pedro Pablo Kuczynski said a transcontinental railway proposed by China to slash the costs of shipping Brazilian goods to Asia could be too expensive and environmentally harmful to build.

Peru and China agreed to study the feasibility of a 5,300-kilometer (3,293-mile) railroad to link Brazil's Atlantic coast with a port on Peru's Pacific shores last year during the term of Kuczynski's predecessor, Ollanta Humala.

Environmentalists said the project, which would cross the Amazon and the Andes, could destroy rainforest and put indigenous tribes at risk.

Kuczynski, who took office in July, said in an interview with local broadcaster RPP from Beijing that he flagged his concerns about the potential project with China's main railway builder during an official visit to the Asian powerhouse.

"I told them, without getting confrontational, that this trans-Amazonic train has very high costs, it could have environmental impacts and we have to look at that carefully," Kuczynski said without elaborating.

Kuczynski said the Chinese railway company, which he did not name, was interested in building a commuter train on Peru's central coast that he has pitched as part of his bid to boost economic growth through infrastructure development.

Kuczynski, a 77-year-old former Wall Street banker, traveled to top trade partner China over the weekend for a five-day visit aimed at finding investments in refineries, ports and railways and broadening access to food markets.

Kuczynski told RPP that Aluminum Corp of China Limited <601600.SS> was interested in building an alloy smelting plant in Peru and that representatives of China's iron and steel industry expressed interest in building a steel plates factory.

Kuczynski wants Peru, the world's third biggest copper producer and sixth largest gold producer, to squeeze more value out of its mineral exports by ramping up its refining and smelting capacity.

Kuczynski has previously said Peru could process copper concentrates with high levels of arsenic from Aluminum Corp's Toromocho mine. Chinese smelters are banned from taking concentrates with high levels of arsenic, a toxic chemical that can cause cancer.

(Reporting by Mitra Taj and Marco Aquino; Editing by Leslie Adler)

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