China’s Cosco Shipping Defends Exclusive Rights to Operate Peru’s Chancay Port

Peru's government is currently in the process of attempting to revoke an exclusive operating agreement with Cosco Shipping Ports, a Chinese state-owned company, for the new Chancay Port terminal. Despite Cosco's claim that they have complied fully with all necessary procedures and requirements set by Peru’s National Port Authority, the authority itself has declared the deal void due to what it calls an "administrative error," claiming it never had the legal right to grant these operational rights initially [para. 1][para. 2][para. 3][para. 4].

Cosco acquired a 60% stake in Chancay port terminal for $225 million in 2019 and increased its investment to $3.5 billion to secure exclusive operational rights. The port, located near Lima and partly owned by Volcan Cia Minera, is strategically important as it provides direct maritime access from Peru’s Pacific coast to Shanghai, which could significantly influence South American trade dynamics [para. 4][para. 5].

The controversy primarily revolves around exclusive rights granted to Cosco for providing certain services at the port including water diversion and tug services. These services are considered critical support functions at the port [para. 6][para. 7]. In response to potential revocation of their rights, Cosco has reached out to Peru’s Ministry of Economy and Finance seeking a six-month negotiation period hoping for an amicable resolution without resorting to international arbitration. Although their request was acknowledged by Economy Minister José Arista who supports honoring the original deal, there has been no formal response yet from the ministry regarding initiation of negotiations [para. 8][para. 9].

Cosco remains optimistic about retaining its exclusive rights, emphasizing that these disputed services are merely supportive and do not impact the main operations at the terminal. This situation mirrors challenges faced by Cosco in other international ventures such as their attempted acquisition in Hamburg, Germany where political concerns about Chinese influence led them to reduce their stake from 35% to just under 25% [para. 10][para. 11].

This ongoing dispute highlights broader geopolitical tensions and concerns related to Chinese investments in critical infrastructure abroad, reflecting a pattern where economic interests clash with national security or sovereignty concerns [para. 11].