Future Mining Prospects in Peru

On Tuesday, Peruvian mining and energy minister Eleodoro Mayorga declared that Peru plans to become the world’s second-leading producer of copper by 2016 and of silver by 2017. Mayorga was quite bullish on Peru’s mining prospects, especially as this would represent a doubling of Peru’s current copper output. The minister went on to detail all of the mining investments currently in progress that will result in a significant increase in production. Most notably, Minister Mayorga stressed that his ministry is doing everything in its power to facilitate the progress of the Conga project, in which Yanacocha, the region’s largest gold producer, is looking to invest $5.3 billion. The project has stalled because of protests by the local community. Social conflicts continue to be the main barrier in the way of Peru tapping the full extent of the country’s mineral wealth.

While medium-term production estimates are positive, short-term estimates were revised downwards. Copper production in 2014 and 2015 will likely fall below the original government estimates, rising just slightly over 2013.

Nonetheless, Peru is plowing ahead, announcing that it will open seven or eight new oil fields to bidding in December. The government had originally tried to auction off these fields in April, but that effort was delayed because of a new law requiring prior consultations with the local communities in the area before the mineral rights could be sold off and extracted. Separately, the Latin American Herald Tribune reports that Peru represents a wonderful opportunity for infrastructure investments, specifically in roads and rail.