Mining's importance to Peru

The Chilean business journal Diario Financiero spoke with Guillermo Arbe, the head of economic analysis for Scotiabank Peru about the recent fall in investment in the Peruvian mining industry. He said that, “There is a sense of disorder in the political arena that worries businesspeople.”

He believes that that the cause of the slowdown in investment has been a loss of confidence on the part of private investors in the Peruvian mining industry and the government’s support for it. Thankfully, according to Arbe, the industry has put its worst days behind it, and will recover strongly on the back of a large infrastructure plan, creating a virtuous cycle to stimulate the country’s mining industry.

Kevin S. Becker, executive director of Deloitte Corporate Finance in Peru, expressed similar confidence, telling Diario Uno that he believes Peru can match its neighbor, Chile, in terms of mining competitiveness, become the number one mining country in the region. He explained that some companies do not want to invest in Chile because of the scarcity of water in that country.

Nonetheless, Peru must first overcome the social conflicts that have fatally undermined large-scale mining projects across the country. The government’s handling of the recent Tía María protests have destroyed Peruvian President Ollanta Humala’s approval ratings, as just 14% of Peruvians approve of his performance.

Appearing as something of a belated PR campaign for the Peruvian mining industry, business journal El Comercio published an article explaining the industry’s importance to the country. First, the numbers: mining accounts for 50% of the country’s foreign exchange, 20% of tax revenues, and 11% of GDP. Mining’s role in the country is totally irreplaceable – agriculture is also a large industry for Peru, but it does not come close to replacing mining.