Profitability at Peruvian mining companies fell in 2015

On Friday, Perú 21 reported on falling profits in the Peruvian mining sector. The article explained that the losses reported by some Peruvian mining countries at the end of 2015 could be explained not just by operation difficulties, but also by long-term investments, and by falling mineral prices. According to mining sector analyst Héctor Collantes, the take-away is that the mining sector is currently hard-pressed to find profitable sources of growth given the difficult climate in the industry.

In other mining-related news, Peru Reports commented on the Peruvian government’s losing battle against illegal mining. According to the article, the government has poured millions of dollars into failed raids against illegal mining operations, all while those illegal miners move even deeper into protected parts of the Amazon rainforest. Each raid, involving helicopters and complicated logistics, costs the government $300,000, but rarely results in the arrest of any miners.

The pace of deforestation in mining hotbeds has only increased, in spite of the government’s raids. One unnamed official complained that illegal mining is just too profitable: “Two weeks after we clear them out, they set up in the same place or maybe somewhere else. There is too much gold in the ground and it’s not too difficult to get it out. They make too much money.”

And still the government continues with its interdictions. Earlier this week, the government announced that it had seized 29 kilos of illegal gold at a warehouse in Callao. The gold, although mined illegally, is used to launder money and then exported from the country.