Peru is poised for a rapid pandemic recovery in 2021
The Peruvian mining industry is on course to be one of the fastest recovering industries in the world in 2021. Already, mining in Peru has returned to pre-pandemic production levels in most of its products thanks to a mix of low inventories and increased demand of all major metals.
The Peru Ministry of Energy and Mines (MINEM) reported that metal prices are on the rise, with copper hitting its highest price since 2011. Peru is the world’s second largest producer of copper and stands to benefit greatly from the mix of increased local production and rising international metal prices.
While official numbers will be announced in March, the latest World Bank reports estimate that the Peruvian economy will grow 7.6 percent in 2021 and will be among those countries benefiting from a rapid post-pandemic recovery. Additionally, the central Reserve Bank of Peru has projected that the metal mining GDP will grow by 14 percent this year.
The Peruvian government has also announced that it will begin construction of seven mining projects in 2021. There are 13 mining projects expected over the next four years, with combined investments of US$11.7 billion.
December output numbers, according to the MINEM, including an increase m-o-m in copper output of 7.6 percent, a 13.3 percent increase in zinc, 4 percent in gold, 7.9 percent in silver, 3 percent in lead, 17.5 percent in tin and 0.5 percent in molybdenum.
Despite the political uncertainty of the upcoming general elections, the current interim government is already putting in place economic processes that aim to stimulate investment in the country’s mining industry. Among the measures are:
- Streamlining the consultation period prior to granting mining licenses, which will speed up current projects, guarantee existing operations and promote exploration and investment.
- Simplifying exploration procedures that will extend the life of mines, which will generate increased return on investment and lower environmental and social risks as mines retain their operating footprint.
“Our priority continues to foster a sustainable and profitable mining sector in our country that benefits investors but also all our citizens,” said Jaime Gálvez, Minister of Energy and Mines.
The state has also been more proactive in cracking down on illegal mining and advancing the process of formalizing small-scale mining. In 2019, the government launched Operation Mercury to attack illegal mining in key areas of the country, like the department of Madre de Dios. In less than three years, deforestation due to illegal gold extraction has decreased by 78 percent in all of Madre de Dios and a remarkable 90 percent in La Pampa, the most critical mining area in the country. "
It should be noted that the data consigned correspond to those reported by the ACCA observatory in 2020.
Additionally, Peru is committed to promoting mining services, which, in the course of the last decades, have reached the highest international standards, both in infrastructure and in human resources with highly qualified personnel, professionals and competitive prices.
“Peru has an interesting portfolio of investment projects in the mining services sector. The country is one of the most attractive and stable nations in the region. In terms of foreign trade, it is one of the most liberal economies in the region and has a very favourable investment climate,” said Claudia Cornejo, Minister Foreign Trade and Tourism.
Peru has had a sustained growth of its GDP for more than 25 years. Mining is a pillar of the country’s economic recovery. The industry contributes around 10 percent of GDP and potential for growth is immense given that only 1.3 percent of its territory is currently undergoing mining activity (0.3 percent in exploration stage and 1 percent in exploitation).