Mining, refining help spur Peru GDP growth in August

Friday, October 14, 2016

Peru's economic growth rate accelerated in August, mostly on gains in mining, refining, natural gas, electricity, manufacturing, fishing, banking and telecommunications, the government said.

GDP growth was 5.5% compared with 3.8% in July and 3.6% in June, Peru's national statistics institute said in a report. Mining production rose 19.8% in August, while manufacturing rebounded 2%.

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Copper output rose 33.9% as Chinalco and Hudbay Minerals both ramped up output at new mines and Freeport-McMoran and China Minmetals brought online new projects. Molybdenum soared 82.8%.

Tin output at Minsur rose 5.4% as the company started up a tailings-sorting project at its San Rafael mine, while silver rebounded 8% and lead and iron ore production both rose 3.6%, according to the agency.

Zinc dropped 5.8% on account of production cuts at Glencore's Los Quenuales and lower output at Volcan, Antamina and Milpo, the agency said. Gold slid 3.3% as production dropped at operations owned by Newmont Mining and Barrick Gold, the agency said.

Precious and non-ferrous metals refining grew 7.2% because of rising demand for gold from the US, Switzerland and the United Arab Emirates, higher refined copper shipments to the US and Colombia, and stronger zinc sales to the US, Germany, Belgium, Colombia and South Africa. Metallic products dropped 8.8%, according to the agency.

Growth was more broad based in August than in previous months, offsetting weak figures from construction, crude oil and agriculture, according to UK-based research firm Capital Economics.

"Economic growth looks set to remain strong over the next year or so," Capital Economics analyst Adam Collins wrote in a report. "The substantial rise in copper production that is boosting the mining sector probably still has some way to run. Despite the new government's weak position in congress, it should be able to garner enough support to ensure fiscal policy remains loose for the time being."

President Pedro Pablo Kuczynski, who took office on July 28, has pledged to fast-track infrastructure projects involving US$25bn in investment.

Peru's central bank last week kept its benchmark lending rate unchanged at 4.25% for an eighth month, citing steady annualized growth and falling inflation. Both the bank and the finance ministry expect the economy to grow 4% this year.