New projects, exploration to boost mining in Arequipa

- Thursday, August 19, 2010

New projects, exploration to boost mining in Arequipa

New mining projects and exploration works in southern Peru's Arequipa region will keep it in the forefront of the country's mining activities, regional energy and mines manager Alberto Butron told BNamericas.

Projects and exploration by large and medium-sized miners in the region are mostly focusing on copper and iron ore, Butron said.

"Companies are continuing to explore and it's possible that they will find new reserves which will maintain [the region's] activity," he added.

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Red metal projects in the region include US-based Southern Copper's (NYSE, BVL: SCCO) Tia Maria project in Islay province. The project will require initial capex of US$934mn for a copper cathode output of 120,000t/y.

The main iron ore project in the region is the Chinese Nanjinzhao Group's Pampa de Pongo deposit in Caraveli province, which will require an investment of US$3.0bn.

Arequipa also has some 240 small scale mining companies that hold concessions of 2,000ha or less, Butron said. Ninety-five percent of these miners are exploring for or producing gold.


One of the main challenges for Arequipa will be to establish a strong relationship between miners and farmers, according to Jose de Echave of Lima-based NGO Cooperaccion.

More and more mining initiatives are being located on the arid coastal region and farmers are concerned that these projects will affect their water supply, De Echave told BNamericas.

Concerns over water have lead to conflicts and delays in mining projects. In April, SCC's Tia Maria was put on hold following demonstrations by local communities concerned about the potential environmental impact.

To improve the relationship with local farmers, the national and regional governments need to be more transparent about the mining projects being developed in the region.

"There is the impression that there is a lack of information in Arequipa about current mining projects," De Echave said.

In Arequipa, mining concessions cover 1.57Mha, which represents 24.7% of the region's territory. Approximately 123,435ha are used for production and 54,500ha for exploration, according to the mines and energy ministry (MEM).

Arequipa has the country's third largest reserves of copper and gold, with 12.8Mt and 123Mg (3.95Moz), respectively, according to MEM.