Peru's mining industry demands faster permitting

By
Tuesday, October 31, 2017

Peru's mining industry, which is dusting off projects as base metals prices surge, will still need "decisive" government action to bring new mines and expansions online, Luis Marchese, head of the national society of mining, petroleum and energy (SNMPE), told BNamericas.

Miners who were forced by a four-year price slump to focus on cost-cutting and optimization of their operations are now allocating more capital to new projects even as many struggle with lengthy permitting processes, said Marchese, who is also Peru country manager for Anglo American.

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"We're starting to see movement amongst the companies – they've started investing more in exploration, equipment and engineering. In three or four years we'll definitely see a project pipeline," Marchese said in an interview. "That will require decisive action including the central, regional and local governments, the population and companies, because this set of stakeholders could ensure these projects are carried out."

The rebound in copper, zinc and lead prices this year is one of the key factors behind renewed investor interest, Marchese said. Copper prices rose 30% in the third quarter from a year ago, followed by zinc (+27%) and lead (+26%).

Copper projects in Peru expected to start construction next year include Anglo's US$4.9bn Quellaveco, Chinalco's US$1.3bn Toromocho expansion and Minsur's US$1.3bn Mina Justa.

Precious metals ventures, meanwhile, include Newmont Mining's US$250-300mn Quecher Main project at its Yanacocha gold mine and Bear Creek Mining's US$625mn Corani silver property, while Barrick Gold is studying an expansion of its Lagunas Norte gold mine.

The government plans to put the Michiquillay copper project up for bidding in December, while Southern Copper and Shougang are scheduled to complete expansions next year at the Toquepala and Hierro Perú mines, respectively. Miners including Minsur, Volcan, Milpo, Buenaventura and Hochschild Mining are all ramping up exploration spending.

Social conflicts that have held up at least US$20bn in mining investment including "perfectly feasible" projects by Newmont, Southern, Bear Creek and Zijin Mining, will require "mutual understanding" to make them happen, according to Marchese.

Peru's energy and mines ministry (MEM) is counting on a US$51bn mining investment portfolio to boost copper output by 30% by 2021. The government in October pushed through legislation aimed at accelerating permitting processes and easing strict environmental standards.

Peru, the world's second largest copper and silver producer, No. 3 in zinc and tin and fifth ranked in gold, produced 2.35Mt copper, 153,006kg gold, 4.37Mkg silver, 1.34Mt zinc, 314,174t lead, 18,789t tin, 7.66Mt iron ore, 820t cadmium, 10.56Mt phosphate rock and 266,236t coal last year.