Peru elections keep mining exploration in the balance
Peru’s general elections, scheduled for Sunday, have generated uncertainty, negatively affecting the investment climate and particularly the mining industry.
None of the 18 candidates enjoys solid public support, according to electoral polls.
Enrique Garay, president of the 2021 ProExplo mining fair, told BNamericas that owners of several greenfield projects are waiting until after the elections to make decisions.
“Yes, there is uncertainty that we hope will clear up on April 11. From now on everything will depend on who goes to the second round,” Garay said.
On the upside, companies that are producing continue to invest because they have to replace the resources they consume. And companies with projects under construction such as Quellaveco, Mina Justa or Toromocho Expansion have not stopped either, because they promised investments and need to start production according to schedules to meet financial obligations, Garay said.
The current mine construction portfolio contains 46 projects totaling around US$56bn. But no major projects beyond Mina Justa, Quellaveco, and Toromocho Expansion are in sight.
The exploration portfolio contains 60 projects for US$506mn.
Garay said systematic greenfield exploration, especially for gold, has not taken place for at least 15 years.
“We regret that there are no new discoveries of this mineral as there is no greenfield exploration. We do not have an advanced gold project in Peru today; we have San Gabriel that was discovered 10 years ago, something more than Buenaventura; Pierina has been closed, Lagunas Norte is going to be closed and there are no new discoveries.”
To reverse the situation, it is essential to achieve social agreements; companies and the government must get closer to communities and the population to show that Peru lives from mining, according to Garay.
HIGH PRICES, AN INCENTIVE
Mining represents 10% of Peru’s GDP, 60% of exports, 16% of private investment and 19% of tax income, which is why Garay considers it vital to develop mining promotion policies and especially exploration so mining remains a pillar for the country’s development.
Current high gold and copper prices can contribute to and encourage greenfield projects.
“I think copper and gold companies are going to invest a lot. Investors are very excited about prices; we have to fix our social and political issues,” Garay said.
High prices would also encourage junior exploration as it will be easier to raise financing.
The mining sector hopes that the next government, which takes office on July 28, will focus on the challenges early on and unblock projects that were postponed due to opposition of communities. Authorities should enable swift decision-making to expedite the procedures.
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