Peru mining body: 'Golden goose' is being throttled

Peru's mining industry is unlikely to be able to build more mining projects if social conflicts do not ease, said Carlos Gálvez, head of the national society of mining, petroleum and energy (SNMPE).

The mining industry has lost five years on account of protests and permitting delays and miners have not announced future investments beyond medium-size projects such as Buenaventura's US$500mn San Gabriel and US$240mn Tambomayo, Gálvez, who is also Buenaventura's CFO, told BNamericas.

Falling mining royalties, expected to drop to a decade low in 2015 because of the metals price slump, are likely to spark further social conflicts in the run-up to April general elections, said Gálvez, a 44-year veteran of the mining industry.

Meanwhile, projects like Newmont Mining's Minas Conga, China Minmetals' Galeno and Rio Tinto's La Granja have been halted and Anglo American pulled out of the Michiquillay project, Gálvez said.

"There are too many expectations. They're killing the goose that lays the golden egg, because that will make any other project unviable," Gálvez said in an interview on the sidelines of the Perumin mining conference in the southern highland city of Arequipa. "We're all fighting and no one imposes order."

'Excessively strict' environmental standards are also impeding the sale of the bankrupt La Oroya zinc-lead smelter in the central Andes, shut since July 2014, Gálvez added. The former Doe Run Perú unit owes about US$600mn to 100 companies including Buenaventura.

"The mining and energy sector is where the government has issued the most environmental regulations. There are industries where nothing has been done," Gálvez said. "The kind of environmental standards they're trying to impose don't exist anywhere in the world, not even in the exhaust pipe of the environment minister's car."

Peru, which has received US$34bn in mining investment since 2011, has lined up US$64bn in mining projects over the next decade, according to the energy and mines ministry (MEM). Projects due to come online next year including China Minmetals' US$8.3bn Las Bambas copper mine and Freeport-McMoRan Copper & Gold's US$4.6bn Cerro Verde expansion are expected to help double the country's copper output to 2.8Mt/y by 2017.