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Outlook: Mining to put Peru power grid to the test

Bnamericas Published: Wednesday, January 08, 2020
Outlook: Mining to put Peru power grid to the test

Mining projects scheduled to come online in Peru in the coming years will narrow the country’s comfortable power reserve margin and may place strain on electricity dispatch if new transmission infrastructure fails to accompany forecast growth of the energy-intensive minerals sector.

Latest information from energy and mining investment regulator Osinergmin shows that over half of free market power sales in June went to mining companies (see pie graph below).

The top mining offtakers and their suppliers include Minera Paraíso (SEAL), Minera Veta Dorada (SEAL), Compañía Minera Antamina (Engie), Sociedad Minera Cerro Verde (Electroperú, Kallpa, Engie), Southern Perú Copper (Electroperú, Kallpa), Empresa Administradora Cerro (Engie), Hudbay Perú (Enel Generación Perú), Marcobre (Engie), Las Bambas (Enel Generación Perú), Tintaya (Kallpa) and Minera Chinalco Perú (Enel Generación Perú, Orazul Energy Perú, Statkraft).

Looking ahead, the watchdog forecasts that 19 mining projects due to enter service this decade will add around 9,400GWh or 17% of total demand growth in Peru through 2028 (see bar graph below).

Of the 19 projects, a third are in construction and total 328MW, led by Quellaveco with 163MW, while the most relevant project in the detailed engineering stage is Pampa del Pongo which is expected to begin construction in 2021, according to Osinergmin research.

The government agency highlights that five of the 10 principal mining projects to be built in the next five years are copper and will increase production of the red metal by 60%.

Against this backdrop, Osinergmin envisions the potential for innovation in terms of power consumption on the part of mining companies.

The regulator points to the use of a solar panel island by Anglo American in Chile at the Las Tórtolas tailings deposit.

Osinergmin's research report is available here.

BNamericas’ Project Profiles team is tracking over 150 early development mining projects in Peru.

GUIDANCE

In its latest medium-term outlook released this month, Peru’s power grid administrator COES forecasts that capacity and electricity demand this year will grow 3% and 5.7%, respectively, to 7,320MW and 56,584GWh.

Capacity and electricity demand guidance for 2020 in the December report was 3.1% (7,330MW) and 4.9% (56,095GWh).

COES adds that between this month and April, the 2.4MW Callao biomass plant and hydros La Virgen (84MW) and Manta (19.8MW) are expected to begin operations.

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