Pan American awaits green light to restart underground Peru mines

Bnamericas Published: Wednesday, June 03, 2020

The outlook for mining companies in Peru is improving as companies resume activities after the stoppage since March 16 to slow the advance of COVID-19.

Pan American Silver said it is awaiting regulatory authorizations to restart operations at the underground Huarón and Morococha mines, according to a statement from the Canadian company.

The company’s Shahuindo and La Arena open-pit gold mines, also in Peru, resumed operations on May 15 and production is now at around 80% of capacity. Pan American added that construction to expand the Shahuindo leach pad and preparation to build a waste dump at La Arena will resume this month.

Pan American suspended operations at its mines to comply with the mandatory national quarantine declared on March 15 and extended until June 30, although on May 3 the government authorized the resumption of large-scale mining activities.

"Companies continue to reopen mines, carefully, with caution, but there is a fairly good process in general terms," mining consultant Luis Barrenechea, who also chaired the National Association of Municipalities impacted by Mining, which groups 200 mining municipalities in Peru, told BNamericas.

The executive director of the SNMPE mining and energy association, Pablo de la Flor, said that of 54 mines operated by large companies, 50 belonging to 28 companies have already received approval for their plans to adapt to the COVID-19 prevention measures and are authorized to resume 100% of production. That would leave practically all companies in the large-scale mining industry up and running and only four operations still on hold, which are not among the largest deposits, local press reported.

Mining is responsible for 10% of Peru’s GDP and 60% of exports. In 2019, copper production reached a record 2.46Mt.

According to the latest data available from statistics agency INEI, metal mining in Peru experienced in April one of the worst contractions in decades, shrinking 47.3% year-on-year. Copper production fell 34.7% in the month.

Meanwhile, the Institute of Mining Engineers estimates that the sector will see annual losses of US$4bn-5bn due to the quarantine, which is equivalent to lost mining production of between 15% and 20%. To accelerate the reactivation, the group proposes "taking into account the experience of the industry in the last 11 weeks, where they incorporated occupational health and safety plans to guarantee the safety of their workers," said the president of the entity, Víctor Gobitz, in a statement.

Energy and mines minister Susana Vilca said last week the mining sector is expected to recover in the third quarter.

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