Peru mining output rises in April on copper, silver, gold

Bnamericas Published: Wednesday, June 01, 2016

Peru's mining production rose 27.8% in April, as new mines and expansions ramped up output, the government said in a preliminary report.

At the same time, manufacturing, led by steel and precious metals refining, which is tracked a month earlier, contracted by 4.6% in March, the national statistics institute said in a statement.

Copper production soared 55.6%, while molybdenum output rose 43%, the agency said. Silver and gold output were up 17.6% and 5.7%, respectively. Hudbay Minerals, Hochschild Mining, Freeport-McMoRan and China Minmetals have all started up projects over the past 18 months.

Peru's export earnings rose for a second month, climbing 11.8% to US$2.613bn in April, as commodities exports led by metals grew 15.5% to US$1.841bn, the institute said. Imports fell 11% to US$2.789bn in April, as machinery imports, mainly by the mining industry, dropped 5% to US$1.017bn.

Government spending on infrastructure slid 6.3% to 1.603bn soles (US$480mn) in April, the agency said. The construction industry expanded 1.4% even though completion of public works slowed 6% due to lower spending by local and regional governments.

President Ollanta Humala, who is scheduled to step down in July following a second round of presidential elections on June 5, is also winding down public spending on schools, hospitals, roads and other infrastructure in his last two months of government.

Infrastructure and mining projects will drive growth in Peru this year despite slumping commodities prices, according to the finance ministry. Peru's economy is expected to grow 3.8% in 2016 compared with 3.3% last year, according to the ministry.

Due to sustained economic growth, slowing inflation and an appreciation of Peru's currency against the US dollar in April, the central bank is likely to keep its benchmark lending rate unchanged for a fourth month at 4.25% next week, according to Lima-based Banco de Crédito del Perú (BCP).

"However, in June and July we could see upward pressure on some prices like fuel and foodstuffs," BCP analyst Luis Ortega wrote in a report. "We're not ruling out an additional 0.25% hike in the reference rate in the second half."

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