Peru urged to reactivate mining exploration

Peru has lost mining potential because environmental regulations, among others, led to reduced exploration, even though global demand remains high.

The pandemic only added to the difficulties and created a situation in which Peru became more expensive in the medium term, Miguel Cardozo, director of the Institute of Mining Engineers (IIMP) and CEO of Alturas Minerals, told the Perumin event.

“In 2020, when investment in mining exploration fell 18% globally, it fell 31% in Peru. Although the recovery was 18% in 2021, the world recovered 35% in the same period,” he said.

Permitting is key to get Peru back on track, he added. Currently, “in addition to being bureaucratic, [regulators] are delaying environmental permits and delivering them within 18 months, or even more.”

As a result, Peru dropped to the bottom of the global competitiveness index, prepared by IIMP and Macroconsult. “If we are confident because we have the geological potential to be successful, we are wrong. More is being explored in Ecuador and Colombia,” Cardozo said.

At the event, the economy and finance ministry (MEF) presented a national portfolio involving 43 projects for US$53.2bn. But it is at risk, because of bureaucracy and blockades. 

Incentives like regulatory changes and tax breaks only show that the government acknowledges the risks and the difficulty to achieve its recovery projections, Cardozo said.

Prime minister Aníbal Torres, however, told the event that “the government will promote mining exploration. Without exploration projects, there is no mining in the future. [Work is being done to] assure investors that their investments in Peru are safe.”

REGIONS

Mining operations are not just crucial for national GDP but also for copper-producing provinces.

Áncash relies on Antamina, Apurímac on Las Bambas, Arequipa on Cerro Verde, Junín on Toromocho, Moquegua on Cuajone and Tacna on Toquepala.

When Las Bambas operations were interrupted for over 50 days earlier this year, Apurímac’s Q2 GDP fell 33%, according to the statistics institute. “There are several regions 'in red' because the useful life of their projects is less than 20 years. If these reserves are not replaced, the provinces are left without production [and canon payments],” Cardozo said.