Peru mining projects, infrastructure spurring growth - minister

Friday, October 3, 2014

Peru's sluggish economy is beginning to show signs of accelerating as new mining operations and infrastructure investment projects pick up steam, said finance minister Alonso Segura.

The government plans to take additional measures to ensure the economy expands at 6% a year on average, the official said, according to a report in government paper El Peruano. Segura was appointed September 14, replacing Luis Miguel Castilla.

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GDP growth was 0.5% faster in August than during the previous month, Swiss investment bank Credit Suisse said in a report. Peru's economy grew 1.2% in July, compared with 0.3% in June, the national statistics bureau said last month

"There are clear signs that the economy is accelerating again," Segura told the congressional banking and economy committee. "New measures are necessary to be able to sustain economic growth in the medium term."

Peru's government earlier this year unveiled an economic stimulus package aimed at jump starting the economy after growth slowed to a five-year low in June. The government in July said it would tap a budget surplus to boost public spending by the equivalent of 1.6% of GDP.

The government will seek to eliminate project permitting delays, look for ways to help businesses cut costs and raise productivity and reduce the country's informal sector, Segura said.

The government will also meet with local and regional officials to ensure public spending does not slow after regional and municipal elections this Sunday (Oct 5), Segura said.

"We will provide technical assistance to prevent the gap that generally arises when there are changes in authorities," the minister said. "The idea is to mitigate the impact of the transition."

The private sector has lined up U$38.9bn in investment, including US$20.7bn in mining, US$7.94bn in oil and gas and US$5.12bn in electric power, Segura said, without providing a timeline.

Infrastructure concessions awarded by the government total another US$13.2bn, he said. The government plans to invest 3.87bn soles (US$1.34bn) this year in public-private partnerships known, and 6.88bn soles in 2015, Segura added.

Central bank president Julio Velarde said last month the economy will expand 3.5% this year – compared with earlier forecasts of 4% and 5.8%.

Peru has lined up US$60bn of mining investment projects, including Hudbay Minerals' US$1.7bn Constancia copper mine, due to start producing at the end of this year, and China Minmetals' recently acquired US$5.1bn Las Bambas copper mine and Freeport McMoRan Copper & Gold's US$4.6bn expansion of the Cerro Verde copper mine, both scheduled for completion in 2015. Chinalco is also ramping up production at its US$3.5bn Toromocho copper mine.