Production forecasts cut for Peruvian mining as conflict continues

Bnamericas Published: Wednesday, January 25, 2023

Growth projections for Peru's mining sector are beginning to suffer downward revisions as a result of the ongoing protests and roadblocks sparked by the arrest of president Pedro Castillo and his replacement by Dina Boluarte. 

The conflict, which began in mid-December, has shown no signs of easing and has affected the movement of goods and people throughout the country, particularly in the mining industry.

The three mines in the area of the southern mining corridor – Las Bambas (operated by Chinese-controlled miner MMG), Antapaccay (owned by Glencore) and Constancia (belonging to Hudbay)  – have been unable to transport copper concentrates since early January due to protestors cutting off highways in the south. 

The roadblocks are also limiting the companies' ability to take supplies to mining camps and their operations have also suffered attacks. The tense situation has led Las Bambas and Antapaccay to temporarily suspend operations, which will hit production volumes this year.

"We expect that as a result of these protests, around 1% of national copper production has been compromised and they threaten to slow mining investment further," Canada's Scotiabank stated in a weekly report.

The conflict has led Scotiabank to trim its growth estimate for Peru's copper production in 2023 to 11% from the previous 12%. 

"However, we could see similar scenarios for the remainder of the year, so we do not rule out lowering our projections again if this climate of conflict continues," it added.

In January-November 2022, copper production grew 3.4% year-on-year to 2.2Mt and production for full-year 2022 was expected to reach between 2.7Mt and 2.8Mt. 

BBVA Research is following much the same line as Scotiabank. "We're reviewing the projections given the context of social upheaval and its economic implications, particularly for the mining sector. At this time there's a lot of uncertainty, which reduces visibility," Hugo Perea, the firm's head of research told BNamericas. 

He added that the bank's research department will soon publish a report on the mining sector analyzing the new scenario.


Production of other metals has also been badly affected by the protests. San Rafael, a tin operation in the southern region of Puno owned by Minsur also suspended operations on January 12. 

"Given that the mine is closed and considering the production levels in January-November 2022, each day the mining company fails to produce 77 tons of tin, which would represent 0.3% of annual production," Scotiabank said.

Meanwhile, fires have reportedly been set at the operations of gold mining company Anabi in Cusco and Apurímac regions.

At present, there seems to be no easy solution to the crisis. Last week, the protests spread to capital Lima, with hundreds more arrested as police clashed with protesters, using tear gas to control crowds of demonstrators throwing bottles and stones and lighting fires.

Besides the southern mining corridor, highways across the country have been blocked, with well over 100 important roads either cut off entirely or with restricted access.

The situation is therefore poor for a mining sector that is trying to step up production by beginning construction of big projects both this year and next. The conflicts could result in these investments being delayed, however, which could mean mining investment falling 20% in 2023, said Scotiabank.

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