However, in 2009 the mining industry, which accounts for over 60% of the countryâ€™s exports, struggled to control the damage resulting from a decline in global commodity prices. Peru is the worldâ€™s second-largest producer of copper and zinc, the prices of which dropped significantly in 2009.
Peruâ€™s mining industry is expected to grow during 2010â€“15
The Peruvian mining industry is forecast to produce nearly 43 million tons in 2015. The metallic mineral category is expected to record the highest growth over the forecast period, followed by non-metallic minerals and coal.
During 2010â€“15, the mining industry is expected to witness substantial investments
In 2009, investment in mining grew to reach nearly US$3 billion. Despite the global economic crisis, domestic and foreign investors continued to invest, reflecting investor confidence in the country and indicating the potential that mining industry offers to its investors. The country also continued to be one of the leading exploration spenders in the world, with a total spend of US$350 million.
During the 2010â€“15 period, the forecast investment in mining will comprise 36 major projects, including exploration projects and expansion projects, which together amount to over US$35 billion. These investments are expected to increase production levels of key minerals such as copper, gold and silver, and will further fuel the growth of the Peruvian mining industry.
Production growth and rising exploration spends to drive the mining equipment industry in Peru
The mining equipment industry is estimated to be worth nearly US$2.5 billion by 2015. Over the forecast period, growth in production (primarily copper, gold and silver) will boost the growth of the mining equipment industry in Peru.
Significant investment will be made to cover new mines and in the expansion of existing ones, and is expected to drive mining companies to opt for more advanced mining equipment. A strong exploration spend will also add significantly to Peruâ€™s proven and probable reserves. As a result the mining industry, and subsequently the mining equipment industry, will continue to prosper in Peru.
The global economic crisis resulted in a decline of 12% in total mining exports from Peru in 2009
In 2009 mining exports accounted for over 60% of Peruvian exports. Mining exports were led by the growth of gold, both in terms of volume and price, boosted by increased demand by investors hedging against the effects of the global financial crisis. With the revival of the global economy and escalating commodity prices, mining exports are expected to witness a resurgence in 2010.
Geological potential and favorable legal policies attract multinational mining companies to Peru
The rules governing the mining sector in Peru ensure legal stability and economic freedom for domestic and foreign investments. Both domestic and foreign companies hold the same rights with respect to the properties that they acquire, and foreign investors are guaranteed the right to make transfers abroad (after taxes) in freely convertible currencies, using the exchange rate most favorable at the time of the transaction, and without any prior authorization from a public authority or agency.
Also, currently only a small part of the countryâ€™s territories with mining potential have been explored, and even less is currently mined. There is still considerable potential for the discovery of other deposits in different geographical areas that have not yet been comprehensively explored, resulting in more opportunities for mining exploration enterprises.
Public opposition and maintaining relationships with local communities remains a key challenge
The robust increase in mining activity has been accompanied by conflicts and violence around large-scale mining projects in the countryâ€™s remote areas such as the Andean highlands.
Public opposition is one of the serious concerns for companies starting new projects in remote areas with tribal populations. Opposition by indigenous communities can push an entire project into uncertainty and render it unviable. For instance, the Rio Blanco Copper Project, which was scheduled to start producing in 2011, was recently attacked in November 2009 by a local group killing three workers and destroying 80% of the site. This attack made the future of the entire project uncertain. Mining companies have made serious errors in maintaining relationships with indigenous communities, and have tried to operate in areas which were clearly unviable.
One example is the Tambogrande mining project in northern Peru, where Manhattan Minerals was seeking to develop an open-pit mine requiring the diversion of a local river, and the relocation of an estimated 8,000 inhabitants of a total population of between 14,000 and 16,000. After several years of protest, the company was forced to withdraw in 2003, having lost US$61 million on the project.
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