Peru Mining Project Pipeline Forecast

Peru has a large pipeline of mining projects totaling approx. USD$53bn. The country has a good mixture of underground and open pit mines already in operation.  In addition,  local mining companies have been investing in new technology, equipment, and services over the last few years which has made Peru a very interesting market for METS companies. 

Peruvian Governments Forecast – Mining Project Pipeline Summary

The Peruvian Energy and Mines Ministry, Minem, released their updated forecasts on the project pipeline. According to Peruvian Ministry of Energy and Mines (Minem), mining investments surpassed US$5.2 billion during 2021, which meant a significant increase of 21.1% compared to the amount (US$4.3 billion) registered in 2020.

Peru has 43 projects in various stages for a total of USD$53b. You can find the report here. 

Results from 2021

• Among the largest mining investment projects in Peru in 2021, Anglo American’s Quellaveco copper project maintained the first position with the total investment of US$1.3 billion in 2021, representing 25% of the total investment in mining projects in Peru.
• Quellaveco is one of the largest copper reserves in Peru and in the world, having estimated reserves of 1.1 billion tonnes of ore grading 0.55% copper. First ore was mined in October 2021 and the plant will go into operations in 2022. 
• Antamina ($481 million) and Toquepala (US$ 339 million) were second and third largest mining investment projects in Peru in 2021.
• You can find here an overview of the projects that were under construction from 2021.

Construction Forcast for 2022 –

Minem reported that its updated portfolio of mining projects considers that seven projects involving investment of US$4.42bn would begin the construction phase in 2022. These perfections may be a little optimistic according to a recent Scotiabank report. The bank executives believe that just 3 of the 7 projects will proceed in 2022 for a total investment of US$845mn.

• Corani, a US$579mn. silver project owned by Bear Creek. The project has all the permits to start construction and the company is looking to finalize financing.
• US$130mn investment for Chalcobamba phase I at the Las Bambas copper mine.
• US$136mn Minera Ares’ Inmaculada optimization, a gold project that is awaiting the approval of modifications to the environmental impact study.

The Scotiabank Report projects that the other four projects would postpone the start of construction untill 2023 –

• Yanacocha Sulfuros controlled by Newmont, which has an investment budget of US$2.1bn.
• US$422mn San Gabriel gold project owned by Buenaventura.
• US$490mn Nexa’s Magistral copper project, which is in the feasibility phase
• US$410mn Río Seco copper plant owned by Procesadora Industrial Río Seco, which is also in the feasibility phase.

You can find here more details on the projects that are expected to go into construction in 2022.

Conclusion – Peru is already a great market for mining suppliers but the pipeline of future projects makes it even more interesting. Peru has grown its copper production considerably over the last 10 years. The country could be positioned well in the coming years to take advantage of demand for copper. CRU Group estimates that the copper industry needs to spend upwards of USD$100 billion to close what could be an annual supply deficit of 4.7 million metric tonnes by 2030.

To keep growing, the country will need to navigate tax increases that it has planned for the mining industry. In addition, Peru will need overcome community relation problems which have paralyzed some operations. Investors are not fond of uncertainity around taxes or production stoppages.

The good news is that if it can overcome these challenges, the project pipeline will surely pick up speed in the next few years.

Ax Legal is an advisory firm that works with foreign companies in Latin America. Our team of legal and commercial advisors have a distinguished track record of helping foreign technology and services companies to grow and operate in Latin America. Over the years, we have worked with starts up, mid-size businesses, and publicly listed companies. The one common factor that connects are clients is that they are leaders in their field, providing innovative technologies and services to the industrial sectors.

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