Peru is the world’s second-largest copper producer, but its growth potential is hampered by a complex and slow permitting process that discourages investment and delays projects. This was the main concern expressed by mining executives and officials at the Perumin conference, held in Arequipa, a city surrounded by giant copper deposits.
According to the central bank, mining investment in Peru is expected to drop by 18% this year and 8% in 2024 as major projects face social conflicts and environmental challenges. The government estimates that there are $57 billion worth of projects waiting for permits, which can take years to obtain and involve multiple state agencies.
Prime Minister Alberto Otarola announced plans to streamline the permitting process by creating a digital one-stop shop for mining companies and freeing up $11 billion in key projects stuck in bureaucracy. He said the government was committed to supporting the mining sector, which accounts for 60% of Peru’s exports and 10% of its gross domestic product.
The mining industry welcomed the announcement and urged the government to show results. Raul Jacob, chief financial officer of Southern Copper, said the company was optimistic about the new administration but also needed to see concrete actions. Southern Copper is developing the $1.4 billion Tia Maria project, which has faced strong opposition from local farmers and activists.
Roque Benavides, chairman of Buenaventura, Peru’s largest publicly traded precious metals producer, said the country had complicated things to excess with its red tape. He said his company had been working on the San Gabriel gold and silver project since the 1990s, but it was still awaiting permits. He said the project could have been operational a decade ago with more efficient permitting.
Benavides also said he did not vote for the current government but recognized that it was sending positive messages to the mining sector. He hoped the government would also address the social issues affecting mining projects, such as lack of infrastructure, public services, and consultation with communities.
Peru’s mining sector faces uncertainty as the country’s new president, Pedro Castillo, a former teacher and union leader, has vowed to rewrite the constitution and increase taxes on mining companies. Castillo has appointed Guido Bellido, a leftist congressman, as his prime minister, raising concerns among investors and analysts.
However, Castillo has also moderated his rhetoric and appointed moderate ministers in key economic portfolios. He has said he respects private investment and wants to promote dialogue with all sectors of society. He has also pledged to fight corruption and poverty, which affect millions of Peruvians.
Peru’s copper production has increased by 20% this year, thanks to the recovery from the COVID-19 pandemic and the ramp-up of Anglo-American’s Quellaveco project. However, some analysts warn that Peru may be approaching its peak copper output unless new projects are developed soon.
Peru has vast mineral resources that could boost its economic growth and social development. But it must also balance its environmental and social responsibilities with its business opportunities. The challenge for the government is to create a stable and attractive climate for investment while ensuring that the benefits of mining are shared with all Peruvians.
Source: Mining Weekly
