A stitch in time saves mines

Peru finally moves to reactivate the mining sector.

We wrote in June of the importance of the mining sector to the reactivation of Peru’s economy following the pandemic [1]. An economic analyst in Peru summarises, “Mining is as important to Peru as oil is to Saudi Arabia.”

Recently, Migual Incháustegui, the Minister for Energy and Mines, has said that he hoped output would be back to normal by the year end and that projects at five mines, requiring a total of USD 3.39 billion, were due to start in July 2021. This is in addition to some USD 8.36 billion in investment and works already underway.

An official at the Ministry of Energy and Mines tells us, “There are 4 projects under construction that add to USD 8.3 billion. In the pipeline, there are 64 exploration projects totalling USD 500 million and USD 57 billion across 50 construction projects.”

“Mining is as important to Peru as oil is to Saudi Arabia.”

Economic analyst, Peru

The official also gave an indication of the maturity of the pipeline, “A lot depends on the permits, many projects are still trying to obtain the Environmental Impact Study (EIA), others are in prior consultation – the final stage of the EIA – others still require financing e.g. Corani (a USD 586 million silver project in Puno operated by Canada’s Bear Creek Mining) has all the permits but is waiting for the completion of due diligence by the banks.”

A mining executive in Peru stresses how challenging the prior consultations are, “The communities are still a heavy burden on most projects, what development means for me is not what development means for them. It is not easy, you need communities, companies and the state all working together or you won’t go anywhere.”

“The communities are still a heavy burden on most projects.”

Mining executive, Peru

Incháustegui has sought to reassure the sector by reporting that the mining-energy investment committees will help build relations with local communities and authorities to streamline processes. This sounds encouraging but our sources were quite dismissive of how useful it will be.

A non-executive director of a mining company operating in Peru vents his frustration and highlights an important political risk, “This government has wasted a lot of time doing nothing for private investment and now there are just months until the elections.”

If you wish to understand specific issues, be they local, regional or national, associated with any mining project in Peru we have extensive experience and capabilities across the sector and would be happy to help.

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[1] “Dig For Victory: Peru needs mining to escape the fallout from COVID-19″, De Orbegoso, C., 4 June 2020, available: https://www.deheza.co.uk/peru-needs-mining-covid19/, accessed: 24 October 2020.

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