Peru's mining sector has great potential but faces many problems

Luis Miguel Castilla, Peru's former finance minister, estimates that Peru's mining sector has the potential to boost the 

country's economy by 2 percentage points if most of the investment programme is completed on schedule, according 

to the BNAmericas website.

In an interview at the Peruvian institute of mining engineers (IIMP), he said that if half of the mining projects with

 a total investment of more than US$54 billion come into production in the next five to seven years, Peru's GDP growth 

rate will increase to 5 per cent from the current 3 per cent.

Castile said it is feasible for investments in expansion and brownfield projects to come online, but the bottlenecks that are

 holding them back must be addressed immediately because with only two years to go before the presidential and congressional

 elections, the political process is likely to impede any national strategy to move forward with new initiatives.

‘As long as there is no opposition from the community, it is possible to move forward with expansion and replacement projects.

 However, this is less likely due to the proximity of the next general election. Nonetheless, it is still possible if the relevant stakeholders 

are in favour’, according to Castile.

Projects and outstanding issues

The former minister stressed that in addition to the projects that the government plans to put into operation, such as the Quellaveco expansion, 

Corani, Raura expansion, Chalcobamba and Romina, projects such as Zafranal, Yanacocha Sulfuros and others will be able to move forward 

without major delays. Zafranal, Yanacocha Sulfuros and other projects are also progressing without major delays.

In addition, the Cajamarca region of northern Peru, which has significant gold and copper resources, could see an increase in mining 

investment and exploitation as national strategies call for better use of water resources.

 With regard to the southern mining corridor, where the large mines of Las Bambas, Antapaccay and Hudbay are located, Castilla pointed 

out that there are important mining projects in the area, but that there is a need to improve the infrastructure and adapt the agreements 

so as to guarantee that the metals are transported to the seaport of Matarani, in the Arequipa region.

surety

One major unresolved issue is security.

Castilla revealed that the Peruvian government invests 15 billion soles (US$4 billion) a year in security, but private companies invest 

the same amount to self-protect because they have not seen tangible action to control crime and violence, with incidents ranging from

 petty theft to attacks on mining operations.

‘15 billion soles were used to protect operations and personal safety, while failing to invest in improving production’, he said.