The billions of dollars generated by the mining sector have been a principal driver of wider economic growth in Peru over the course of the past decade. Revenues from the sector have increased several times over as Peru continues to ride the wave of a commodities “super-cycle”. This has not only filled government coffers, bringing foreign reserves to an all-time high, but has also sparked large-scale transportation and energy projects as both the private and public sector attempt to keep up with the demands of rising production.

Yet despite its recent success, the mining industry faces several obstacles and could yet create a few of its own. Just as rising mineral prices, particularly those of copper and gold, have spurred economic growth, the subsequent drop in global prices – of 30% for gold, 40% for silver and 16% for copper as of early July 2013 – could bring the country’s expanding economy grinding to a halt in the coming years.

Additionally, the industry faces the challenge of tackling social conflicts around the country, which have both delayed and shut down various projects. Government bureaucracy, illegal mining, inadequate infrastructure and an insufficient workforce to meet human resources needs round out the remaining issues. However, these concerns have not held back investment. As of August 2013, the Ministry of Energy and Mines (Ministerio de Energías y Minas, MINEM) reported an investment portfolio of $57.4bn. With the rich, polymetallic Andes as a source, Peru has an abundance of copper, gold, silver, tin and zinc, among others.

Macro Economic Impact

Mining has an important role within the broader economy as a major generator of both central and local government income, private investment and employment. A study in 2012, commissioned by the National Society of Mining Petroleum and Energy, and conducted by local firm Macroconsult, found that every incremental rise of 15% in mining exports corresponds to a 2.1% jump in GDP and a 0.9% increase in employment of the economically active population. In addition, the study cited the strong impact of the sector outside of Lima, where it is estimated to account for 28% of GDP, while taxes collected from the industry were enough to fund the government’s chief social programmes five times over in 2012. Taxes and royalties from the industry have helped fuel a surge in public investment, which increased from 2.8% of GDP in 2003 to 5.4% in 2012, thanks to a rise in mining royalties from 0.2% of GDP to 0.5% during that time.

The Super-Cycle

While some believe the most recent commodity super-cycle to be over, others see the dip following the global economic crisis as merely a short break. Indeed, much depends on demand, particularly from emerging markets such as China, where import levels for raw materials are driven by booms in large-scale construction and infrastructure. A UN study titled “Super-cycles of commodity prices since the mid19th century”, published in February 2012, identified four commodity super-cycles between 1865 and 2009. According to the analysis, non-oil price super-cycles generally follow world GDP and are determined by demand, in contrast to supply-driven oil cycles. The most recent mineral super-cycle has been more acutely punctuated in terms of length and scope when compared to previous ones – which occurred before and after the First World War and the Second World War – with prices nearly doubling in the five-year period from 2003-08.

Top Two

Going forward Peru will have one eye trained on copper prices and the other on gold. The two minerals accounted for some $20bn worth of exports (77.3% of mineral exports and 43.9% of total exports) in 2012 and $11.73bn through the first eight months of 2013 (76.8% of mineral exports and 42.8% of total exports), as per MINEM data. Further, they are the dominant sources of investment in the mining sector.

According to data from the World Bank Prospects Development Group (WBPDG), the price of copper, which reached an annual high of $8828/tonne in 2011, up from $1813/tonne in 2000, is expected to decrease at a fairly slow and stable rate until it reaches $6800/tonne in 2025. The price of gold, which shot up to an average annual price of $1670/troy oz (toz) in 2012 from $279/toz in 2000, will likely follow a similar declining trend until it reaches $1300/toz in 2025.

While commodities cycles always carry a threat of collapse, World Bank data is supported by predictions of continued growth over the next decade in emerging markets, even if growth in the developed world slows to a crawl. Notwithstanding the anticipated declines in copper and gold prices, Peru’s mining industry should hold up relatively well given its diversity.

Sector Organisation & Strategy

MINEM oversees the strategic development of the mining sector, with the Supervisory Agency of Investment in Energy and Mining responsible for the regulation and supervision of mining activities across the country. The General Directorate of Environmental Affairs, which falls under MINEM’s purview, has been responsible for approving all environmental impact assessments (EIA) for mining projects. However, that task is in the process of being transferred to the Ministry of the Environment (Ministerio del Ambiente, MINAM).

After seeing consecutive administrations support private investment in the mining sector, concern over the election of Ollanta Humala to the presidency in 2011 grew in the lead-up to his victory in a run-off election – though private sector fears of a dramatic shift in administrative policy have been generally assuaged since. President Humala restructured royalties derived from the sector and approved new legislation protecting local communities. The main concerns for firms operating in the country are now social conflict, increasing government bureaucracy and tackling illegal mining, though to date the industry has weathered the storm, with the investment climate remaining strong.


According to MINEM figures, the sector’s investment portfolio reached $57.4bn in August 2013. Copper has attracted the majority of new investment, around $36.37bn, which accounted for 63.36% of the sector’s investment portfolio. As of August 2013, gold projects saw the second-highest investment, with $7.18bn (12.51% of the investment portfolio). Iron ore was third with $7.06bn (12.3%).

Though significant funds are being poured into increasing overall production in existing and newly discovered deposits, nearly half of all investment in the sector is focused on exploration activities. Indeed, exploration projects account for the largest share of investment with $26.9bn (46.87%), followed by new projects with an already-approved EIA with $19.49bn (33.96%), expanding existing projects with $9.33bn (16.24%) and lastly projects awaiting approval of an EIA with $1.68m (2.93%), as per MINEM statistics.

China’s hunger for minerals has made it Peru’s largest trading partner, taking over the leading spot from the US in 2011, and it is also the country’s largest mineral investor. According to the most recent figures published by MINEM, Chinese investment in mining projects was reported at $13.82bn (24.07%) as of August 2013, followed by the US with $9.95bn (17.33%), Canada with $9.66bn (16.82%), Switzerland with $5.2bn (9.06%), the UK with $5bn (8.71%), Australia with $3.79bn (6.6%), Mexico with $3.46bn (6.03%), Brazil with $2.37bn (4.13%) and South Africa with $1.2bn (2.09%). Domestic investment was ranked eighth, with $2.47bn (4.3%).

Annual investment in 2012 reached $8.56bn, approximately seven times the figure of $1.25bn that was posted in 2007, according to data from MINEM. From January to August 2013 investment levels were 19.6% higher year-on-year. In August 2013 investment was distributed fairly evenly with 12.1% ($714.65m) destined to exploitation activities, 18.2% ($1.07bn) to infrastructure, 11.7% ($690.07m) to processing plant equipment, 8.7% ($511.08m) to exploration activities, 8.2% ($481.19m) to mining equipment, 4.2% ($249.91m) to preparation, with the remaining 36.8% ($2.17bn) split among various activities for a total of $5.89bn.


More than half of the $57.4bn investment portfolio is being poured into new and existing projects with 61.45% being directed towards increasing mineral production through exploration and expansion of current projects, and the balance allocated for EIA-approved and pending projects. All three of the country’s largest copper producers are undergoing major expansion of operations. Cerro Verde, which is largely owned by Freeport-MacMoRan Copper, is undertaking the largest expansion, as a $4.4bn investment will see its mine in Arequipa expand annual production to 272,000 fine tonnes of copper and 7257 fine tonnes of molybdenum by 2016 – at which time it could become the largest producer of copper in the country. Antamina, currently the largest copper mine in Peru, is receiving a $1.28bn expansion that is expected to increase production by 175,000 fine tonnes of copper in 2013. Antamina is owned by Australia’s BHP Billiton (33.75%), Switzerland’s Xstrata (33.75%), Canada’s Teck (22.5%) and Japan’s Mitsubishi (10%). Mexico’s Southern Peru Copper Corporation is investing $300m to expand its Cuajone mine in Moquegua by 22,000 fine tonnes and $600m to raise annual production by 100,000 fine tonnes of copper in its Toquepala mine in Tacna. It also has plans to upgrade its copper smelter in Ilo.

Aside from copper, China’s Shougang Hierro Peru is currently adding 10,000 tonnes of iron to its Marcona mine to the tune of $1.2bn. Barrick Misquichilca, owned by Canada’s Barrick Gold is expanding its Lagunas Norte gold mine for $400m, while Brazil’s Vale is investing $520m in the expansion of its phosphates mine in Bayó- var. Finally, local mining company Buenaventura is investing $254m to boost zinc production by 220,000 fine tonnes in its Colquijirca mine, due for completion in 2013, while Votorantim of Brazil is also increasing zinc production in its Cajamarquilla refinery at a cost of $500m.

New Projects

New projects with already approved EIAs are led by Xstrata’s Las Bambas project, currently the largest single investment in the sector with spending rising to $5.2bn. Las Bambas, located in Apurímac, is expected to come on-line by June 2015 with an annual production of 315,000 fine tonnes of copper and 5000 fine tonnes of molybdenum. Minas Conga, the fate of which is still not entirely assured, is expected to bring $4.8bn worth of investments. The stalled project, which is owned by Newmont and Buenaventura, was expected to start production in 2015, though MINEM has postponed the beginning of operations until 2017, with annual production of 680,000 toz of gold and 54,000 fine tonnes of copper. Other major new projects coming on-line in the next five years include: Anglo American’s $3.3bn Quellaveco copper mine (225,000 fine tonnes, on-line in 2016), Chinalco’s $3.5bn Toromocho copper mine (275,000 fine tonnes, expected to begin operations by the end of 2013), Hudbay’s $1.54bn Constancia copper mine (80,000 fine tonnes, on-line in 2014) and Grupo Bresia’s $744m Marcobre copper mine (110,000 fine tonnes, expected in 2020).


Mineral exports from Peru rose from $3.8bn in 2001 to $27.36bn in 2011, though they dropped to $25.92bn in 2012, primarily due to the falling price of gold. The MINEM has forecast that production increases could see mining exports rise significantly in 2013, potentially reaching an annual haul of $26.9bn. In terms of the industry’s weight in the wider economy, mineral goods accounted for 55.81% of the country’s total exports in the first eight months of 2013, while hydrocarbons exports came in a distant second, with 12.77%, according to data from the Central Reserve Bank of Peru.

During the first eight months of 2013, the majority of Peruvian copper was delivered to China (41.17%), Japan (12.97%) and Germany (8.24%). Zinc destinations included China (21.23%), Spain (16.26%) and South Korea (14.22%), while primary destinations for lead included South Korea (28.08%), China (18.40%) and Canada (16.28%). Demand for gold is strongest from Switzerland, which imported a full 40.88% of Peru’s gold exports in the first eight months of 2013, followed by the US (25.85%) and Canada (24.17%).


The dramatic increase in gold prices – which stood at $1670 per oz in 2012, up from $279 per oz in 2000, according to the WBPDG – perhaps best symbolises the world’s latest commodity super-cycle. The rise is tied to a variety of causes, including its ability to act as a “safe haven” for investors looking to hedge against long-term inflation potentially caused by debt-driven increases in money supply or any number of other economic difficulties. As a result, even though the national production of gold fell 5.26% from 2007-12, its export revenues rose 128.2%, from $4.19bn to $9.56bn. In the first eight months of 2013, gold production decreased 8.01% on the same period in 2012, according to figures from MINEM.

Gold production is not nearly as concentrated as other minerals, with the top-three producers – Yanacocha (23.06%), Barrick Misquichilca (13.22%) and Minas Buenaventura (5.13%) – accounting for 41.41% of all production in the first eight months of 2013, the most up-to-date information at the time of writing.


Unlike gold, copper’s price spikes are owed to real, not speculative, demand from emerging markets such as China. The average annual price of copper has risen in a similar fashion to gold, with prices increasing 315.6% over the first decade of the new millennium, while in 2012 its average annual price reached $7962/tonne, according to the World Bank.

The primary copper belt in the country runs from north to south alongside the coastal front of the Andes Mountains. Though current production is concentrated in southern and central mines, heavy investment into northern regions, in particular Cajamarca, could see more production shifted north in the coming years.

Antamina, Southern Peru Copper and Cerro Verde continued to lead copper production in the first eight months of 2013, producing 73.79% of the national total. During this time production increased 5.99% on the same period in 2012.

Geological Diversity

The Andes are home to the majority of the country’s diverse mineral wealth. Peru is among the top-10 global producers of a number of metals, including gold, copper, silver, zinc and lead, while it has the third-largest reserves of gold, copper, silver and zinc in the world, according to figures from the US Geological Survey. Though investment is currently focused on the high-priced copper and gold, Peru’s diversity of minerals will benefit the long-term stability of the sector (see analysis).

Value Appreciation

While Peru possesses a massive quantity and diversity of mineral resources, it has yet to create significant added value for its resources, instead exchanging its wealth in ores for foreign currency on the international market. Currently the only value-added industry comes in the form of a few refineries and a small artisan community.

In September 2012, Jorge Merino, the energy and mines minister, met with his Chilean counterpart – Peru and Chile together account for roughly 40% of the world’s copper production – to discuss how to boost value-added mining exports. The MINEM is considering using the Chilean example of mining clusters, which are essentially private-sector-led industrial centres. Nine firms, including major international companies such as Xstrata and Anglo American, have taken it upon themselves to promote the development of a support industry in heavily mined northern Chile involving downstream activities and services to the sector such as equipment suppliers and mechanics, among others.

Such an industrial centre has also been called for in Peru in order to fully capitalise on the resource wealth. Some see Peru’s current lack of downstream development as a warning sign that eventually the country could succumb to the infamous natural resource curse. Thus far economic growth in Peru most certainly cannot be described as sluggish, as it is at times in countries afflicted by “the curse”. However, incorporating and developing new industries linked to the mining sector could be a key factor in sustaining economic development as Peru attempts to shift from an efficiency-driven to a knowledge-driven economy.

Tax Regime

One of the first moves President Humala made after his inauguration was to fulfil a major campaign promise by restructuring taxes and royalties paid by the mining sector to support programmes aimed at tackling poverty and social inequality. The administration involved the private sector in negotiations before passing Law 29788, resulting in a scheme that, at least on current prices, should add an additional $1bn annually to the government’s coffers.

The law changed how often royalties are determined, shifting from once a month to each quarter. A sliding scale is used to determine rates, which vary from 1-12%, with increases coming at each 5% increment in a company’s operating margin, up to a maximum of 80%.

The previous scheme was based on private sector firms paying 1-3% of all sales; however, under the current tax regime companies are required to pay taxes based on profits. While this will benefit the government in the short term, any major collapse of global commodity prices could dent government finances. Meanwhile, companies like Xstrata and BHP Billiton, which boasted tax stability agreements prior to the implementation of the new regime, are required to also pay a special contribution tax based on operating profits.

Illegal Mining

Illegal mining activities have become a growing problem in Peru. Apart from failing to pay taxes and royalties, as well as to obtain licences and concessions, such operations are harmful environmentally and to local communities. “Illegal mining represents another serious problem to the sector, especially in provinces like Madre de Dios where deforestation and misuse of mercury has caused considerable environmental damage and harm to workers,” Roberto Huby, general manager of Glencore Peru, told OBG. MINAM has estimated that illegal mining activities had already destroyed 18,000 ha of rainforest by May 2012.

Illegal mining operations have grown in size and sophistication over the years. The informal mining industry was worth some $1.8bn in 2012, according to Macroconsult. Merino estimated that there are now more than 100,000 people directly involved in illegal mining operations, and a further 400,000 indirectly connected. Rising commodity prices have served to exacerbate the problem as the industry has grown an estimated five-fold over the past six years.

A large portion of illegal mining takes places in jungle regions such as Madre de Dios, which is located in the south-eastern corner of the country, where rainforest degradation and mercury pollution have harmed local ecosystems. Meanwhile, the high prices of gold and other precious minerals have attracted criminal elements, which have in turn caused increased instances of violence and crime in areas where there is at present a high concentration of illegal mining activities.

Richard W Graeme, general manager of Lumina Copper, pointed out another detriment of illegal mining operations in the country. “People mistakenly associate informal mining with the formal sector. For instance, they do not differentiate between informal miners in Madre de Dios who throw mercury into the river and the environmentally sustainable and modern installations of Cerro Verde,” he told OBG.

While in the past, numerous strategies have been implemented to stem the tide of increasing numbers of illegal miners, including the use of the military and police forces, the current strategy is modelled on a softer approach in the form of a two-year, six-part programme to prevent illegal operations by formalising them where and if possible. The MINEM told OBG that throughout 2012 over 70,000 miners had taken the first step towards formalisation – essentially just a declaration of intent. Steps two through six involve miners signing contracts with concession- and land-holders before submitting an EIA and gaining artisanal certification for their company and operation. Though initial signs are promising, it is too early to forecast how many illegal and informal miners will complete the process.

Some in the industry said it is unlikely MINEM will be able to formalise even a majority of illegal mines and a sterner tactic will be required if the government is to eliminate illegal operations. In late August 2013 the government announced its decision to extend the deadline to formalise to 2016. According to local media, the move has drawn criticism from civil society, the formal mining sector and foreign investors alike. Formal miners currently operate at a competitive disadvantage due to their compliance with licensing, tax and environmental regulations, so the two-year extension is viewed as a move that could further weaken their position.

Environmental Responsibility

An increasing orientation towards environmental responsibility has created a culture of environmental sustainability across the global mining community. In Peru, the sector, which is now primarily populated by modern firms operating under strict environmental guidelines, is still recovering from times when an environmental clean-up was seen as an unnecessary expense. Although the public image is hampered by the actions of illegal mining operations, a strong, internationally funded anti-mining lobby keeps the industry on its toes.

The questionable reputation of the industry’s previous environmental practices, which have now mostly been modernised, has prompted the government to take action in an effort to improve oversight of the sector and how local populations view mining activities. The most significant change is the transference of the responsibility to approve EIAs from MINEM to MINAM. The move should detach the government from criticism regarding what some segments of the population view as the biased approval of EIAs under MINEM. While MINEM had the technical expertise to carry out the EIAs, its role in regulating and promoting investment in the sector was seen as a conflict of interest.

Social Conflict

With the administrative agenda focused keenly on social inclusion, activities in the mining sector have been put under a particularly powerful microscope. More recent government administrations are likely paying the price for the inability, or in some cases the inaction, of previous governments in addressing the needs and demands of rural communities. As a result, mining projects have, in certain contexts, become symbols of both wealth and inequality, sparking social disputes across the country.

“Social conflicts around mining and energy projects are basically driven by the fact that the coast is developing but the highlands and jungle region are not, and they have been for so long without the presence of the state that they claim the benefits of these projects immediately and dramatically,” Ricardo Trovarelli, the president of Consorcio Minero (CORMIN), told OBG.


The largest such ongoing conflict is centred on the $4.8bn Minas Conga project, which is owned by Minera Yanacocha, a joint venture between the US’s Newmont and Peru’s Buenaventura. Following the approval of a viability and environmental impact study by the government, local protests over the depletion of water supplies – which according to the aforementioned studies would have been purified and replaced several times over – resulted in the government repealing its approval. The case highlights some of the common characteristics of social conflict, including a lack of communication and a divide at the level of local and national government. Some within the private sector fault the national government for a lack of leadership by bending to the will of unsubstantiated criticism and misinformation coming from the provinces.

To better gauge community sentiment following the project’s postponement, Newmont and Yanacocha commissioned a study entitled “Listening to the Voices of Cajamarca”, which was carried out by the University of Queensland’s Centre for Social Responsibility in Mining. One of the influencing factors in the conflict identified by the study was the coverage area of community engagement. Yanacocha successfully engaged communities surrounding the mine’s areas of direct influence, yet failed to engage the urban centre of Cajamarca, which has been the epicentre of protests. This underscores a developing theme of nearby communities becoming more actively involved in protesting projects, even when they are not directly – or in some cases even indirectly – affected by the activity.

Mixed Messages

Disjointed politics have also supported many dissenters’ criticisms. President Humala’s assertion of “water before gold” during his election campaign seemed to indicate his position on the matter, yet many of his policies towards the sector once in office have been criticised by some of his supporters as pro-mining. Meanwhile, at a ministerial level there were also mixed messages surrounding the Minas Conga project in 2011, as MINAM stated the EIA needed to be reviewed and improved, while MINEM stood by its original decision. There is also opposition to the project at the local level, with the regional president of Cajamarca openly stating there will be no end to social unrest until the Minas Conga project is scrapped.

The need for a clear voice coming from the central government and a lack of communication between Yanacocha and Cajamarca have added to volatilities as road blocks, protests and increased police presence are seen in Cajamarca. The study, which involved more than 60 interviews with local residents of Cajamarca, lays out the city’s views with respect to Yanacocha: it suffers from “an inability to listen to the community”, its presence contributes to social inequality, and it lacks the ability to clearly present its social agenda.

State Responsibility

A common private sector demand is to see more government involvement in providing stronger economic and social development in rural areas, as the private sector is bearing the brunt of the responsibility for social development. According to Graeme, “Mining companies cannot assume the responsibilities of the government because they leave once their project ends, whereas the government needs to enforce sustainable plans to ensure the continued improvement of communities.” Though 50% of corporate tax from the sector is directly distributed to local and regional governments, many cite an inability of local governance to responsibly manage these sums. In 2011 about half of all available funds from natural resource taxes ($3.5bn) collected over the past decade was lying dormant in provincial bank accounts, according to a Reuters analysis of MINEM data.

While Minas Conga is the largest project afflicted by social conflict, it is certainly not alone. Barrick Gold’s Pierina mine was shut down briefly in September 2012 following clashes between protestors and police which left one dead. Earlier, in May 2012, Xstrata’s Antapaccay project in Espinar also resulted in protests leading to a fatality and a state of emergency. Figures vary slightly as to how many active social conflicts there are, with most estimates in the range of 150-200. Such unrest represents the biggest challenge to both the sector and the current administration.

Legal Reform

One measure to help reduce the potential for social conflict is due to be implemented in 2013. In August 2011 Congress approved Law 29785, known as the Law of Prior Consent (LPC), new legislation that requires government consultation of native and indigenous communities prior to the approval of any mining or energy project in their community. When implemented, the LPC should bring Peru up to global standards by complying with International Labour Convention 169. Yet uncertainty surrounding implementing measures has been a concern in the past 18 months for both the private sector and local communities. However, with the Ministry of Culture working on the law’s imminent implementation, questions surrounding the LPC will be cleared up soon enough.

With around 100 different languages and numerous ethnic groups, the first step in applying the LPC is identifying the many “unique” cultures in Peru. Thus far the ministry has identified 52 indigenous cultures, 48 of which are located in the Amazonian jungle, while four are found in the Andes, such as the Quechua and Aymara. Numerous characteristics are used to determine which communities will fall under the protection of the LPC, but the primary factors are the existence of a live, active language and the usage of ancestral land. Religion is considered, but the widespread penetration of Christianity makes it less of a factor. “The spread of Christianity and colonial rule, as well as the eventual natural mixing of communities in the Andes and along the coast have reduced the number of isolated, indigenous tribes over the past couple of centuries and for this reason we have found most indigenous tribes in the Amazon where culturally and ethnically the population remains quite diverse,” Iván Lanegra Quispe, former vice-minister for intercultural affairs, told OBG.

Once identified, the consultation process differs slightly for mining and energy projects. In the mining sector individual mining companies may reserve lots for exploration. However, before exploration may begin the consultation process must be completed. For hydrocarbons projects the state is responsible for consulting before any potential concession is auctioned.

Other Challenges

Another increasingly important obstacle to the overall development of the sector stems from a severe shortage of qualified engineers, geologists and other related specialist personnel. Aside from a significant loss of workers via a brain drain to higher-paying countries, particularly Chile and Australia, a large number of employees nearing retirement could also exacerbate the problem.

“I think the retirement of senior engineers is not the main reason for the lack of quality engineers. What is also mentioned is that the demand from all the mining companies based in the country exceeds the number of graduates. As such, companies should worry about creating a satisfying work environment and excellent working conditions to retain talent,” Leandro García Raggio, controller-general of Minas Buenaventura, told OBG. Indeed, overall growth in employment in the sector has failed to match rising investment and broader sector growth. While Peru has a plethora of university and training institutions geared to mining professions, the lack of graduates poses another obstacle.

On another note, according to Glencore’s Huby, a lack of infrastructure is one of the main issues affecting the sector, especially with regards to roads, railways and ports. Even though there have been individual companies and associations of miners willing to invest in building the necessary infrastructure, there is at times a lack of central government support to expedite these processes due to social pressures and/or bureaucracy. Meanwhile, local and regional governments, the primary beneficiaries of the new tax scheme, lack the organisational and bureaucratic capacity to effectively work together to fund such expenditures.

One solution being increasingly called upon is the further usage of public-private partnerships (PPP) to develop infrastructure. With the government often unable to keep up with the growing demand for infrastructure, and the private sector unwilling to carry the burden alone, PPPs are being increasingly used to spur infrastructure development. In addition, Law 29230 promotes investment in infrastructure by allowing private companies to sign agreements with local governments so those companies can finance and execute prioritised public investment projects in infrastructure, as well as get a discount on their income tax equivalent to 50% of the amount invested in such projects.


The success of the mining sector over the past decade has resulted in a significant investment portfolio. Even with falling global mineral prices expected over the next 10 years, export revenues from mining activity will at the very least remain stable, if not increase, due to the massive spate of projects set to come on-line in that timeframe. In the longer term, the hefty provision of funds in exploration activities should sustain future investments in the sector.

Notwithstanding, numerous obstacles remain. A lack of infrastructure development in areas of mining activity often results in companies bearing a responsibility for the development of transportation and even social infrastructure in nearby communities. Meanwhile, social unrest around the country will continue to impede investment into future mining operations. Finally, a lack of downstream manufacturing means the country often misses out on significant added value.

On a broader note, commercialising mineral wealth will continue to play a key role in wider economic development in the long term, despite the approaching end of the commodities super-cycle. Moreover, Peru’s mineral diversity and projected production increases should help protect the country from the impact of falling commodity prices – even for copper and gold projects.