Mining in Peru: Industry's Development
7 Jan 2021
Join us as we tour Peru, charting the history of mining in the region from Pre-Inca civilizations through to present day projects.
Mining has been developed in Peru since ancient times. Gold and silver pieces found used by authorities of different preInca cultures evidence this early mining development. The Chavín (900 B.C.), Vicus (900 B.C. - 300 A.D.), Paracas (700 - 500 B.C.), Nasca (100 A.D.), Mochica (80 A.D.) and more recently Tiahuanaco, and Wari cultures knew about metal mining and developed metallurgy. Inca mining was limited to gold, silver and copper. The first two were used to decorate temples and houses and to make personal objects. On the other hand, copper was used for tools, utensils and weapons, among others (1).
More recently, the last 30 years, after the establishment of a new economic regime in the 90s have represented a great impulse to the private investment in exploration and exploitation in the mining industry, as well as to the remarkable increase of the territories under concession.
In terms of production stages, three key moments in Peruvian mining can be identified in the last three decades.
1) Peru became the leading gold producer in Latin America and the fourth largest in the world due to the production of Yanacocha (Figure 1), the biggest gold mine in South America, since the mid-1990s.
2) The incorporation into large-scale mining production of the Ancash region with the entry of production from the Antamina deposit (Figure 2). This area became one of the largest copper and zinc concentrate production centers in Peru, making Antamina one of the ten largest copper mines in the world in terms of production volume. The Antamina Mine in Ancash is operated by Peruvian company Antamina, a joint venture owned by BHP Billiton, Glencore, Teck and Mitsubishi.
3) A new production jump between 2013-2016 was made as a result of the entry into production of several mining projects, mainly copper. Among those projects are the Las Bambas copper project in Apurímac, owned by Minerals and Metals Group, also the Pampa del Pongo iron project in Arequipa, owned by Jinzhao Mining Peru S.A. (2).
Since the 90s Peru has been the second largest producer of copper in Latin America, with 2.40 Mt in 2019. Its production in comparison to the first producer (Chile) and the global extraction of copper has been changing in recent years. In the early years of the twenty-first century, Peru was ranked fifth in the world, and reached the second place in 2016, surpassing countries like China, United States and Australia. In addition, the leap in copper production is also explained by low production costs: Peru is listed as the country with the lowest average cost of production worldwide. In terms of the importance of copper investment in the national economy, it reached a maximum participation of 12.7% of gross national investment and 15.5% of gross fixed private investment in 2013 (2).
Peru also shares the 7th place with Ghana in gold production with 130 t reported in 2019. Peru has as well the second place in silver production in the world after Mexico, however it has the largest silver reserves in the world, with 120,000 t. Peru's silver reserves represent 21.4% of the world's reserves of this precious metal, Ancash and Junin have 52% of the total silver reserves. Moreover, Peru is the second largest producer of zinc, with a volume of 1.40 Mt per year (3).
According to the Peruvian Ministry of Energy and Mines, Jaime Gálvez, the schedule for 2021 consists of 64 projects with an investment amount of US$498.6 million. These projects are located in 16 regions with Arequipa experiencing the largest investment. Julio Velarde, president of the Banco Central de Reserva del Perú (BCRP), said that they expect mining investment to grow by 29% next year (4). Additionally, seven mining projects will begin construction in 2021, which will demand a total investment of US$ 3,577 million, according to the Ministry of Energy and Mines (5).
Gálvez emphasized that the most important project in the country will be Yanacocha Sulfuros, in Cajamarca, for US$ 2,100 million, which will allow the increase of the national gold production. Other projects as the Corani project, located in Puno, the San Gabriel gold project, in Moquegua, and the Expansion of Shouxin, located in Ica will start the next year. Other important projects to be carried out are the new Pampacancha pit (Cusco), Optimización Inmaculada (Ayacucho) and Chalcobamba Phase I (Apurimac) (5).