LIMA – Peru's government expects mining companies to invest only slightly more this year than last year as protests from local communities force many firms to put planned spending projects on the back burner. But it also sees the pace of growth in mining investments recovering strongly in 2013, as authorities resolve community opposition to various projects.
Peru is the world's second-biggest copper and silver producer, and a major producer of gold, lead, zinc and other minerals.
Its government, in a report seen by Dow Jones Newswires, forecasts investment by mining firms will grow by 7% this year, to $7.7 billion, a sharp slowing in pace from last year, when spending by mining companies rose 77%, to $7.2 billion.
Peru's economy relies on growth in the mining sector, which accounts for 60% of exports and 30% of government tax revenue.
Mineral production in Peru has declined over the past several years, as many mines have begun to age, causing ore grades--the amount of metal found in bedrocks--to naturally decline.
In 2011, Peru's copper production declined almost 1%, to 1.24 million tons, while gold output was also down slightly, to 164,013 kilograms, according to the Mines and Energy Ministry.
Silver production fell 6.2% last year, to 3.41 million kilograms, while zinc output was down 14.6%, to 1.26 million tons.
Industry officials say community opposition and lengthy permit requirements have also contributed to the lower output by delaying the startup of new projects.
This opposition to mining has largely focused on environmental concerns, particularly the use of water in Peru's arid coastal and mountain regions.
Community protests have delayed projects owned by Newmont Mining Corp. (NEM), Southern Copper Corp. (SCCO) and Anglo American PLC (AAUKY, AAL.LN).
Government and industry officials hope to resolve the disputes quickly, which will allow companies to restart work on projects and reverse the decline in output, particularly for copper.
About 70% of the investments planned by mining companies are aimed at copper projects.
If the conflicts are resolved, the expected sluggish growth in spending by mining companies could be followed by about a 36% jump in spending in 2013, with investments estimated at around $10.5 billion.
Of 2012's spending, $2.7 billion is expected to go toward expansion projects, the report said.
The biggest expansion projects are being advanced by Sociedad Minera Cerro Verde SAA (CVERDEC1.VL), Compania Minera Antamina SA and Southern Copper.
Companies will spend another $3.1 billion this year on projects that have already passed environmental tests that often force projects to be delayed.
The remaining $1.9 billion in investments this year will come from projects still at the exploration stage, according to the government.
In 2014, investments are seen at $12.6 billion, and in 2015, mining companies are expected to invest $11.3 billion.
foxbusiness.com
Peru is the world's second-biggest copper and silver producer, and a major producer of gold, lead, zinc and other minerals.
Its government, in a report seen by Dow Jones Newswires, forecasts investment by mining firms will grow by 7% this year, to $7.7 billion, a sharp slowing in pace from last year, when spending by mining companies rose 77%, to $7.2 billion.
Peru's economy relies on growth in the mining sector, which accounts for 60% of exports and 30% of government tax revenue.
Mineral production in Peru has declined over the past several years, as many mines have begun to age, causing ore grades--the amount of metal found in bedrocks--to naturally decline.
In 2011, Peru's copper production declined almost 1%, to 1.24 million tons, while gold output was also down slightly, to 164,013 kilograms, according to the Mines and Energy Ministry.
Silver production fell 6.2% last year, to 3.41 million kilograms, while zinc output was down 14.6%, to 1.26 million tons.
Industry officials say community opposition and lengthy permit requirements have also contributed to the lower output by delaying the startup of new projects.
This opposition to mining has largely focused on environmental concerns, particularly the use of water in Peru's arid coastal and mountain regions.
Community protests have delayed projects owned by Newmont Mining Corp. (NEM), Southern Copper Corp. (SCCO) and Anglo American PLC (AAUKY, AAL.LN).
Government and industry officials hope to resolve the disputes quickly, which will allow companies to restart work on projects and reverse the decline in output, particularly for copper.
About 70% of the investments planned by mining companies are aimed at copper projects.
If the conflicts are resolved, the expected sluggish growth in spending by mining companies could be followed by about a 36% jump in spending in 2013, with investments estimated at around $10.5 billion.
Of 2012's spending, $2.7 billion is expected to go toward expansion projects, the report said.
The biggest expansion projects are being advanced by Sociedad Minera Cerro Verde SAA (CVERDEC1.VL), Compania Minera Antamina SA and Southern Copper.
Companies will spend another $3.1 billion this year on projects that have already passed environmental tests that often force projects to be delayed.
The remaining $1.9 billion in investments this year will come from projects still at the exploration stage, according to the government.
In 2014, investments are seen at $12.6 billion, and in 2015, mining companies are expected to invest $11.3 billion.
foxbusiness.com
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