Peru’s metal mining GDP to grow by 14% this year; world fastest to recover

RIO DE JANEIRO, BRAZIL – Peru’s mining industry is on track to be one of the fastest in the world to recover from the coronavirus pandemic, according to its Ministry of Energy and Mines.

Preliminary figures from the World Bank estimate that the Peruvian economy will grow by 7.6% in 2021.

A good chunk of that recovery is fueled by Peru’s mining output: the central Reserve Bank of Peru has projected that its metal mining GDP will grow by 14% this year.

Currently there are 13 mining projects expected over the next four years, with combined investments of US$11.7 billion. Seven of those projects are slated to start construction this year.

As the world’s second-largest producer of copper, Peru’s mining industry is characterized by its open and stable mining regulatory environment, strong fundamentals, and stable macroeconomic indicators – and, of course, bountiful mineral potential.

Copper is obviously the star export but the country is home to significant precious metals and zinc deposits that help support a diversified sector. December output numbers, according to the Ministry of Energy and Mines (MINEM), show a month-over-month increase in copper output of 7.6%, a 13.3% increase in zinc, 4.0% in gold, 7.9 % in silver, 3% in lead, 17.5% in tin and 0.5% in molybdenum.

While the country is facing political uncertainty with upcoming general elections, the current interim government is committed to stimulating investment in the country’s mining industry with measures such as streamlining the consultation period prior to granting mining licenses and simplifying exploration procedures that will extend the life of mines.

“Our priority continues to foster a sustainable and profitable mining sector in our country that benefits investors but also all our citizens,” Jaime Gálvez, Peru’s Minister of Energy and Mines said recently.

The government also took action to help combat illegal mining in the country by launching a program known as Operation Mercury. In less than three years, deforestation due to illegal gold extraction has decreased by 78% in the region of Madre de Dios and 90% in La Pampa, the most critical mining area in the country, according to the government.

All of this is good news for the sector as a whole, but specifically the plethora of foreign juniors who are advancing projects in the country.

Canadian exploration firm Aftermath Silver Ltd (CVE:AAG) (OTCQB:AAGFF) recently inked a definitive acquisition agreement with major SSR Mining Inc to buy the Berenguela silver-copper project in Puno, a silver-copper epithermal polymetallic carbonate-replacement deposit with a historic JORC resource that contains 98 million ounces of silver and 624 million pounds of copper in the measured and indicated category.

Another company is Vancouver-based Aurania Resources Ltd (CVE:ARU) (OTCMKTS:AUIAF), which entered the country through its flagship Lost Cities-Cutucu project in Ecuador after sensing that the highly prospective mineral trend overlapped into northern Peru. In February, the company was granted six mineral concessions of around 384,000 hectares covering potential extensions of the sedimentary-hosted copper-silver identified over the border.

Also exploring for gold is New Oroperu Resources Inc (CVE:ORO) (OTCMKTS:NOPUF) (FRA:OE6), the owner of the Tres Cruces gold project in Peru, which lies on a famous gold producing belt and spans four concessions over 3,000 hectares. The project was a grass-roots discovery made by New Oroperu in 1995 and optioned in 1999 to Battle Mountain Gold. Tres Cruces lies 10 kilometres south of Barrick Gold’s Lagunas Norte mine, which generated over 10 million ounces during its mine life.

Outside of precious metals, Tinka Resources Ltd (CVE:TK) (OTCPK:TKRFF) is advancing its wholly-owned Ayawilca zinc project, one of the largest undeveloped prospects of the metal in the world. The asset spans 170 square kilometres in the richly mineralized silver-lead-zinc belt of Central Peru. Earlier this year, the company reported one of the best grade intersections to date from its 7,000-metre drill program on the property ahead of an updated preliminary economic assessment (PEA), earmarked for the middle of this year.

Just this week, Vancouver-based Hannan Metals Limited (CVE:HAN) (OTCPINK:HANNF) revealed the first high-grade copper-silver outcrop discoveries from the Tabalosos project held within the San Martin JOGMEC joint venture sediment-hosted copper-silver project. Hannan holds 1,864 square kilometres (186,400 hectares) of granted mineral concessions and applications in Peru making it a top ten in-country explorer by area.

Mining is going to be a key factor in Peru’s economic recovery. The industry currently comprises around 10% of its GDP and the potential for growth is huge, given that only 1.3% of its territory is currently undergoing mining activity.

The country’s vibrant junior exploration companies are helping to stimulate Peru’s economy following the global economic shutdown. Will the country serve as a model for global post-pandemic recovery? Time will certainly tell, but the world is watching.