Peru – The emergence of a global giant?
Nowadays, Peru is one of the most well-known countries in the mining industry. It is among the top ten richest mineral countries in the world. With its vast reserves of ore, it is the leading producer of silver, the second-biggest miner of copper, and the seventh rank among gold-producing countries, and an important contributor of zinc to the world.
Its primary export is copper, which is porphyritic, having texture in igneous rock containing one different size of the crystal. In 2019, Peru turned out 2.46 million tonnes from its, mainly, large open-pit mines. Gold deposits, on the other hand, are orogenic – found in the folds of its earth-crust and upper mantle which have been pushed upwards by natural factors into mountain formations. Peru’s silver is mostly a by-product of copper and gold.
This richness has attracted many of the foremost international mining companies who operate in Peru in spite of the difficulties thrown up by the country’s political climate. Smaller mining enterprises are also coming to Peru nowadays.
Transition – enabled by better regulations, to newer technologies, and tax climate
From manual panning by locals who panned for gold in the accumulation of deposits formed by gravity separation during the sedimentary process (which was slow, pain-staking, inefficient and generally unprofitable) to conventional surface mining techniques like hard rock mining and by-product metal recovery (for the extraction of both gold and silver) to the adoption of mass mining methods, such as block caving for underground mining (which explores and recovers metal ores in previously inaccessible sites inexpensively), and remote access mining – the character of mining has changed drastically in Peru.
Earlier, small-scale miners would use mercury in gold prospecting because the formation of a mercury-gold amalgam helped aggregate minute gold particles which could later be separated to arrive at the gold of high purity. But this increased productivity damaged the environment, especially aquatic life.
Now tough environmental regulations have been imposed by the Peruvian Ministry of Energy and Mines. Environmental laws have been tightened. Public-Private Partnerships have been put in place, and highly mechanized processes using the latest machines have been encouraged.
Moreover, the government has made the tax system more favorable to mining industries and foreign investments are being encouraged in the sector. These actions, combined, have brought about a great age of mining in this ore-rich country.
A boom in Copper Mining
The standout growth has been seen in the copper mining industry in Peru. In 2018, Peru produced million metric tons of copper, nearly doubling its exports in less than ten years and making the country the second-largest copper mining nation after Chile.
The four major copper mines across the country are – the 5th biggest worldwide and the largest in Peru, the Cerro Verde copper mine, located southwest of Arequipa, the world’s 6th largest copper mine, Antamina, which also produces silver and zinc, the world’s 8th-ranked mine, Las Bambas, which is the third-largest in Peru, and the world’s 18th-largest copper-producing mine, Toquepala.
A profusion of big and small players in the mining map of Peru
The dominant forces in mining in Peru are the key international companies who work on the abundant untapped reserves of gold, silver, copper, and zinc in this country, as well as its minerals. Most of the world’s major mining companies, like Xstrata, Newmont, Glencore, Gold Fields, Freeport-McMoRan, Rio Tinto, Anglo American, and Barrick have operations in the country.
The world’s fourth-largest gold mine, Yanacocha, in the northern highlands, is a joint venture between Newmont Goldcorp, Buenaventura, and the International Finance Corporation. Buenaventura also maintains two other gold operations (Orcopampa and Tambomayo), one silver mine (Uchucchacua), and one copper mine (Marcapunta) and Buenaventura tops the list in terms of contributions to Peru’s annual gold and silver production, generating 590,100 oz. of gold and 24.7 million oz. of silver in 2018.
The other major players in gold mining include Barrick (who operate the Lagunas Norte and the Pierina mines), Minera Ponderosa, Tahoe Resources (now owned by Pan American Silver), Aurifera Retamas, Consorcio Minero Horizonte, Hochschild Mining, and Gold Fields. Most of them are exploring new technologies that would extend the life spans of their mines, and are also using remotely controlled machines to optimize output.
There are opportunities for mining juniors too. Once they have been able to overcome the slow and arduous process of obtaining mining permits and leapfrogged over the governmental red tape that created bottlenecks, they are making rapid strides in business operations. All of the smaller companies have upgraded their capabilities for both base and precious mineral exploration.
Companies like PPX Mining completed pre-feasibility studies for the Igor Gold-Silver Project located in northern Peru along the spine of the Andes Mountains and procured construction permits. Rio Silver maintains a gold-silver project in the Department of Ayacucho to the south-east of the capital, Lima. At Ninobanba, AngloGold and Newmont performed historical drilling and surface exploration before 2010 and discovered high-sulfidation gold and silver mineralization – confirmed by Rio Silver in 2012. They are banking on the improved exploration climate of Peru and the rising commodity prices and are hoping to win support for an exploratory drilling program.
A very hopeful future
Economic the mineral potential is important to an exploration project, but the political and social climate of the host region is just as important. Without a social license and a predictable permitting process, it is not possible to start operations. This has been understood by the stakeholders in Peru and the country’s mining economy looks poised for an unprecedented era of growth were big and small players can work in an environment that is conducive to productivity.