Peru Mining Report Q1 2012
Business Monitor International, January 2012, Pages: 65
We forecast Peru's mining sector to grow by 13.6% in 2012, reaching US$20.6bn, as investment continues to flow into the country. While Peru's mineral production has declined steadily over the last few years, we believe the long-term prospects for the mining industry remain favourable. With numerous medium-sized to large copper mines scheduled to come online in 2012, we expect output to rise. We forecast the strongest growth in copper and gold production, as those metals have attracted the largest interest from investors. Our production forecasts for zinc, tin and silver are more modest, in line with expectations that companies will continue to see falling ore grades and fewer new projects in these metals are planned at present.
While we expect Peru's business environment to remain favorable for mining companies, several recent developments could affect the sector. We highlight the recently revamped mining tax as a positive sign for investors, as it was done in such a way as to include mining sector interests and maintain the sector's regional competitiveness. President Ollanta Humala successfully negotiated higher taxes on company operating profits, determined using a sliding scale based on current market prices. Recent protests against one of the country's largest mining investment projects have also tested the administrations mettle. Having reshuffled his cabinet, we expect Humala to take a harder line stance towards mine protesters, protecting mining sector interests. The government has pledged its intention to continue attracting mining investment while increasing social spending on healthcare, education and infrastructure. That said, strikes, protests and environmental opposition will remain a key theme for Peru's mining sector in 2012.
Peru's mining sector has been amenable to foreign investment since the 1990s as successive governments have taken a pro-business stance. Despite fears that recently elected President Humala would shift policy far to the left, we were correct in our view that he would moderate his stance once in office. The majority of mining companies operating in Peru are foreign-owned, and we see no indication that the government is seeking to alter this trend through regulatory or legislative means. Companies will, however, have to deal with the impact of the new tax structure which ranges from 8-12% of operating profits, although many large-scale ongoing operations remain unaffected by the royalty due to previous contracts with the government.
Peru's mining industry is dominated by foreign-owned companies, with private domestic entities owning most of the small and medium-sized mining operations. Mined zinc, copper and tin production is highly consolidated, while silver and gold output are more fragmented. We expect primary copper miners as well as diversified mining companies will continue to invest and acquire projects in Peru, as fundamental demand for the country's minerals remains strong.
Business Monitor International's Peru Mining Report provides industry professionals and strategists, corporate analysts, mining associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Peru's mining industry.
Executive Summary
SWOT Analysis
Peru Political SWOT
Peru Economic SWOT
Peru Business Environment SWOT
Global Mining Outlook
Table: Recent Tax Increases
Table: Largest Coal Projects
Table: Frontier Mining Projects
Industry Trends And Developments
Planned Mining Projects
Main Global Mining Sector Strikes In 2011
Mining Business Environment
Table: Americas Mining Business Environment Ratings
Political Outlook
Domestic Politics
Long-Term Political Outlook
Industry Forecast
Tin
Table: Peru’s Tin Production, 2008-2015
Zinc
Key Expansion Plans
Table: Peru's Zinc Production, 2008-2015
Silver
Table: Peru's Silver Production, 2008-2015
Copper
Selected Planned New Projects
Table: Peru's Copper Output, 2008-2015
Regulatory Development
Competitive Landscape
Table: Operating Statistics - Selected Mining Companies, 2010 (Us$Mn)
Company Profiles
Minsur SA
Table: Minsur's Key Company Data, Fiscal Years Ended December 2006-2010 (US$mn)
Grupo México
Table: Grupo México's Key Company Data (consolidated group), Fiscal Years Ending December 2006-2010 (US$mn)
Xstrata
Commodity Strategy – Metals Update
Peru Mining Report Q1 2
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Copper
Aluminium
Lead
Nickel
Tin
Zinc
Global Assumptions
Table: Global Assumptions, 2009-2015
Table: Global And Regional Real GDP Growth, 2010-2013 (% y-o-y)
Table: Selected Developed Market Exchange Rates, 2010-2013 (average)
Table: Selected Emerging Market Exchange Rates, 2010-2013 (average)
Developed States
Table: Developed States Real GDP Growth Forecasts, 2010-2013 (% y-o-y)
Table: Emerging Markets Real GDP Growth Forecasts, 2010-2013 (% y-o-y)
Consensus
Table: Real GDP Growth Consensus Forecasts, 2011-2012 (%chg y-o-y)
Business Environment Ratings Methodology
Table: Mining Business Environment Indicators
Table: Weighting Of Components
- Minsur SA
- Grupo México
- Xstrata
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