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Peru continues its mining renaissance

Positive developments in mining are a key feature of the market in Peru with the consecutive appointments of a number of mines ministers since 2016 with the previous deputy energy minister, Ángela Grossheim being the latest to take the role.

On the back of the copper price increase last year, projects that had been stalled for some time will be get the green light. This is likely to spark further investment and ensure the sector continues to flourish in Peru throughout 2018. Investment in mining projects is likely to exceed US$3,900 million dollars, and exploration will reach around US$ 500 million.

Having recently attended the Latin American Mining and Investment conference in Peru, we can personally attest to this – on the back of a general global resurgence in mining, this is no more obvious Latin American territory than Peru, which has a very strong copper base, one of the essential minerals for the new generation of energy and battery applications, as well as being very strong on zinc and other base and precious metals. There are clearly deals going on with former mines being dusted down and a renewed vigour in the industry, led by a new mining minister who is trying to facilitate the permitting business in country on an ongoing basis.

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It is vital that investors do not think too narrowly about potential prospects, so by just going working with the most recognisable brands for example. There has been a significant rise in new entrants as the Peruvian market has turned around. A mixture of investments with this class, as well as the more traditional players, is, therefore, the approach likely to net the most return – while there is an unknown quantity attached with new entrants, this can go either way so is worth taking considered risks.

What is key is to recognize that the level and type of demand coming from macroeconomic forces has shifted considerably in Peru which allows more variety into investment choices and provides an opportunity to being ahead of the wave and benefitting from becoming part of a leading mining jurisdiction. 

 

Charles Bond, partner, Gowling WLG

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