The country is the largest gold producer in Latin America and not only faces challenges such as the closure of large deposits and the lack of new projects, but also the paperwork and threats of illegal mining. Timing is valuable, taking into account that the metal has been registering rising prices.
Mining stood out for the economic activity of Peru in 2023. With a contribution of 14% of the GDP and representing 60%, mining had a growth of 11.4% explained by a greater volume in copper shipments and prices favorable international
“If it had not been for their contribution, the fall [of the economy] would be much greater than 0.55%,” said the Minister of Energy and Mines, Rómulo Mucho, in an interview with Diario El Peruano .
Although copper is the star metal of Peruvian exports - Peru is the second largest producer in the world, after Chile - gold, a safe haven asset par excellence, is experiencing a great moment and represents a good opportunity for Peruvian mining to intensify efforts in the promote new projects and increase the production of the gold metal.
Only this Thursday the price of gold reached a new record, above US$ 2,164, thus adding five maximums in three days. Last Tuesday, the metal touched US$ 2,141.79 and surpassed the previous record, in force since December.
Precisely, during the last few days, news about Peruvian mining has been the order of the day, after a delegation, led by the head of the Ministry of Energy Mines (Minem), attended the largest mining fair in the country. world, PDAC ( Prospectors & Developers Association of Canada ), held in Toronto with the attendance of 25,000 delegates from 130 countries.
At the event, Minister Mucho highlighted the current situation of the project portfolio under his management, which has practically remained unchanged since 2020, marked by the COVID-19 pandemic. “If the planned projects are reactivated, at least I can say that mining would contribute about two points to the GDP this year,” he said.
“Growth at the production level has been positive in the last three years, even exceeding pre-pandemic levels, which has indeed been fundamental for the country. However, it is important to project ourselves into the future and commit to the development of new projects,” said Jaime Polar Paredes, general manager of Summa Gold Corporation, a company that operates the El Toro mine, in Huamachuco, La Libertad, and that between 2027 and 2029 plans to launch a new operation in southern Peru.
Between 2024 and 2025, the Ministry of Energy and Mines seeks to accelerate the progress of these projects, trusting in the increase in investor confidence and inter-ministerial collaboration with the Ministry of the Environment, the Ministry of Culture and the Ministry of Agrarian Development and Irrigation.
Already during the first quarter of this year, mining investments close to US$ 3 billion have been approved.
The ambitious objective, according to the minister, is to exceed this figure, aiming towards US$ 5,000 million or, preferably, recover the level registered in 2022, which reached US$ 5,400 million.
At the copper level, the environmental approval of the Antamina Replenishment project contemplates investments for approximately US$ 2,000 million that will be carried out gradually towards 2028. While in gold projects, there is the construction of San Gabriel (US$ 470 million) and Expansion Santa María (US$121 million).
“These are quite positive opportunities, but even so, we must keep in mind that the development of these projects has been long. The task of expediting permits and also providing security for ongoing projects is pending,” says Polar Paredes. "Today, groups dedicated to illegal mining constitute a latent threat to the sector and we must take immediate action against it."
OUTLOOK FOR GOLD IN 2024
Peru occupies first place in gold reserves in Latin America, and is fifth worldwide. Their gold production during 2023 was close to 100 million fine grams of gold, however, 20 years ago it was double that (more than 200 million fine grams), and 10 years ago they produced 50% more than now (close to 150 million fine grams), says the general manager of Summa Gold.
“Evidently, there has been a significant drop in production, which responds to the lack of new large-scale projects since large fields such as Yanacocha, Lagunas Norte and Pierina have continued their natural production process and are today in the closure stage” explains Polar. “We must also consider permitting, since processing a mining exploration permit can take between five and 15 years. "We need to promote exploration and strengthen competitiveness so that Peru maintains a leading position in global gold production."
In that sense, formal production has grown 2.6% between 2022 and 2023. This 2024, as long as the insecurity generated by illegal miners is not addressed, the outlook is uncertain, said Polar Paredes. This is because in La Libertad, the leading region in gold production, mining companies have been continuously suffering attacks and threats. Given this, the Government decreed a state of emergency in the province of Pataz, as the illegal mafias have moved to other territories such as Otuzco, Huamachuco and Santiago de Chuco, where police presence is also needed.
“At the investment level, the portfolio of mining projects is robust and we need to generate a climate of security and trust for the development of future projects such as Conga in Cajamarca and Ollachea in Puno, which are still in the pre-feasibility stage,” said Polar. Walls. “The Minister of Energy and Mines, Rómulo Mucho, has been optimistic about this and we hope that he will achieve positive results.”
The Summa Gold executive agrees with the minister regarding the need to promote mining exploration, addressing the existing bureaucracy around environmental permits and authorizations, with the support of the institutions involved in the analysis. In addition, they are still waiting for the Digital Single Window to be consolidated for the mining sector, which would allow review periods to be reduced.
On the other hand, according to Polar Paredes, at a regional level, gold would maintain a high price in the international market and as a refuge asset against global economic phenomena. In addition, this year the elections will be held in the United States, which also has a certain impact on the economy.
“This is, without a doubt, a scenario that Peru has to capitalize on. It is estimated that the value of an ounce will remain around US$ 2,000 this year,” concluded Polar Paredes.
