According to the state-owned Proinversión, which signed the contract with Buenaventura, investment in the project could reach US$2.773 billion over 10 years, although this will depend on a social pact between the company and neighboring communities.
The Buenaventura mining company signed a concession contract with the Peruvian government on Tuesday for a water project, a bid to develop a major copper mine at a time when copper production in the country has stagnated.
According to the state-owned Proinversión, which signed the contract with Buenaventura, investment in the project could reach $2.773 billion over 10 years, although this will depend on a social pact between the company and neighboring communities.
The Algarrobo project is located in the Piura region, where Buenaventura must begin studies and community engagement to build water infrastructure. This is an area where mining concessions have been paralyzed for years due to opposition from local residents.
The plan must ensure a water supply to the Tambogrande district and a social agreement with local residents, which could take at least three years before studies to develop the mining project can begin.
"The first stage is to build a solid social agreement with the communities and authorities. This will lay the groundwork for consolidating an underground copper mining project," said Buenaventura's Vice President of Business Development and Marketing, Aldo Masa, after the contract signing.
Peru is pushing ahead with the development of copper projects at a time when production has stagnated due to a lack of investment and declining ore grades at large mines, according to analysts and industry data.
The country fell to third place in global copper production in 2023, having been overtaken by the Democratic Republic of the Congo. Chile is number one globally.
Buenaventura, which owns several gold and silver mines in Peru, also owns 19.58% of the Cerro Verde copper mine, the largest producer of the metal in the country and operated by Freeport McMoRan.
In 2023, Chilean Antofagasta acquired a 19% stake in Buenaventura through a subsidiary.
MEF: El Algarrobo will be a turning point for mining investment development
Peru's Minister of Economy and Finance, José Salardi, stated today that the execution of the El Algarrobo project (Tambo Grande, Piura) represents a turning point for new mining investment, especially in projects and actions for water conservation.
"We believe this project will be an important turning point for the new mining investment that can be developed," he said.
"The experience at El Algarrobo will be crucial, not only because of the future investment that will mobilize more than US$2.7 billion, but also because of the significant combination of water and mining that the company (Buenaventura Mining Company) has clearly highlighted," he added.
During the signing ceremony for the concession contract for the El Algarrobo water and mining project, José Salardi emphasized that this project will be a model to follow and replicate in other areas of Peru.
"In reality, it's abundantly clear that after two decades of what happened in Tambo Grande, the population living there has seen the situation worsen rather than improve," he said.
"That's why there's so much expectation. It's a project that, as a state, we're going to defend and move forward jointly with the concessionaire, local authorities, and the population. That's the commitment we have as the Dina Boluarte administration," he added.
The minister indicated that moving the El Algarrobo project forward required hard teamwork with the concessionaire, ProInversión, and the Ministry of Energy and Mines.
“This project taught us lessons from more than two decades ago. The main conclusion is that halting and blocking a project causes Peru and its population to lose, and it also causes us to leave our wealth buried and not take full advantage of all the positive benefits it can bring,” he stated.
"This year, several projects will quietly be activated. There's a sense of great confidence. We were in Canada a few weeks ago and saw that firsthand, with foreign investors interested in projects in Peru," he said.
