According to Apumayo, although the prices of gold, silver, copper and zinc increased at the beginning of 2024, the situation would normalize in the coming months.
Faced with an uncertain international context, Apumayo, a Peruvian mining company, affirms that various variables affect metal prices in the international market. One of them is the interest rates of the United States Federal Reserve, which will have a correction that will generate a decline in the price of precious metals if said rate increases.
This normalization of prices could affect the income from canons and royalties that come from mining in Peru.
“Every time the United States Federal Reserve announces an increase in the interest rate, then it is assumed that economic agents prefer to bet on a more stable bond, a higher rate.
Thus, metal prices are expected to drop a little. Otherwise, when rate cuts are announced, agents tend to take refuge in precious metals such as gold and silver,” explained Guillermo Shinno, Corporate General Manager of Apumayo.
However, these readjustments are not the only factors to consider. The increase in demand for copper, lithium and cobalt must be taken into account in the face of the energy transition.
This situation can be taken advantage of by Peru due to the high geological potential of the Andean country.
“Many specialists point out that the Democratic Republic of the Congo has surpassed us in terms of copper production, although it is temporary given that they have found a large deposit, but they do not have other large-scale projects.
We do have large projects in the pipeline and with that we could improve our second place and even get closer to Chile,” added the former vice minister of mining.
Despite the negative predictions, it is worth taking into account the significant increase in the price of copper so far in May. Well, it has reached an average of 445 cents per pound (cUS$/lb), its highest level in two years.
This increase has been caused by restrictions on copper production by key mines in Peru, as well as in other countries such as Chile, the United States, Poland, Australia and China.
RECOVERY AT THE COUNTRY LEVEL
In order to take advantage of the international market situation, for Apumayo it is necessary for the Peruvian government to propose a strategy to unblock mining projects and prevent social conflicts from scaring away large investors.
“For now we are focusing as a country on brownfield projects. We have the expansions of Antamina and Chinalco that represent an important investment; while as new projects we have San Gabriel, which is in the middle of the construction stage. We can name Zafranal, which we hope will begin construction next year. The other expansions are of smaller mining units,” added Shinno Huamaní.
Regarding gold production, the specialist indicated that Peru has lost pace because no large deposits have been found. In the case of silver, Corani is waiting for its permit renewal to continue with the detailed engineering phase. The investment in the project amounts to US$571 million and is expected to take Peru to second place in the world in silver production.
