Peru - Mining

Peru Mining 1479
Photo by: Alexey Stiop

The mining of metals was Peru's leading industry in 2002. Among export commodities, gold, copper, zinc, crude petroleum and byproducts, and lead ranked second through sixth, respectively. Peru was the second-largest producer of silver, after Mexico, the third-largest producer of zinc, after China and Australia, and the fourth-largest producer of lead, after Australia, China, and the United States. Peru's zinc output represented 12% of world concentrate output, almost 62% of Latin America's concentrate, and 29% of refined zinc. Petroleum was Peru's second-leading industry in 2002, and cement, steel, and metal fabrication were other leading industries. Minerals and hydrocarbon industries accounted for 11.2% of Peru's GDP in 2001, and 2.4% in 2000. Including petroleum, mineral export earnings amounted to $3.6 billion, or 50.7% of total export earnings. Mining export revenues ($3.2 billion) represented 45.1% of total exports. Metal exports in 2001 amounted to $3.19 billion, down from $3.21 in 2000, even as prices for Peru's major minerals remained low. Gold exports earned $1.2 billion; copper, $987 million; zinc, $419 million; lead, $196 million; and silver, $169 million. Mineral exports could increase if negotiations between the Mercado Común del Cone Sur (Mercosur) and Mercado Común Andino (ANCOM) lead to a South American free-trade agreement.

Gold output (from mines and placers) was 138,022 kg in 2001, up from 77,940 in 1997; 121,402 kg came from mines. The increase was because of greater production by large-sized mines. Large producers reported 87.0 tons; medium producers, 28.3 tons; small-sized mines, 6.1 tons; and an unknown number of placers and "garimperos" (informal individual miners), 16.6 tons. Reserves (metal content) totaled 3.5 million tons, excluding placer deposits. Minera Yanacocha S.A. (MYSA), the largest gold producer (58.7 tons of gold, with a 70,000 kg per year capacity), acquired the Yanacocha gold project (Cajamarca Department), which contained 641.4 million tons of geological reserves that graded 0.30% copper and 0.79 grams per ton of gold; MYSA planned a feasibility study of Yanacocha and the nearby Amaro, Chailhuagon, and Perol gold properties in 2002–03, intending to mine them as one unit by 2004. The southeastern Andes had well-known gold placers on the Inambari River and its tributaries. Placer gold production, which accounted for 12% of total gold output, was concentrated in the Inca and the Mariategui regions, and gold was also recovered from placers in rivers and streams throughout the jungle.

Copper mine output in 2001 (metal content) was 722,035 tons, up from 553,924 in 2000; 686,000 tons were exported. The rise was a result of expansions and modernizations of copper-processing facilities, output at the Antamina Mine, which started operatings in 2001, and copper from Cía Minera Atacocha S.A., Peru's second-largest private lead producer. The country's copper reserves totaled 57.4 million tons (metal content). Southern Peru Copper Corp. (SPCC) remained the largest copper producer, with a total output of 341,947 tons of copper metal from its mine operations at the Cuajone open pits and its solvent extraction and electrowinning cathode plant at Toquepala. Expansion of the Toquepala mine was completed in 2001, and included identification of a massive sulfide ore deposit, increasing the mine's proven and probable reserves to 770 million tons at a grade of 0.74% copper and 0.08% molybdenum and 1,931 million tons of leachable ("lixiviable") reserves at a grade of0.20%. Peru's second-largest copper producer, Compañía Minera Antamina S.A., owned the $2.3 billion copper-zinc Antamina megaproject (Huari, Ancash Department), which could become the world's third-largest producer of zinc (163,000 tons per year) and seventh-largest producer of copper (272,000 tons per year). The project included the Antamina open pit and concentrator, a 302 km slurry pipeline, port facilities in Huarmey, and a new access road, power line, and town site; the new mine had a capacity of 275,000 tons per year; the concentrator, 70,000 tons per day. Antamina's revised proven and probable ore reserves were 559 million tons at a grade of 1.24% copper, 1.03% zinc, 13.71 grams per ton of silver, and 0.029% molybdenum, or 1.8% equivalent copper, and the project was designed to produce up to1.5 million tons per year of copper and zinc concentrates over a 23-year mine life. Medium- and small-sized mines supplied 201,730 tons. Cambior Inc., of Canada, transferred the rights for the La Granja copper project to Billiton; the La Granja deposit consisted of 3.2 million tons at a grade of 0.61% copper, potential resources of 6.4 million tons at a grade of 0.55% copper, and 800 million tons of leachable ore at a grade of 0.25% copper. Copper production more than tripled in 1960 with the opening of SPCC's Toquepala mine. The completion of a 296 km rail line connecting the Toquepala concentrator plant with the port of Ilo was the last major step in the Toquepala blister-copper project. Two large mines, at Cuajone and Cerro Verde, were opened in 1977, boosting copper production by 78%. Another large mine, at Tintaya, south of Cuzco, opened in 1985, but slumping world prices, unfavorable exchange rate policies, and labor strife kept its production and those of other mines down.

Zinc mine output (metal content) was 1.1 million tons, up from 910,303 in 2000 and 760,563 in 1996 (792,000 tons were exported); lead output was 289,546 (258,000 exported), up from 270,576 in 2000. The zinc increase was the result of expansions at Cía Minera Volcán S.A., Peru's largest private producer of zinc (319,317), lead (76,135), and silver (334); Volcán had operations in the Yauli mining district and the Paragsha property, in Cerro de Pasco. Total reserves of zinc (metal content) amounted to 16 million tons; lead, 3.5 million tons.

In 2001, Peru produced 2,674 tons of silver (metal content), up from 2,438 in 2000 and 2,025 in 1998; 1,182 tons were exported. Medium-sized companies accounted for three-quarters of production. Buenaventura was the second-largest private producer of silver, at 333 tons. Reserves totaled 36 million tons (metal content).

Production of iron ore and concentrate (gross weight) was 3.9 million tons in 2001, down from 4.9 million tons in 1998 and a near record high of 7.4 million tons in 1994. Shougang Hierro Perú S.A., a subsidiary of China's Shougang Corp., continued to be Peru's sole iron ore producer. Iron ore reserves (metal content) totaled 830 million tons. Exploitation of iron ore, centered in southern Peru, was exclusively for export until the steel mills at Chimbote began operations in 1958.

The metals antimony, white arsenic, bismuth, indium, manganese, molybdenum, and tin were extracted in various parts of Peru. No cadmium or chromium was mined in 1998–2001, and no tungsten in 1999–2001.

Of the 30 industrial minerals mined commercially in Peru, the most important were salt, gypsum, marble, and limestone. Peru also produced barite, bentonite, boron materials (borates), hydraulic cement, chalk, common clay, fire clay, diatomite, dolomite, feldspar, flagstone, granite, kaolin, lime, nitrogen, onyx, phosphate rock, pyrophyllite, quartz, quartzite, sand and gravel (including silica sand), marl shell, slate, sulfur, talc, and travertine. Minero Perú had proven reserves of 550 million tons of phosphate rock at its Bayóvar Project, in the Sechura Desert, and was scheduled to be privatized in 2004. The Bayóvar Project had tremendous export opportunities to the Asia-Pacific region via the port of Paita.

Peru has long been famous for the wealth of its mines, some of which have been worked extensively for more than 300 years. Through modern techniques and equipment, a vast potential of diverse marketable minerals was gradually becoming available from previously inaccessible regions. Because many of the richest mines were found in the central Andes, often above 4,300 m, their operations have been wholly dependent on the Andean Indians' adaptation to working at high altitudes. Copper, iron, lead, and zinc were mined chiefly in the central Andes, where all refining was done at La Oroya, the metallurgical center.

The government no longer had exclusive control over exploration, mining, smelting, and refining of metals and fuel minerals, although, in principle, all mineral and geothermal resources belonged to the government. The role of the government has been limited to that of a regulator, promoter, and overseer. Individuals and private companies were allowed to hold mining permits. As of 2001, the government has privatized 90% of its assets in mining, a greater rate than in any other sector, with some mining tenders still pending, and several mining prospects waiting to be privatized, which could generate $2.14 billion. The promotion of domestic and foreign private investment via a sweeping privatization process and the formation of joint ventures started off at a vigorous pace in 1991 and has continued at a slower pace. Private firms, most of which were controlled by local interests, dominated medium- and small-sized mining operations. More than 100 foreign mining companies have been established in Peru since 1990. Of the $10.02 billion of foreign direct investment in 2001, $3.32 billion was in the minerals sector, $1.67 billion of it in mining. In 2001, $1.4 billion worth of mine and facility expansions were completed, and $2.6 billion worth of mine projects were completed. In addition, $3.3 billion of investment were projected for mine projects with feasibility studies, and $1.3 billion were expected in projects with advanced exploration work. The state was expecting Minero Perú's projects pending privatization to generate $2.1 billion of investment. Mining, energy, telecommunications, and related industries were the most attractive sectors of the Peruvian economy. Privatization of Centromín, Electroperú S.A., Minero Perú, Petroperú, and the banking sector was expected to continue to generate investments in every sector of the economy, particularly in the mining and energy sectors. Future foreign investments in the minerals sector were projected to be $17 billion, the largest amount of capital committed to date, with $9.1 billion expected in the mining sector for the 2001–2009 period.

Peru was facing political upheavals, and the mining industry was increasingly on the defensive. Development of MYSA's Cerro Quilish gold deposit was stalled by the city of Cajamarca to protect its major watershed. The citizen group Coordinadora Nacional de Comunidades Afectadas por la Minería (Conacami) indicated that it had the right to participate and to be consulted on mineral policies that involved communities affected by mining operations.

The junta that came to power in 1968 pursued a steady program of nationalization. In 1971, state mining rights were assigned to the government enterprise Minero Perú. The General Mining Law of 1992 made legal procedures to obtain mining rights easier, and amendments in 1996 guaranteed protections to mining ventures and contracts. These laws have ensured more favorable exploration and production contract terms for investors. Within the framework of four 1990s laws promoting investment in mining and natural resources and dealing with foreign and private investment, more than 250 domestic "Stability and Guarantee" contracts have been signed since 1993.

User Contributions:

Report this comment as inappropriate
May 22, 2011 @ 7:19 pm
i am interested to minig at peru,and export to granite blocks ,slabs,tiles,and manuments

Comment about this article, ask questions, or add new information about this topic:


Peru forum