Peru is a country located on the western edge of the South American continent and is bordered by Chile to the south and Ecuador to the north. The total area of the country is 1,285,216 km2 and it has a population of 32.17 million as of July 2017. The country’s climate varies from tropical in the eastern regions to dry desert in the western regions.
|The national flag of Peru. Image Credits: CIA Factbook
After years of military rule, Peru gained democratic independence in 1980; however, the political situation of this nation remained unstable until about 2000. Today, the country is moving towards sound, market-oriented economic policies with a focus on the free-trade path. Since 2002, the country has seen a steady economic growth with an average of 6.4% per year and a constantly appreciating exchange rate and low inflation. As a result, Peru is considered to be one of the most stable and fastest growing countries in Latin America.
Peru is abundant in a wide variety of natural resources including gold, natural gas, petroleum, copper, silver, iron ore, coal, zinc, phosphate, potash and hydropower. In 2017, the country’s mining activity accounted for nearly 10% of its national GDP. In fact, 62% of Peru’s total exports were provided by the country’s mining sector, thereby signifying this industry to be Peru’s most important source of foreign currency. To date, over $60 billion USD has been invested in Peru’s mining sector over the past decade.
The country has become one of the top three destinations for mining exploration investment in the world and a leading destination in the Latin America region.
Overview of Resources
Peru is a country with a strong mining tradition. The country’s coastal regions, the Andes and forest regions are popular for mining operations to unearth metals such as copper, gold, silver, zinc, tin and lead.
Among the Latin American regions, Peru is the largest gold-producing nation, and also ranks second for its copper, silver and zinc distribution around the world. In addition to being home to some of the largest silver reserves in the world, Peru’s zinc and copper reserves also rank third in the world.
In terms of world production of resources as of 2017, Peru is:
- The sixth leading producer of gold (after China, Australia, Russia, the United States and Canada)
- The second largest producer of silver (after Mexico)
- The second leading producer of copper (after Chile)
- The second largest producer of zinc (after China)
- The fourth leading producer of molybdenum (after China, Chile and the United States)
- The third biggest producer of tin (after China and Indonesia)
- The fourth leading producer of lead (after China, Australia, and the United States)
Machu Picchu is situated 2,430 m (7,970 ft) above sea level. Image Credits: CIA Factbook
In 2010, phosphate deposits owned by Cía Minera Miski Mayo S.A.C. (CMM) produced about 48,500 t of phosphate rock, which was nearly 28% more than 2009. The CMM fertilizer plant with a capacity of 90,000 t/yr produced 21,800 t of phosphate. In the same year, the country started exporting phosphate rock to India, Mexico, Brazil and the United States.
By the year 2025, several projects including Fosfatos Pacifico Bayovar extension, Bayovar 12 and Fosfatos Mantaro will begin mining for phosphate throughout various Peruvian cities.
In 2010, Peru’s investment commitments in mineral projects amounted to about $42.5 billion, which were mainly for feasibility studies, advanced exploration and expansion work. About 66.5% ($28.2 billion) of the planned investments was allocated specifically to copper projects. As a result of the recovery of global economic activity, the price of Peruvian copper increased.
The country produced 1.1 million metric tons (Mt) of copper in 2010, which accounted for about 8% of the total world production. Exports of copper amounted to 1.25 Mt and were valued at $8.9 billion. With 10.3% of the world’s copper reserves, copper continues to be the country’s most exported metal in terms of value. As a result, between 2018 and 2021, 71% of the total mining investments will be dedicated to purely copper projects, amounting to a total investment of $42.2 billion USD.
In 2010, gold exports of Peru amounted to about 196 tons and were worth $7.8 billion, which was a huge 14.7% increase in value when compared to that of 2009. Peru is home to 4.3% of the world’s total gold reserves, which amounts to a total of 2,300 tons of this metal as of 2017.
A mountain lake in the Andes. Image Credits: CIA Factbook
Between 2018 and 2021, the remaining mining investments that have not been dedicated to copper projects will largely be used to support gold and iron projects. Of these projects includes Quecher Main, which was commissioned in 2019 and is currently undergoing construction of the mine, as well as Santa Maria extension, Optimizacion Lagunas Norte, Quicay II, San Gabriel, Conga and Ollachea, each of which are still in the early planning stages.
Peru is home to 17.6% of the world’s silver reserves, which amounts to a total of 93,000 tons. Some future projects to be dedicated to silver production include Corani in 2022, as well as San Luis at some point in the near future.
The largest coal deposits in Peru can be found at Alto Chicama in La Libertad Department. The coal basins of Goyllarisquizga and Hatun Huasi in the Caceres region, and the Cuenca del Santa in the Marañon Region are other well-known coal deposits. According to 2010 estimates, the recoverable coal deposits in the country were 1.1 Gt.
The gasfields of Aguaytia is reported to have reserves of 8.5 billion m3 of gas and about 9 Mbbl of natural gas liquids (NGL). The Camisea gasfields situated in the Ucayali Basin region of the Cusco Department is said to have 250 billion m3 of gas and 411 Mbbl of NGL. Between the years of 1995 and 2014, investment in Peru’s oil and gas industry rose from $147 million to $1.19 billion USD. By 2019, it is estimated that $2.0 billion USD will be invested in an additional 16 oil and gas projects in the country.
Peru’s largest oil refinery, La Pampilla has a capacity of about 110,000 bbl/d. Talara is the second largest oil refinery and has a capacity of about 62,000 bbl/d.
Disclaimer: The Author of this article does not imply any investment recommendation and some content is speculative in nature. The Author is not affiliated in any way with any companies mentioned and all statistical information is publically available.
Sources and Further Reading
This article was updated on the 24th May, 2019.