【Ferro-alloys.com】:This week’s PERUMIN event in the city of Arequipa is the most important conference in Peru’s mining sector and is being held for the first time in three years after being canceled in 2020 and 2021 due to the pandemic and restrictions on movement.

Social conflicts and the paralysis of mining projects continue to affect the sector, and the solutions – dialogue with communities, agreements between companies and local people – are perceived as short-term responses.

Added to the internal noise is the international situation, with signs of economic slowdown being increasingly clear. The United States once again raised its benchmark rate, from 2.25% to 3%, which will have an impact on consumption – and therefore commodities – as well as the exchange rate and the cost of inputs. After the announcement by the Federal Reserve, Peru’s sol currency weakened and is currently around 3.90 to the US dollar.

PERUMIN’s focus is not only to spotlight the country’s main mining projects but also to respond to the international situation, how to build multi-stakeholder dialogue and regain the confidence of the private sector. Although mining production fell in January to July, mining investments grew. The project pipeline is extensive, and Peru will be a key partner in the global transition to renewable energy if agreements are reached and disputes resolved.

Peru does not have, to this day, a real solution to mining conflicts. A few days before the September 26-30 event, a new social conflict began in Arequipa, a region where the Quellaveco and Tía María copper projects are located, the latter of which has been stalled for years. The latest conflict is between farmers of the Tambo Valley and Quellaveco over fears of running out of water resources for their crops.

In the first half of the year, copper mines Cuajone (Southern Copper) and Las Bambas halted operations for more than 50 days and, although they are back operating and have reached agreements, the conflicts could break out again at any time. The same with the blockade in Espinar (Cusco region) of the Antapaccay copper mine, the lifting of the blockade of the future Chalcobamba pit (Las Bambas), and the conflict in the Cerro de Pasco region due to blockades of Nexa Resources’ zinc mine.

"The issue of how to make mining contribute to development is going to be addressed [at PERUMIN], and both the president [Pedro Castillo] and the [energy and mines] minister [Alessandra Herrera] have been invited. I welcome that and it seems important to me, regardless of the criticism," former energy and mines minister Miguel Incháustegui told BNamericas, who added there will be a record of number of attendees.

Both the economy and finance ministry and the energy and mines ministry will participate in the convention, but the "real" signal of confidence has to come from the president, said Incháustegui.

The increase in global logistics costs and prices of various inputs directly influenced the results of mining companies in the first half. Although the demand for various metals will remain steady –especially in the transition to a cleaner energy matrix – the schedule for the start of new projects, expansions and investments will not necessarily follow the same rhythm.

Newmont announced this month it will postpone investment for the Yanacocha sulfides gold project to the second half of 2024 due to logistics costs and inflation, among other factors. Although the US company assured that it will continue with measures “to de-risk the project in the search for a profitable and predictable path forward,” the future is uncertain.

The portfolio of mining projects under construction involves investment of US$53bn, around 23% of Peru’s 2021 GDP. More than 60% are copper projects, a metal that is playing a key role in the transition to a cleaner energy matrix, which will also be an important topic at PERUMIN.

In its latest projections, Peru’s central bank cut the GDP growth forecast from 3.1% to 3.0% for 2022, explained by lower prospects in the mining sector, which is expected to grow 1.9% rather than the previous estimate of 2.9%.

Peru is the world’s second largest copper producer after Chile.

• [Editor:Alakay]