Peru | Mining sector: recent evolution and short-term outlook

Summary

We estimate that in 2020 mining production will perform better, giving an important support to GDP growth. We also anticipate that mining investment will exhibit a more moderate increase due to the completion of some projects (mainly copper) already underway.

Key points

• Key points:
• The competitiveness of the Peruvian mining sector stands out due to its geological potential and relatively low production costs. However, there is still room for improvement in the form of policies that favor investment in the sector.
• It is important that the Government continues to work on policies that encourage new exploration, make portfolio projects viable, ensure continuity of current operations, promote mining formalization, and manage mining’s environmental liabilities.
• During 2019, the number of social conflicts increased. Our estimates suggest that in districts with a higher incidence of poverty, higher income inequality and larger population, the likelihood of conflict increases.
• We anticipate that in 2020 the average price of copper will be around USD 2.70 per libra. Going forward, the price of copper will receive support from increased demand for electric cars and the infrastructure required for these types of vehicles.

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