Anti-mining protests biggest hurdle for Peru’s mining growth – S&P – by Dorothy Kosich (Mineweb.com – August 29, 2013)

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Peru’s mining sector may be booming, but the country need political stability to support long-term mining growth, Standard & Poor’s advises.

RENO (MINEWEB) – Of all the challenges facing Peru’s mining sector, Standard & Poor’s considers anti-mining protests the main constraint on its expansion “because if protests become more widespread, other mining projects could be delayed or scrapped entirely.”

Nevertheless, S&P Credit Analysts Diego Campo, Francisco Serra and Richard A. Francis feel “Peru’s mining sector is poised for significant growth, thanks to its large and high-quality metals reserves, reasonable tax regime, regulations that promote private investment, attractive power costs, and a long track record of mining activity. Plus, the country has fostered the development of ancillary-services suppliers and qualified manpower.”

“We expect investment in the energy and mining sectors will continue at a steady, rapid pace through the 2016 national elections, supporting future economic growth,” the analysts forecast in note published Wednesday. “Moreover, fiscal revenues from the mining sector, along with implementation of the new fiscal rule, should help Peru’s fiscal accounts and continue to reduce the government’s debt burden.”

“However, Peru’s political institutions are still maturing, with some uncertainty regarding policy continuity from one election to the next,” they noted. “Poverty (although declining) and social discontent continue to pose problems both for the government and the mining sector, as witnessed by the large Conga mining project being put on hold indefinitely.”

In the analysis, S&P observed that Peru’s government is currently investing in major electricity and port infrastructure to boost the expansion of the country’s mining sector. Peru is the third largest global copper producer, sixth largest gold producer, and ranks among the largest miners of zinc and tin. It also produces significant amounts of silver, lead and molybdenum.

The analysts said Peru’s main copper projects could more than double the nation’s production levels by 2016—exceeding 2.7 million tons annually or 14% of current global copper supply. Among the global commodity producers operating in Peru are Glencore Xstrata, Grupo Mexico, Freeport-McMoRan Copper & Gold, BHP Billiton, and Newmont. Smaller mining companies, such as Shougang Herrio Peru, a subsidiary of China’s Beijing Shougang Co., are also thriving.

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