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Article Excerpt
"We'll make Peru into the world leader in mining." These were the firm and emotive words of Prime Minister Roberto Danino during the presentation of the new ministerial cabinet last August. The country certainly has the resources to achieve this status: it hosts vast quantities of gold, copper, silver, lead and zinc, in addition to extensive deposits of oil and natural gas.
Peru's recent history - switching between periods of democracy and military dictatorship; domestic power struggles between successive governments and guerrilla insurgencies (although the guerrilla groups have now been virtually destroyed) and more recently the dismissal by Congress on grounds of 'moral incapacity' of Alberto Fujimori, who fled the country after ten years as Peru's president - have held back this ambition.
However, the inauguration at the end of July 2001 of President Alejandro Toledo saw the emergence of a more positive attitude and, in general, mining companies are more confident, boosted by the perception that the country faces a calmer political future. Furthermore, the dominant position of mining means that it will continue to account for at least three-quarters of Peru's export earnings, making it a priority for the new government.
Indeed, at the end of 2001 President Alejandro Toledo pledged to send new legislation to Peru's parliament aimed at increasing the competitiveness of the mining sector. He said that the new legislation would contain all measures needed to reactivate mining, including the cancellation of taxes on exploration expenditure. He went on to promise legal and tax stability, aimed at balanced and fair economic development of deposits.
Furthermore, recently-appointed mining and energy minister Jaime Quijandria has said that Peruvian authorities will scrupulously respect contracts signed between foreign investors and the state. He understands that Peru has to present an image of a stable country, which will honour its word if it is to attract the foreign investment it needs, especially in mineral and hydrocarbon exploration.
The chance to test this confidence came in September 2001 during the 25th Mining Convention organised by Peru's Institute of Mining Engineers in the southern city of Arequipa. This successful event, attended by over 3,000 participants from 26 countries, was held in conjunction with the Extemin Mining Technology Exhibition, which itself attracted about 350 exhibitors with particularly strong representations from Australia, Canada, Chile, Germany, Spain, South Africa and the US.
Roque Benavides, chief executive of Compania de Minas Buenaventura, one of the most important players in Peru's mining scene, stressed the importance of mining to the Peruvian economy and the major production increases achieved during the past decade. Annual copper production has risen from 323,000 tin 1990 to 563,000 t in 2000, zinc output has risen from 598,000 t to 905,000 t and gold from 20 t to 132 t. Mr Benavides is forecasting that by 2008, output will have climbed to 1.38 Mt for copper, 1.16 Mt for zinc and 146 t for gold.
During the convention much prominence was given to Peru's showcase mine: the Antamina zinc-copper project (BHP Billiton and Noranda 33.75% each, Teck Corporation 22.5% and Mitsubishi 10%), which achieved commercial production at the end of September, four months ahead of schedule (MJ October 19 2001, p.293). During his address to the convention, Augusto Baertl, the president and executive director of the operating company, Compania Minera Antamina (CMA) reminded the audience that, at full production, the mine will increase Peru's export revenues by around 30%.
Antamina is seen as a model for future mining projects in Peru, with all stakeholders consulted from the outset and much emphasis placed on social and environmental responsibility. Dr Jorge Recharte and Steve Botts recounted how Antamina has been used as a case study in mining, conservation and sustainable development with respect to the nearby Huascaran National Park. The park has been designated a World Biosphere Reserve and World Heritage Site and the Huascaran Working Group, which has UNESCO recognition, has been formed with the goal of monitoring Antamina's activities. The working group...
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