Peru's SNMPE Sees Record Mining Investments in 2012

By Ryan Dube

LIMA, Peru--Investments in Peru's mining sector are expected to reach a record-high this year despite delays to some large-scale projects, the National Mining, Oil and Energy Society, or SNMPE, said Wednesday.

SNMPE President Pedro Martinez said that mining investments are forecast to total $9 billion in 2012, up from $7.2 billion last year.

The mining sector is key to Peru's economy. It is a major source of private-sector investments and tax revenue, while mineral exports also account for about 60% of Peru's total shipments abroad.

However mining companies have faced obstacles as they try to build new mines and expansion projects in one of the world's biggest producers of copper, gold, silver and zinc. Community opposition and permitting delays have pushed back the startup of many projects.

Mr. Martinez told reporters that the impact of those delays will likely be seen in 2013. "This year, we estimate that [mining investments] should reach $9 billion," he said. "Investments will probably fall in 2013, but they could recover in 2014."

In a report Wednesday, Scotiabank Peru said that it expects mining investments to rise 8% in 2012 to just under $8 billion. The bank also forecast mining investments to climb next year, rising an additional 7% to around $8.5 billion.

In the first eight months of 2012, mining investments totaled $5.07 billion, compared to $4.1 billion in the same period last year, according to the Mines and Energy Ministry.

Mr. Martinez also said that the private sector is watching to see what changes the government will make in water rates for mining companies. The head of Peru's national water agency, Hugo Jara, said that the government plans to announce in the first half of 2013 new rates for the use of water, newspaper Gestion reported.

Most of the community opposition to mining in Peru has been related to concerns about the sector's use of water. Some companies, such as Newmont Mining Corp. (NEM), have said they will ensure the water supply to local residents by building reservoirs before starting mining operations at new projects.

"There have been a lot of declarations from many companies about prioritizing this issue," Mr. Martinez said. "I think it is a good solution."

Write to Ryan Dube at [e-mail]

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