Peru’s mining industry, the country’s largest source of export revenue, is facing a significant drop in investment this year due to ongoing political instability and protests. The government is now taking steps to streamline environmental permitting regulations and restore stability in order to attract much-needed investment.
The protests, demanding the resignation of President Dina Boluarte, have caused roadblocks and disruptions in the mining sector. As a result, mining investment is expected to decline by 18% this year. Peru, the world’s second-largest copper producer, relies heavily on mining, which accounts for 60% of its total exports. The decline in investment not only affects the industry itself but also poses a risk to the country’s overall economy.
During a mining conference in Arequipa, Prime Minister Alberto Otarola addressed concerns about political instability and emphasized the government’s determination to prevent chaos and insecurity. He also highlighted the efforts to streamline environmental permitting regulations, which have been a major obstacle for new investments.
Senior executives in the mining industry expressed their concerns about the lack of clarity and governance in the country. They pointed to unclear rules and red tape regarding the use of contractors and securing environmental permits as major obstacles to new investments. While copper output has rebounded this year, declining investment threatens future production and economic growth in Peru.
Raúl Jacob, vice president of finance at Grupo Mexico’s Southern Copper, Peru’s third-largest copper producer, called for the repeal of a law limiting the use of contractors. According to him, the law hinders mining firms from cutting costs and should be revised to promote investment.
The political situation in Peru has been volatile in recent years, with six presidents in the last five years. President Dina Boluarte, who took office late last year, has weak popular support. The government, however, insists that it has made progress in unlocking mining projects, although the projects are mainly expansions or medium-sized ventures.
Victor Gobitz, president of Peru’s largest copper mine, Antamina, controlled by Glencore, BHP, Teck, and Mitsubishi, highlighted the negative impact of political crises on investments in “greenfield” copper sites. He emphasized the need for a clear mining policy and more agility in approving expansion projects. Gobitz also stressed the importance of developing local areas around mines to prevent conflicts with local communities, often fueled by resentment over the benefits of mining bypassing them.
Peru’s mining industry plays a crucial role in the country’s economy, and the decline in investment is a cause for concern. The government’s efforts to streamline regulations and restore stability are necessary to attract new investments and ensure the industry’s growth. Clear and predictable policies, along with efficient permitting processes, will be key in revitalizing Peru’s mining sector and supporting its economic development.