Arriving late to the mining boom helped Peru defy a global freeze on project spending as prices plunged. Now the pipeline’s drying up, and the country’s chances of joining neighboring Chile as a copper superpower depend largely on the next president’s affinity with remote communities.
For Pedro Pablo Kuczynski, who secured the majority of votes in Sunday’s presidential election, the task won’t be easy. While outgoing President Ollanta Humala oversaw a surge in investment and output as China’s MMG Ltd. and Freeport-McMoRan Inc. brought on new operations, other companies such as Southern Copper Corp. and Newmont Mining Corp. shelved projects amid community opposition that spiraled into violent protests.
Mining accounts for half of Peru’s exports and the industry’s golden decade for investment helped boost incomes and reduce public debt. The country is challenging Chile’s position as China’s top copper supplier, with a 28 percent share in the first four months of the year, according to Bloomberg Intelligence.
But there’s a long way to go in a nation where community opposition is among factors holding up $22 billion of mining projects, according to the central bank, and no large mines have started construction since 2012. Convincing people that mining is a boon rather than a threat to their communities may determine the industry’s future.
“You’re just going to have to sit down again and start talking to whoever represents a community or the whole community, whatever it takes,” Cesar Perez-Novoa, co-head of research for Latin America at BTG Pactual, said by telephone. “Talk to them about what they need, and how their lives could improve and benefit from royalties and the mining canon.”
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