The Uncertain Future of Mining Investment in Peru

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While mining investment in Peru has recovered slightly since the onset of the pandemic, analysts have forecasted that recovery will slow down due to the fall in price of minerals and reduction of mining exploration in the country.

Rosa Chávez Yacila of Ojo Público Magazine of Peru reported that in the last 10 years, the mining sector has represented 23.3% of foreign direct investment in Peru according to the Ministry of Energy and Mines. The mining sector also contributed 9.7% of the country’s GDP in 2021 and made up 63.9% of exports and 11.5% of the country’s total private investment.

Official communications have stated that investment in the sector is picking up in the country but that this will not be enough to reach levels prior to COVID-19. Experts have also pointed out that the current rebound in investment will not continue in the following months of 2022 or during 2023. This was one of the reasons that led the Minister of Economy, Kurt Burneo, to announce a probable upcoming recession in Peru.

However, the initial rise in the price of certain minerals during the pandemic, specifically copper, of which Peru is the second greatest world producer after Chile, was presented as a great opportunity for the country. Unfortunately, the volatile nature of the market, as can be seen by the recent decline in the price of copper, along with other factors such as a decreased demand for commodities by China, could prove to be a dangerous setback for the country’s economy.

The former Minister of Economy, Alonso Segura has also expressed these fears and pointed to lower mineral prices and an unstable external situation, making the environment less favorable for investment.