Peru became the world’s second-largest copper producer last year. Here’s how that happened.
Peru is a world leader in copper production and the nation’s mining-friendly government has been working hard to support the growth of its copper industry.
In South America, Peru ranks as the second most attractive mining jurisdiction after neighboring Chile. Peru’s mineral largess places it among the world’s top producers of many of the most economically important metals, including copper, zinc, silver and gold.
In 2019 the country ranked as the second largest copper producer, with national copper mining output of 2.4 million MT. In addition, Peru holds 87 million metric tonnes (MT), or 13 percent, of the world’s copper reserves.
Copper mining in Peru: highly-supportive government
Peru’s stable economy and political climate is highly attractive to mining companies, making mining the country’s largest industry. Since the early 1990s, this South American jurisdiction has enjoyed steady economic growth, largely due to the government’s industry-friendly policies including its comparatively low corporate tax rate of 29.5 percent and welcome stance toward foreign investment.
The continued focus on large-scale development of the country’s infrastructure also greatly benefits the mining sector. This includes a proposed railway for transporting mineral concentrates from Peru’s southern copper mining belt, which are mainly destined for export markets. The majority of copper produced in Peru is shipped to China, followed by Japan, South Korea and Germany, among others.
Copper output in Peru grew by more than 97 percent from 2008 to 2019. In 2014, the Peruvian government set the goal of doubling its copper output by 2016 to recover its position as the second-largest producer of the base metal from China. While Peru has yet to double its copper output from 1.4 million metric tonnes in 2014, it did manage to beat out China for the second top spot in 2016.
This impressive growth in copper production was due to the government’s support of increased activity at several of the nation’s copper mines, including the commissioning of MMG-owned (HKEX:1208) Las Bambas mine, an expansion of Freeport-McMoRan’s (NYSE:FCX) Cerro Verde mine as well as ramp ups in production at Glencore’s (LSE:GLEN) Antapaccay and Hudbay Minerals’ (NYSE:HBM) Constancia.
Copper mining in Peru: world class copper mines and copper deposits
Peru’s largest copper reserves are found at the Antamina, Toquepala, Cerro Verde, Cuajone and Tintaya mines. Cerro Verde is an open-pit copper and molybdenum mining complex and one of the world’s largest copper mines, producing 1 billion pounds of copper and 29 million pounds of molybdenum in 2019.
The Antamina mine, one of the largest copper-zinc mines in the world, is operated by a joint venture company owned by BHP (ASX:BHP,LSE:BHP,NYSE:BHP), Glencore, Teck Resources (TSX:TECK.B,NYSE:TECK) and Mitsubishi (OTC Pink:MSBHY,TSE:8306). Antamina is one of the largest skarn deposits in the world. The mine has estimated resources of 3 million tonnes averaging 0.89 percent copper, 0.77 percent zinc, 11 g/t silver, and 0.02 percent molybdenum—enough to carry production into 2029.
Mexican firm Southern Copper (NYSE:SCCO) operates the Toquepala and Cuajone mine complexes include smelting and refining plants. The company’s Peruvian operations also include an industrial railroad and port. In addition to copper, these operations also produce molybdenum and silver as by-products. Southern Copper’s US$1.4 billion Tia Maria project is under development and once completed is expected to produce 120,000 tonnes of copper per year over a 20-year mine life.
Another large copper project under development is Anglo American’s (LSE:AAL,OTCQX:NGLOY) US$5.3 billion Quellaveco mine, which is slated to begin production in 2022. In the first ten years of production, Quellaveco is expected to produce about 300,000 tonnes of copper each year.
Glencore’s Antapaccay copper mine is brownfield expansion of the massive Tintaya open-pit copper mine and is expected to continue producing through 2030. Antapaccay also produces gold and silver by-product credits.
Hudbay Minerals’ Constancia operation and processing facility is reportedly the lowest cost open-pit sulphide copper mine in South America. The Constancia property also includes Pampacancha, a high-grade satellite copper deposit located four kilometres from the processing facility. Constancia produced 113,825 tonnes of copper in 2019 along with 55,505 ounces of precious metals.
Chinalco’s (HKEX:3668) Toromocho copper mine is one of China’s largest overseas copper operations. Commercial production at Toromocho began in 2015 and the company plans to invest about US$1.3-billion to expand the project. The investment represents a portion of the US$10.2-billion China-based companies will invest in five of the country’s mining projects, according to Peru’s Ministry of Energy and Mines.
MMG is another Chinese firm investing in Peru’s copper mining sector. The company’s La Bambas is a large, long-life copper producer that ranks amongst the world’s largest copper mines. Prior to the coronavirus lockdowns, Las Bambas was expected to have a output of between 350,000 and 370,000 tonnes of copper in concentrate for 2020, or about 2 percent of the world’s projected production.
There are also a number of junior resource companies with exploration and development-stage copper projects in Peru. If you are following or investing in any junior copper companies with projects in Peru, let us know in the comment section below.
This is an updated version of an article originally published by the Investing News Network on April 7, 2011.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.