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Mines and Energy Minister: Lithium Potential Bright for Resource-rich Peru
At this year’s PDAC convention, INN had the chance to talk to Peru’s mines and energy minister, Francisco Ismodes.
Ismodes shared his thoughts on mining in Peru, what challenges are ahead for the South American country and what the future holds for lithium projects there.
Watch the interview above for more from Ismodes or read the transcript below. You can alsoclick here to view our full PDAC 2019 interview playlist on YouTube.
INN: Can you tell our audience some of the competitive advantages that, in your opinion, make Peru one of the best investment destinations?
FI: Peru has a competitive advantage due to its geological potential incopper,zinc,gold and other resources. We’ve recently made an announcement about a new lithium discovery. Peru has important mining developments, and, as a government, we are working on putting a focus on competitiveness in the sector and improving regulations and processes to obtain operating and environmental permits. We are also strengthening the sustainability of projects and working with local communities and authorities to share the importance of the sector and make sure that the benefits of the activity are reflected in the community where miners operate as well as throughout the entire country. So, by working on the competitiveness and sustainability, we will meet the conditions to become a more attractive mining destination.
INN: And what are some of the challenges that your country has in developing its mining sector?
FI: First of all is improving the application process for permits. We are working on an online platform where approvals could be tracked, which will reduce the time it takes to share information with investors, the status of their applications and deadlines, with a lot of transparency. Another [challenge] is the connection we have to make between the benefits of mining and the benefits for the local communities.
INN: What about the lithium sector in particular? What opportunities do you see for Peru to grow in this space?
FI: Peru has a lot of geological richness. The discovery of a very important lithium deposit was announced recently, which has generated a lot of expectations. Those are initial announcements about exploration results. There is a process that will continue to confirm the important reserves, which are now resources. With that, we will be in an expectant position to promote this production in our country knowing that this is a mineral with uses that are developing, such as electric cars, all the lithium that is used in batteries. That truly makes us expectant to see what is to come.
INN: Are you working with miners to develop exploration projects in this space? What is your goal? Do you think Peru could be part of a “Lithium Square”?
FI: Of course, we have an organization, an institute, called INGEMMET, that is affiliated with the energy and mines ministry and evaluates projects geologically. We’ve asked INGEMMET to work closely with the company that is exploring in the Puno region to understand and know a bit more about this deposit and give them everything they might need to develop it. At the same time, in Puno and the south region of our country, there’s great potential, mainly in copper, but there are other opportunities that are being discovered.
INN: Do you think a collaboration with other countries, such as Argentina or Chile, is possible to develop lithium projects in the future?
FI: Yes, definitely, I believe that if we were to work together for the development of technologies that can take advantage of this mineral, it would be something positive for Argentina, Chile, even for Bolivia, which also has lithium deposits.
INN: Finally, what are your goals for the mining sector in Peru this year? What are some of the challenges in achieving them, and what do you expect to accomplish?
FI: In mining, last year we received or there were mining investments for US$4.9 billion, and this year the program is for US$6 billion. What we have to do is support companies to develop those investments. We also have the challenge of sharing information about mining and the benefits of mining, such as that it can coexist with agriculture, with good water-use practises, and that information needs to reach local communities. We need to be able to reach our goal as a government to promote projects of social welfare for the local communities where this important mining activity is developed. Those are the main challenges.
We also want to continue with our project portfolio goal. We are aiming to develop projects for US$21 billion by 2021, which are part of the US$58 billion in projects we have identified in our country, and [we also want to develop] processes to strengthen exploration activity for this year, which is about US$500 million.
Peru has 7 percent of the global investment in exploration. Our goal is to have that 7 percent increase to 8 or 9 percent in the coming years, supported by these improvements in processes and times. I also want to highlight the Fraser Institute report, in which we are now ranked 14, up from 19th place. Our goal is also, in the next two years, to be in the top 10 in competitiveness to ensure that we continue to attract mining investments.
Finally, in terms of energy, I would like to mention the area of renewable energy. Peru has great potential to develop renewable energy. We currently have an energy grid that is almost 5 percent solar and wind. We hope in the coming years to improve those investments. South Peru is an attractive destination for solar energy, so our bet is also to promote investments in renewable energy.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.