2012-09-06 08:09:10 - Peru Mining Report Q1 2012 - a new market research report on companiesandmarkets.com
We forecast Perus mining sector to grow by 13.6% in 2012, reaching US$20.6bn, as investment continues to flow into the country. While Perus mineral production has declined steadily over the last few years, we believe the long-term prospects for the mining industry remain favourable. With numerous medium-sized to large copper mines scheduled to come online in 2012, we expect output to rise. We forecast the strongest growth in copper and gold production, as those metals have attracted the largest interest from investors. Our production forecasts for zinc, tin and silver are more modest, in line with expectations that companies will continue to see falling ore grades and fewer new projects in these metals are planned at present.
While we expect Perus
business environment to remain favorable for mining companies, several recent developments could affect the sector. We highlight the recently revamped mining tax as a positive sign for investors, as it was done in such a way as to include mining sector interests and maintain the sectors regional competitiveness. President Ollanta Humala successfully negotiated higher taxes on company operating profits, determined using a sliding scale based on current market prices. Recent protests against one of the countrys largest mining investment projects have also tested the administrations mettle. Having reshuffled his cabinet, we expect Humala to take a harder line stance towards mine protesters, protecting mining sector interests. The government has pledged its intention to continue attracting mining investment while increasing social spending on healthcare, education and infrastructure. That said, strikes, protests and environmental opposition will remain a key theme for Perus mining sector in 2012.
Perus mining sector has been amenable to foreign investment since the 1990s as successive governments have taken a pro-business stance. Despite fears that recently elected President Humala would shift policy far to the left, we were correct in our view that he would moderate his stance once in office. The majority of mining companies operating in Peru are foreign-owned, and we see no indication that the government is seeking to alter this trend through regulatory or legislative means. Companies will, however, have to deal with the impact of the new tax structure which ranges from 8-12% of operating profits, although many large-scale ongoing operations remain unaffected by the royalty due to previous contracts with the government.
Perus mining industry is dominated by foreign-owned companies, with private domestic entities owning most of the small and medium-sized mining operations. Mined zinc, copper and tin production is highly consolidated, while silver and gold output are more fragmented. We expect primary copper miners as well as diversified mining companies will continue to invest and acquire projects in Peru, as fundamental demand for the countrys minerals remains strong. The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.
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