--Peru expects mining investments to rise 12% in 2013 to $9.57
billion
--New mining projects key to boosting production, exports
--Community opposition puts investments at risk
By Ryan Dube
LIMA, Peru--Mining investments in Peru are expected to increase
significantly over the next two years, as companies advance new
mines and expansion projects in one of the world's biggest metals
producers, according to government forecasts.
The Mines and Energy Ministry expects investments to total $19.5
billion in 2013 and 2014, according to government projections seen
by Dow Jones Newswires.
Mining-sector investments are expected to jump 12% this year to
$9.57 billion this year, compared to the record $8.55 billion
reported in 2012. Investments in 2014 are projected to rise
slightly to $9.91 billion
The government is counting on the investments to boost
production of copper and other metals, which would support exports
and economic growth in the mineral-rich Andean nation. Higher
output will also increase tax revenue, which President Ollanta
Humala has been betting on to fund social programs to lower
poverty.
Mining companies are planning to invest a total of $53 billion
in Peru this decade. However, mining investments could be curbed if
Peru is unable to resolve opposition that the sector has faced from
some communities in the Andean highlands. Several large-scale
projects have already been delayed following protests by residents
concerned about the industry's impact on the environment.
The government says its forecast for 2013 and 2014 is based on
data provided by mining firms. Some of the biggest projects include
Xstrata PLC's (XTA.LN) $5.2 billion Las Bambas copper deposit,
Minera Chinalco Peru's $3.5 billion Toromocho project, and Sociedad
Minera Cerro Verde SAA's (CVERDEC1.VL) $4.4 billion expansion at
its mine in southern Peru.
The ministry expects Xstrata to spend about $3.5 billion over
the next two years at Las Bambas, where commissioning is expected
to start by the end of 2014. Minera Chinalco Peru, a subsidiary of
Aluminum Corp. of China Ltd. (ACH, 2600.HK, 601600.SH), also known
as Chinalco, will likely invest $1.8 billion this year at
Toromocho. Production at Toromocho is expected to start before the
end of 2013. Officials from Xstrata and Chinalco didn't return
requests to confirm the investment forecasts.
A spokesman for Cerro Verde confirmed that the company plans to
spend about $2.5 billion over the next two years on its
expansion.
"Cerro Verde estimates that spending on the $4.4 billion
expansion project will be approximately $1 billion in 2013 and $1.5
billion in 2014," said Eric Kinneberg, a spokesman for
Freeport-McMoRan Copper & Gold (FCX), which has a majority
stake in Cerro Verde. The expansion is expected to be finished in
2016.
Investments in the sector and export revenues from it will add
to the appreciation pressures on Peru's currency, making it more
difficult for the government to ease the trend.
The sol has appreciated steadily over the last several years
against the U.S. dollar, gaining 5.4% in 2012 and 4.9% in 2011. The
government has recently announced several measures aimed at slowing
down the appreciation, following complaints by exporters that the
stronger currency is hurting their profits.
Write to Ryan Dube at ryan.dube@dowjones.com