INVESTMENT PROJECTS IN THE PERUVIAN MINING ROMULO MUCHO Rio de Janeiro, October 21st, 2016 romulomucho1@gmail.com
PERU'S GEOGRAPHIC INFORMATION
COUNTRY OVERVIEW
ECONOMIC GROWTH RATES Latinamerica projections: 2014-2016 (Anual average variation %) GDP AND GDP PER CAPITA (PURCHASING POWER PARITY PPP) OF MAIN ECONOMIES OF LATIN AMERICA ( 2015 and 2020)
PERU'S ECONOMIC OVERVIEW
PEOPLE OVERVIEW
PERU: MINING EXPORTS (US$ million) EXPORT VALUE BY PRICE INCREASE VALUE OF EXPORTS AT CONSTANT PRICE 2004 Sources: BCR
PERU EXPORTS (US$ million) Source: BCRP
Source: BCRP PERUVIAN TRADE BALANCE, 2006-2015 (Millions of US$)
MAIN ECONOMIC ACTIVITIES BY REGION
GDP BY INDUSTRY ANNUAL % CHANGE
GDP VARIATIONS
DEVALUATION AND INFLATION
COUNTRY RISK INDICATOR
PERU'S INVESTMENT GRADE RATING (Long term debt in Foreign Currency) Source: Bloomberg
FOREING INVESTMENT BY INDUSTRY (2015) Source: Proinversion
DIRECT FOREIGN INVESTMENT FLOW (MILLIONS OF US$) Source: BCRP
MACROECONOMIC INDICATORS FOR NEW GOVERNMENT GDP
WHY INVEST IN PERU?
MACROECONOMIC SOUNDNESS and continues leading regional growth allowing the GDP per capita to exceed the global average by 2020
MACROECONOMIC SOUNDNESS Peruvian economy grew rapidly in the last decade
DOING BUSINESS (Presenting Latin America countries FORBES (Presenting Latin America countries)
MACROECONOMIC SOUNDNESS Economic growth has been driven by an increase in private investment
MACROECONOMIC SOUNDNESS which today represents almost 20% of GDP
FRIENDLY INVESTMENT ENVIRONMENT Peru offers a favorable legal framework for foreign investment:
FRIENDLY INVESTMENT ENVIRONMENT Special Regimes: Legal Stability Agreements Regime whereby the Peruvian Government guarantees:
MINING SECTOR
MINING PRODUCTION Copper Gold Silver Lead Zinc Molybdenum Tin Iron
ESTIMATED GLOBAL NONFERROUS EXPLORATION BUGDET TOTALS, 1996-2015 Estimated Exploration Total Nonferrous Exploration Budget Total SNL Annual Indexed Metals Price 24 4,0 Nonferrous Exploration Budget (US$B) 22 20 18 16 14 12 10 8 6 4 2 3,5 3,0 2,5 US$8.8bn in 2015 2,0 1,5 1,0 0,5 Indexed Metals Price (1996=1) 0 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 0,0 Source: SNL Metals & Mining, information as of end-april 2016.
Source: MINEM PERU S MINING EXPLORATION EXPENDITURE
Source: MINEM MINING INVESTMENT 2006 2015 (US$millions)
EVOLUTION OF MINING INVESTMENT
MINING INVESTORS BY COUNTRY PAIS INVERSIONISTA INVERSIÓN MILLONES US$ PARTICIPACIÓN China 19,189 34% Canada 8,937 16% EE.UU. 5,335 9% EE.UU. / PERU 4,800 8% Mexico 4,160 7% PERU 3,775 7% UK 3,300 6% Australia 3,135 6% Brazil 2,034 4% UK / Australia 1,000 2% PERU / Korea / Japan 744 1% Japan 490 1% TOTAL 56,899 100% Source: MINEM
MINING INVESTMENT PORTFOLIO 2015 PROJECTS STAGE US$ Million % Expansion 9,215 16.20 % Construction 23,871 41.95% EIS 884 1.55% Production 22,929 40.30% Total Investment 56,899 100.00% Source: MINEM
TIPO DE INVERSION STAGE MINING PROJECTS SELECTED EMPRESA / INVERSIONISTA PROYECTO / REGIÓN METAL AÑO PRODUCCIÓN INVERSIÓN (US$ MM) Expansion In construction Soc. Min. CERRO VERDE (EEUU) Cerro Verde/ Arequipa Cu 2016 5,200 Expansion In construction Shougang Corporation (China) Marcona / Ica Fe 2018 1,480 Expansion EIS (approved) Southern Perú Copper (México) Toquepala / Tacna Cu 2017 1,200 Expansion Studies Minera Chinalco (China) Toromocho / Junin Cu 2018 1,320 Production In construction Xstrata Las Bambas ( Suiza) Las Bambas / Apurímac Cu 2016 7,500 Production In construction Hochschild Mining ( Perú) Inmaculada/ Ayacucho Au-Ag 2015 420 Production EIS (approved) Cía. de Minas Buenaventura (Perú) Tambomayo/ Arequipa Au-Ag 2016 250 Production EIS (approved) Tahoe Resources ( Canadá) Shahuindo / Cajamarca Au 2016 70 Production EIS (approved) Anglo American ( UK) Quellaveco/ Moquegua Cu n.d 3,300 Production EIS (approved) Jinzhao (China) Pampa de Pongo/ Arequipa Fe n.d 1,500 Production EIS (approved) Southern Perú Copper ( México) Tía María / Arequipa Cu n.d 1,400 Production EIS (approved) Cía. Minera Milpo ( Brasil) Pukaqaqa/ Huancavelica Cu n.d 706 Production EIS (approved) Bear Creek ( Canadá) Corani / Cusco Ag n.d 574 Production EIS (approved) IRL Minera ( Canadá) Ollachea / Puno Au n.d 178 Source: MINEM
COPPER CONTINUES TO SEE LONGER TERM PRICE SUPPORT Source: Wood Mackenzie
RELATIONSHIP BETWEEN METAL PRICES WITH PERUVIAN ECONOMY Source: COMEX / BCR
MAIN DIFFICULTIES THAT FACES THE PERUVIAN MINING INDUSTRY External Factors: Dropping of the international metal prices and changes in the demand and supply. Internal Factors: Government does not explain the benefits of the Mining Industry to the communities Lack of environmental regulations in the past which has contributed to present mining environmental liabilities Lack of information by the local population regarding the water use and consumption Uncontrolled wish of the communities to get larger economic benefits from the mining activities Mistrust of the communities in the mining companies. Government offices are too slow and bureaucratic
RELATIVE IMPORTANCE OF THE FACTORS THAT CONTRIBUTE TO THE COMPETITIVENESS OF THE PERUVIAN MINING INDUSTRY PwC
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