Mining in Peru is such a BIG and complex set of industries that I have decided to write two articles: this one more focused on gold and the macro environment of gold production in Peru, and my next article will cover other metals (especially copper, a much bigger business than gold) as well as some comments on natural gas and oil in Peru.
Mining is the backbone of the Peruvian economy. Yes, mining is a dirty business, but with no mines, we would have no (little) metals, and life would be very different... Gold mining, done in a sloppy way, badly pollutes the environment. ALL mining, done poorly, pollutes badly. Peru has a long and sad history of having parts of its environments wrecked by pollution, although standards are getting better.
Mining exports are about 60% of Peru´s total exports. Other major Peruvian exports include agricultural products (like coffee, cocoa, fresh flowers, fishmeal, fruits and vegetables), textiles, artisanal products (souvenir-like products) and some steel manufactured products.
I had the great fortune to meet with the Editor (Ing. Luis Vargas Barbieri, a gentleman of the "old school", now in rapid decline worldwide) of Minas y Petroleo, the weekly mining journal here in Peru. We discussed, both at his office and over lunch, the current state of gold and other mining in Peru. He also gave me a few issues of Minas y Petroleo for my inspection, and where I took much of the data for this article. 2014 is their 20th year of publishing!
Muchas gracias, Ingeniero! Ingeniero means "Engineer" in English, it is considered a prestigious title in Peru, as would be "Architect", etc.).
After the usual pleasantries (children, etc., he has five, all grown), we got down to business. Overly general for the moment, he told me that there had been a small decline in gold production in Peru in very recent years, based on lower production at Yanacocha and other major gold mines as well as very slow replacement production coming online (Conga has been slowed down a lot, but it looks like it will come online in say a couple fo years, though there are still issues to be worked out). I mentioned Yanacocha and Conga here: http://robertmixblog.blogspot.com/2013/03/review-of-panorama-cajamarquino.html.
His estimate is that gold production will continue to stagnate or decline a bit, perhaps until the companies, the Peruvian government and the locals (both for and against mining) are all able to make some deals happen. All three components: gold mining companies, the Peruvian government and the locals are all powerful players, all need to be onboard for any mine to get going.
Here are the latest statistics for gold exports, in ounces and US dollars:
|Exports of Gold from Peru|
|Gold Exports||Gold Exports|
|(thosands of||(millions of|
|Year||troy oz)||US dollars)||Comment|
|Source: Minas y Petroleo (Peru, Issue No. 834)|
The figures speak for themselves, but note three things:
1) Production has indeed been falling reasonably slowly but resonably surely since the peak in 2009
2) Note how important the dollar volumes are from 2010 to now (call it an $8 billion dollar range) vs. much lower in 2001...
3) The figures do not include (as far as I can tell) the informal and polluting production from "Madre de Dios" (the SE jungle) area, this is a real issue, as that area of Peru has one of the world´s largest biodiversities and even a couple of almost completely uncontacted native Amazonians (latter was true as of a year or two ago anyway)
It looks like the rather optimistic comments I had in earlier articles about Peru and gold will likely NOT come about as quickly as I had thought. The above link from a year ago noted that the Editor of the Cajamarca newspaper thought Conga would be huge (well, yes) and coming online soon (no). No other big gold mines are expected to come online soon in Peru.
Here is where Peru stacks up vs. other major gold producers (from mines only, the USA also produces a fair amount of scrap gold from jewelry and electronic goods) worldwide, Peru is currently in sixth place, maybe they will soon capture No. 5 from South Africa, maybe not:
2012 Gold Production -- Major Producers
Quick math check: (165 tonnes) * (approx 32.11 oz / kilo) * (1000 kg / tonne) = 5,298,000 toz (close enough (1.35% difference) to above figure 5,370,000 from Minas y Petroleo).
We went on to talk about other issues related to gold production in Peru. Gold is found in all three mining regions of Peru (the North -- Yanancocha, South America´s largest gold mine), the Center (famous more for silver, lead, copper and zinc production with some gold as well) and the South (copper and gold). Note that he told me that gold is almost always produced at mines where a lot of copper is produced! There is a correlation, but it is not all that high, based on copper vs. gold production at top mines.
The next piece will be more about specific mines and metals production in Peru.
Thanks for dropping by!