Photos for Testing HTML re ameru.io

Today's post has several images that will eventually go to my new (inactive now!) website.

Bearings & Hub Assemblies for Hyundai Accent & Sonata:

Two Pallets of Hub Assemblies for Hyundai (Ameru Trading del Peru S.A.):

Afternoon Snack in Lima, Peru (at "Chantilly" in Surco):

Mt. Everest (Nepal):

China & Peru Now Point To Recession?

Recently China has been in the news re their huge debts, new QEs, real estate overbuilding and other signs that they may be on the verge of recession.  Chin has also stopped importing the massive amounts of copper and iron ore that they had been importing for years.

Australia has started shutting down some iron ore mines.  Zero Hedge recently reported that iron ore prices have sunk to a very low $80 per tonne.

Peru has for the first time arrived at the edge (or worse) of recession.  The below chart comes from the INEI (Peru's economic statistics agency):

I found this at Otto Rock's interesting blog on Latin America and mining (especially Peru), here is the link to the article with the chart:

http://www.incakolanews.blogspot.com/2014/09/peru-gdp-july-2014-116.html

Note how close to zero Peru's growth has been in the past four months or so.  Otto comments that this news is being "spun" as good news, but..., if you account for the fact that governments often lie, then you might infer that Peru may have entered recession.  Otto's blog (incakolanews.blogspot.com) is quite irreverent, but is really more interest to people in mining or involved with Peru.

If Peru HAS entered recession, that would be the first time since the mild one in 2008-2009 (mild for Peru).

Another indicator that Peru may be slowing down is the recent performance of our own bearing business there.

QT_Year_Totals

Year	Expr1001
2007	$543,000
2008	$610,000
2009	$597,000
2010	$620,000
2011	$607,000
2012	$759,000
2013	$874,000
2014	$736,000

(figures rounded)

Some of the above lower 2014 sales figures (6% lower) we can explain away by noting that some of our best selling pieces have not been available, but Peru's slowing economy is a factor.  Many of our customers are telling us that business is slower.

Lower commodity prices (which hint at lower Chinese demand) also affect Peru as a major exporter of copper and other metals.  Gold production is likely to decline this year as well, as Peru's production at their huge Yanacocha mine is going down faster than production from mines gearing up.  Lower export volumes at lower prices, this is known in economics as "deterioration terms of trade", which is not good for an export economy.

* * *

In addition to the well known facts of China's risks (eg, credit bubble, "ghost" cities, bad demographics), there are some new tidbits of information:

-- Zero Hedge and others have been reporting a new giant QE in China...

-- A recent surveys of Chinese billionaires shows some 40% are considering leaving...

-- A LOT of Chinese money has arrived (and still coming) buying US real estate...

-- Alibaba has just IPO'd...  The largest IPO ever.  A typical sign of a top...

The Alibaba IPO may be significant in that it is typical of OUR country slowing as well as any Chinese themselves cashing out by buying US real estate.

Mish (Michael Shedlock) often comments on important financial issues out of China, often he cites respected Chinese observer Michael Pettis:

http://globaleconomicanalysis.blogspot.com/

Pettis has his own blog, mostly on China (where he teaches and writes):

http://blog.mpettis.com/

The Telegraph out of the UK has coverage of China that is usually better than that of the US media, although only a percentage is financial news:

http://www.telegraph.co.uk/news/worldnews/asia/china/

* * *

And it is not just Peru and China.  Brazil entered recession recently (probably due at least in part to lower commodity exports).  Europe and Japan are teetering...:

Spain and France are both in Mish's latest (France apparently now is recession).

Abe's "Abenomics" (deficit spending witgh help of the Bank of Japan's new QE).

The above remarks include nothing about the arguably recessionary conditions in the USA (if we ever recovered from 2008/2009).

Plan B Countries & Thoughts

Anyone who has read more than a couple of my articles already knows that Peru is "our" Plan B country, our bearing import company -- Ameru Trading del Peru S.A. is located in Lima.  We really do not have any kind of plans or ideas of anywhere else to go, as we have no good contacts anywhere else.  We do have an reasonably good understanding of Peru, and a large part of my wife's family there, however, and of course my wife is Peruvian (and American).

So, I cast the net out for people to contact me regarding THEIR Plan B countries, especially those who had actually DONE something (either move to one or show me serious planning).  Three people/groups sent in their stories (of serious work or having left), and I will share some of each here.  Four others have either looked at the subject in some depth and/or are otherwise planning for a difficult future in the USA.

I am by no means trying to look at many candidates, nor make a judgement.  Zero Hedge member "CrashIsOptimistic" pointed out recently that there is no perfect place.  That is obviously true, if there were, everyone would go there!

A curious thing I have noted among all of the below people discussed below: they dislike Socialism!

***

One of these is a big surprise!  I would not have guessed that country in my "Top Ten" or so guesses, but what I have learned very recently makes a very good case for:

Paraguay!

Beginning an extraordinary series of emails back and forth over just the past few days, I was contacted by a family living in Australia, and they are strongly considering moving from Australia to Paraguay!  From Australia?  Yes.  Perhaps some of you have read recently (over the past three - five years or so it has become much more obvious) that Australia has gone further than the USA down a socialist path...  These reports are evidently true, as this family had actively looked at a number of countries, including in SE Asia as well as a few in Latin America and a long hard look at Mauritius (an tropical island nation in the Indian Ocean).

Members of this family have visited (in Latin America) at least Paraguay and Uruguay (the latter is, in general, highly regarded by the ex-pat newsletter writers).  But, the family found a fairly stifling environment and tax burdens they did not want to deal with.  This family is tightly knit and looking for a quiet place from which they can work and enjoy what they have.  My guess (!) is that they have some, but not a LOT of money, so they can move to many places.

This family has impressed me with the amount of homework they have done.  Some of them have visited candidate countries of Mauritius, Uruguay, Paraguay as well as certain SE Asian countries "they know well".  Some are working (a couple at lucrative jobs it seems), some are not.  What they seek is tranquility and and environment that will LEAVE THEM ALONE.  And one that welcomes immigrants such as them.

They have settled for the moment on Paraguay.  But a family is a family, and this decision must be accepted by them all.  They have a lawyer already there whom it looks like they could trust (important).  They have spent at least a month there on visits.  The climate and the "laissez-faire" attitudes are to their liking.  Small scale farming will be at least a segment of how they live.

Taxes are low.  They welcome European-descendant people.  Paraguay is less enthused about Brazilians and Argentines.  People from Brazil and Argentina are swarming in due to local softly-repressive governments (both Socialist in governing), and the Brazilians are slowly accumulating land in Eastern Paraguay along their common border, and bring their language and attitudes with them, which are NOT in harmony with Paraguayans as a whole.

One things I did not know: Paraguay is growing very fast!  They are building roads and other infrastructure (good hospitals and schools).  It is becoming something of a regional business hub, in part due to their relaxed attitudes about taxes and regulations (there is the bribery, and some crime there, but not much violent crime like is seen, for example, in Peru).  Here is an interesting link I received today from one of the family members:

http://www.qwealthreport.com/is-paraguay-the-next-panama/

Holy moly!  The next Panama!?  Paraguay appears to be much more advanced than the ONE time I visited (in 1985).  I rather enjoyed the country, but, at least in 1985, I felt very remote...  On the other hand, this family has no problem with remoteness, they are not living in Sydney down under.

Paraguay appears to be a very interesting choice for those who want a warm (hot!) climate, a tarnquil (by Latin American standards), reasonable prices and a lack of ethnic tension (you see ethnic tension in Peru, there is still a lot of resentment against Westerners...).

This family is the only people I have communicated at length with who are NOT Americans.  They do NOT want to come to the USA either (not even the Republic of Texas, discussed further below), as we here are just a year or two behind Australia in adopting many of these soft-coercive policies imposed by the government of Australia.

R. Mix grade of their work so far: A+, with Distinction in walking the walk.

***

I have a  "Virtual Friend", that is, a friend whom I do not know personally (in fact she is my first virtual friend!), only through email and other Internet correspondence.

She is living on a tropical Pacific island, and rather enjoys it.  She is an American with some ties to the USA (family), but has been where she is at for years now (working there).  Her situation is tenuous there though, mostly dependent on being able to keep her job.  She has some assets in addition to her income.

Even though she likes life where she is at, she is looking at other islands (including more remote ones) that will be able to use her skill-set and better match her own need for a tranquil life.  One island she has looked at is Fiji, where one of my other correspondents has also looked.  She has also looked at New Zealand.

New Zealand seems to have tightened their rules for immigrants for prospective immigrants, a general trend I see in many other countries.

***

One of my other "virtual friends" (an American) is looking at Australia (hey, you better read this article!) as well as Fiji.  He may have other countries in mind as he has certain exceptional skills that allow him a freedom to go just about anywhere...  I have "known" him for a little while now, and it would not surprise me if I get an email from him

***

Another new contact (the family looking hard at Paraguay is a new contact) wrote me a nice pair of notes about his experiences in a variety of countries.  European born, but a traveler at heart (he has lived in many places), it looks like he found his place in New Zealand.  At this point I do not know how long he has been there, but he is married, with children, and one of those children is studying back in "the Old Man's own country".

Full circle!  I gather that he is happy in New Zealand, he is not stuck in a city...

***

Proving yet again that "great minds think alike" is another virtual friend, in fact he is my second one, and the ONLY one who I have actually met in person!  At a coin shop buying gold of course, smile,,,

He has been interested in the whole "Plan B Country" idea for years.  He has looked at Mexico and Costa Rica in some detail, he has at least one tie to each of those two.  But, for now, he is dug-in in a part of the country where one would NOT think that there are not many "Bug Out" places, yet he has one...  I don't where it is, ha ha ha!

He is there because his wife is unenthusiastic about leaving the USA...  A common theme among American men it seems.

***

I have two friends in The Republic of Texas who are probably just going to dig in there, for better or worse.  At least Texas is "still America" (for the most part), there are lots of rural areas and people who want to be left alone (and are armed to the teeth to protect their freedom).

Both of my friends are armed, don't mess with them!  They are "Molon Labe" kinds of guys, NOMI, CATIYMFs! are acronyms I would expect to hear from them when (not "if", when!) I go back to visit beloved Texas.

My first friend in the Lone Star Nation LIKES the idea of leaving, but his wife does not (they have a big family), and he told me they would require good medical facilities, a real issue for them.

My friend Ed is my BESTEST friend!  He will not be heading to Latin America, but if he gets some more money, he will be moving to the sticks...  And never be found!

***

To summarize this main part of the article, the family I described first is commendably on the march...  My virtual friend in the Pacific has already left!  My new contact living in New Zealand has as well (having lived in several other countries).  My virtual friend hunkering down in the "unexpected place" is one of the few people I know who are fairly close to being "ready" in a SHTF or even the dreaded TEOTWAWKI.

***

I close this article with a thought or two on PREPARING for a move to "Plan B".  They all say that it is best to start now, before the chips fall...  This is very true!

We have some infrastructure in Peru, and we could move some wealth (probably) in a pinch there, so we would be just fine down there.  Some of my above friends are more ready than others for moving overseas if it comes to that.  But, whether they move or not, they are getting ready for the storm...

Another one of my really smart Internet contacts I deal with on other matters.  But, he rolled an idea past me just the other day.  Namely what did I think of buying stamps (as in stamp collecting, some of you may have collected them when younger).  Of course some stamps are very valuable, which was his point.  Buying some valuable stamps, putting a pair of $20,000 stamps between Pages 112 and 113 in the book you are reading on your flight allows you to discretely move capital out...

As does having Bitcoin.  Perhaps Bitcoin's highest and greatest value is the ability to move a HUGE amount of wealth about as discretely as possible (providing that you can find a way to cash them in "over there", which, with some creative thinking, is soluble...).

I somewhat regret not having had more time to write a longer article on this subject of so much interest to bright and freedom-loving people.  This will have to do for now.  If this article finds a big audience (that I can see in my stats), there may be more articles with more experiences...

Comments and/or emails are very welcome.  Especially comments!

Gold News And Pictures From Peru

Andina (http://www.andina.com.pe/Ingles/noticia-perus-gold-exports-to-top-9-billion-in-2014-502070.aspx), a press agency in Peru, recently released the following news item:

Lima, Apr. 14. The value of gold exports from Peru is likely to reach US$ 9 billion in 2014, due to a better outlook for this year in the conditions of the international mineral price, the National Society of Mining, Petroleum and Energy (SNMPE) said on Monday.

Jose Miguel Morales, SNMPE’s head, noted the Andean nation holds a privileged position for taking advantage of a rising gold price environment projected for the second half of 2014.

“Within this environment exports’ earnings from this sector could match the amount recorded in 2012, thus surpassing US$ 9 billion,” he said in statements to El Peruano official daily.

According to Peru-based bank Scotiabank, the downward pressure on the international gold price is expected to finish, giving way to an upward trend in prices.

In that sense, Morales stressed Peru is top performer in Latin America in terms of gold production with output of 165 metric tons per year, while in the global standing, the Andean nation ranks sixth.

Peru's output of about 165 tonnes matches its 2012 production.  Andina published a picture of Peruvian gold bars with the note:

The picture does not make it clear, but if I had to guess, the above gold would be doré bars (typically produced at the larger mines) or from gold mills for the smaller miners.  Note that there are numbers taped to the bars, but otherwise are unmarked or marked only slightly.  They do not have the "refined" and polished look that most gold bars have.

***

Doré bars are typically from 55% - 80% or so gold with the balance being silver.  The always useful site goldbarsworldwide.com (highly recommended!) has a description of doré bars here (.pdf, bottom of Page 7):

http://www.goldbarsworldwide.com/PDF/BG_10_Categories.pdf

CNBC (http://www.cnbc.com/id/43974868) says:

Gold mines produce rough gold, called a dore bar. These bars are typically about 80 percent pure gold. The gold is then sent to a refinery, where it is refined into gold of different forms and purity.

The Malartic Gold Mine in Quebec that I visited and wrote about in June 2013 produces their own doré bars of about 55% gold.

Here is a doré gold bar from Peru (produced by Inca One Resources):

http://www.kincommunications.com/clients/inca-one-resources

Inca One Resources is a Canadian company that is buying small gold mills in Peru.  A recent law in Peru is tightening up standards there, so Inca One is buying up small mills in various parts of Peru to conform with the law (as many of the small mill owners are unable to comply with the regulations there in Peru).  Here is Inca One's introduction on their home page (http://incaone.com/):

Inca One Resources Corp (TSX-V: IO) is a Canadian-based mineral resource company and ore processing company with a gold milling facility in Peru, servicing government-permitted small-scale miners. A highly mineral-rich country, Peru is one of the world’s top producers of gold, silver, copper and zinc, with substantial production coming from small scale miners who need government permitted milling facilities to process their ore (such as the Company’s Chala plant).

Inca One is a very small junior gold company out of Vancouver.  They have one mill running now (Chala, some 650 km SSE of Lima, near small artisan miners, whom they hope to have as their ore supplies, Inca One acquired this facility in 2013), I believe the above bar is their ONLY production to date.  They also have a small mine 88 km east of Lima which they appear to want to develop.  Here is Inca One's "Fact Sheet":

http://incaone.com/_resources/Fact_Sheet_mar_13_2014.pdf

***

As Andina mentioned above, Peru is Latin America's number one gold producer and number six in the world.  They are on the verge of displacing South Africa if the latter's production goes down and/or if Peru is able to up their production in the coming years.

Peru has always had gold as a part of its culture, from the pre-Incas (from about 500 BC) until the present.  Some Inca (perhaps pre-Inca, but likely Inca, from National Geographic, 2006), the first item is an Inca headdress:

All of the Native Americans liked nature, the Incas liked making animal images out of gold (from a museum in Munich, Germany, photo via maryldonner.com), these are jaguars:

A Peruvian 20 Gold Soles coin from 1863 (from coinshome.net):

APMEX occasionally has Peruvian One Libra coins for sale, picture from apmex.com:

These Peruvian gold coins are hard to find and expensive down there, as it appears that there is genuine numismatical interest among Peruvian collectors.  I priced a One Libra coin when I was down there that was some 50% over its spot gold metal value, and the coin I looked at was not rare.

***

Peru's largest export is now gold.  Peru's economy is doing rather well now (in contrast to much of South America -- I just ran into my friend who sells capital equipment (pumps & compressors), he told me most of Latin America is slow now).  Gold will be an important part of the Peruvian economy for a long time.

Peru Trip Photos And Comments

We leave for the USA late tonight.  I had the chance to do other things than just work on bearing orders and look into mining.

I mentioned at one of the places I commented online that Peruvians do not think politically much like Venezuelans, want proof?  (*Click* on any image for a better view)  El Comercio is Peru´s top newspaper.

94% of Peruvians do not want a "Chavez Model" for their economy.  Only 25% think President Ollanta Humala is doing a good job...  66% think that First Lady Nadine Humala is doing a bad job in her role.  Hmm, sound like any "First Couple" we know?

Here are some surfer-dudes, I took this from the top of the cliffs of Miraflores (Lima), that day the biggest waves were some 5 feet.  They can get substantially larger.

I wrote my two previous mining articles based mainly upon my conversation with Ing. Luis Vargas Barbieri, the Director of Minas y Petroleo, Peru´s weekly paper on mining.  We talked at his office, behind him is a painting by his son:

A curious pair of ads from his paper, Peru´s only real gold refinery (left, which did not allow me to visit) and a Russian hotel there in Lima:

We did have dinner with three of our customers (front, L - R: Collections Director Raul (leaning in), customer Daniel Ramos, Managing Director Cesar Rodriguez, back, L - R: customer Carlos Quispe, customer Silvestre Huaman, Sales Director Roberto and some gringo...):

Lily´s younger grandaughter Alondra delebrated her first birthday and Baptism on the same day.  Here are Lily´s two grandaughters (Camila on the left, 18 months, and Alondra) at her party (75 people showed up):

The next day we went to a Peruvian "country style" restaurant, "La Rustica".  Peru is very proud of being, well, Peru!  Here is La Rustica´s drink coaster:

At La Rustica, little Alondra with her proud grandpa Cesar:

Here are cousins Viviana (who took the pictures of me doing Tai Chi a week or two ago) and Mauricio.  Viviana is the youngest of Lily´s three children, and Mauricio is the youngest of Oscar´s five (both are siblings of my wife).    Viviana and Mauricio get along very well.  Why?  Because they both show each other respect and accept the other for whom they really are.  We need more people like that...  (Viviana recently stayed with us for a few weeks back in January and February).  Both are about 15 and are studying hard to try and come to America to study at American universities.

This next picture shows China´s most popular pickup truck!  It is called the "Wingle" (look hard), although I do not know if that "Wingle" rhymes with tingle or with "ting lay".  It is made by Great Wall, one of many Chinese car brands here in Peru.

Finally, I invite one and all to participate in another contest!  The first one who answers the below question about the "QR" code below wins 0.05 Bitcoin (worth almost $30 as of now).  The answer MUST come by blog comment below, and send me your wallet number (sooner or later) to collect your BTC!  The question is: "What is so unusual (VERY rarely seen) about this QR Code?"  The black border making the outer square is not the answer.

Mines and Metals in Peru

My last article was a macro-level view of the gold industry here in Peru.  Today I would like to look at specific gold mines and projects that may help raise production if they come online as expected and hoped.  I will also examine the exports of other important metals, especially copper, which brings in more money than gold does.  Finally, I will take a quick look at oil & gas production here and their prospects.

Platinum and palladium have lately gotten some notice, but Peru does not produce these and similar platinum-group metals.

***

Yanacocha is Peru´s (and South America´s) largest gold mine.  It is located in the northern mining region of Peru, high up in the Andes in Cajamarca Department ("State").  The mine is owned almost in whole by Canada´s Newmont and Peru´s Buenaventura (I believe Buenaventura´s shares are available as well on the NYSE).  Golf production at Yanacocha has been going down, it is estimated by Minas y Petroleo that production will fall soime 14.6% from  2012 to 2013 (from 41,865 kg in 2012 to 35,756 kg in 2013).

Minas y Petroleo lists "Barrick" as the second largest producer, the table notes that includes all of Barrick´s production in Peru, it is also declining (from 26,900 kg in 2012 to 20,488 in 2013, a drop of 23.8%).

Yanacocha and Barrick represent over one third of Peru´s gold production (both years), so this is a serious matter for those in Peru who want more revenue from gold mining.  Overall, Peru´s esitmated 2013 gold production will drop about 3.9% (some of the other mines are taking up production some, and "informal" mining production is oncreasing as well.  That 3.9% works out to some 6200 kg less in 2013 (or about 198,000 oz (total, from 2012 to 2013) less, this number should be put in context with what should be coming on line soon, see below).

OK, re the Conga mine (nearby to Yanacocha, this mine has been delayed by protests now for a few years), I now have heard three versions:

1)  from the Cajanarca newspaper editor, that Conga is a HUGE wolrd-scale gold mine, much bigger than Yanacocha

2)  From Ing. Luis Vargas (Editor of Minas y Petroleo), that Conga is mostly a copper mine (well yes, almost every copper mine produces much more copper tonnage than gold tonnes)

3)  from a local contact here who grew up in Cajamarca Department, who also said that Conga would be a huge gold producer

The only written reference from Minas y Petroleo that I have handy lists Conga as a copper mine (with gold) whose "EIA" (I have not been able to track down exactly what that is, but I believe it is a formal plan that includes the detailed environmental impacts statement equivalents, the measures they take to lessen the impact on the locals (up to 13,000 will be affected to some extent, but I think it is really only about 1000 who will have to move...) has been approved by the Peruvian government (in late 2010), but protests have been intense enough so that Newmont and Buenaventura have considered just abandoning the project (it would be VERY expensive).  They have recently built a dam, however, their newest idea is "dams first, then the mine"), there are three or four lakes that would be destroyed by the project.  I myself looked at a detailed study done by a group from Spain (among others, including 12 parts of Peru´s governement), and it LOOKS like, if done right, that the locals would benefit (this first dam now holds about twice as much water as the lake it will replace -- the main factor), and there would be many jobs...  But, resentment, led especially by the political hard left, is leading the charge to stop the mine.

Cecilia Jamasmie files occasional accounts of what is happening around Conga, it looks like  no one should hold their breath looking for production to begin soon:

http://www.mining.com/newmonts-conga-opponents-vandalize-mine-site-kidnap-worker-91468/

Conga is estimated to produce some 680,000 ounces per year (Minas y Petroleo), which does not look like would be enough on its own to stop Peru´s current gold production decline.  That is a big increase-

Some new proposed mines have presnted their "EIAs" to the governent.  Coriani looks to be perhaps a successful model of how to negotiate with the locals in good faith.  Coriani is Bear Creek Mining, and it will be a silver mine (and lead amd zinc -- polymetallic like most silver and gold mines are).  Bear Creek worked very hard with the Aymara (the "other" main Andean Native Americans (the Quechua are the largest group, the direct decendants of Cuzco´s Incas and seems to be spreading the wealth around...

Ollachea (est, production when up and running) is some 112,000 oz / year.  Shahuindo will produce some 90,000 oz per year.

The total from the above three gold mines (Conga, Ollachea and Shahuinda) would be around an 890,000 oz increase, that would more than offset the 198,000 oz less in 2013...  Conga´s 680,000 oz (about 21,250 kg) is some three times the 2013 - 2012 shortfall.

(Ed. Note: Everyone is invited to check my arithmetic!  Please have at it and let me know if I got something wrong)

The way I see it, and Ing. Luis Vargas essentially agreed, is that in the very short-term production of gold in Peru will fall.

Cecilia Jasmasmie (not at the above link, but in a nearby article there at mining.com wrote that Peru has about 4% of the world´s gold reserves.

***

I write a lot about gold and a lot about Peru.  But, Peru is really a GIANT in copper!  Chile would be KING, see below table.  Peru is the third largest producer in the world and probably has the third largest copper reserves.  The below data comes from this link:

http://copperinvestingnews.com/16023-top-10-copper-producing-countries-of-2012.html

World Copper Producers and Reserves
	Production		Reserves
	(metric		(metric
Country	tonnes)		tonnes)
Chile	5.7 million		190 million
China	1.5 million		30 million
Peru	1.2 million		76 million
USA	1.1 million		39 million
Australia	970 thousand		86 million
Russia	720 thousand		30 million
Zambia	675 thousand		20 million
Congo	580 thousand		20 million
Canada	530 thousand		10 million
Mexico	500 thousand		38 million

Peru is currently in third place, both in production and reserves.  I am going to guess (but of course do not know) that perhaps large unexplored countries like Russia and Congo may have more waiting to be discovered, with perhaps Canada (up in the arctic) and China (up in Tibet and maybe in Yunnan or Xinjiang)...

Peru´s current production is dominated by four mines / companies:

Major Peruvian Copper Producers
	Production
	(2012 metric
Mine / Company	tonnes, est.)
Antamina	430 thousand
Southern	298 thousand
Cerro Verde	249 thousand
Xstrata Tintaya	161 thousand
Above Total:	1,138 thousand
Peru Total:	1,326 thousand

Source: Minas y Petroleo

The above Peruvian total for 2013 is very close to the estimate to the growth rate anticipated from 2012.

Minas y Petroleo reports that there are several new copper mine additions and new mines that are planned to be coming online soon.  Copper production in Peru will likely continue to grow.

***

Peru has always been famous for its silver production.  In recent years I have read that Peru and Mexico used to fight it out for No. 1 producer, but Ing. Vargas told me that China now produces a LOT of silver.  Here is a table I found (rounded numbers), Ing. Vargas is right, China just overtook Peru:

Top World Silver Producers in 2012
	Production
	(millions
Country	of ounces)
Mexico	162
China	117
Peru	111
Australia	57
Russia	45
Poland	41
Bolivia	40
Chile	37
United States	33
Argentina	24

Silver was estimated to grow its production a little over 1% in Peru in 2013.  It is not clear how much the silver mine Coriani silver mine will produce, but it will contribute to Peru´s production, perhaps bringing back into second place (?).

Peru has some 22% of the world´s silver reserves.  If silver makes a comeback in use has money (highly unlikely), well, that would likely increase its price.

***  I am still waiting for an passionate expert on silver to come and write a piece as a "Guest Post" here, an opportunity to gain fame among your peers!  ***

***

Many metals are found together, in Peru´s case many are "porphyrys" of rocks, especially igneous rocks.  Learn a little something about Copper Porphyry here:

https://en.wikipedia.org/wiki/Porphyry_copper

At that link you can find information on the Grasberg Mine (Indonesia, the world´s largest copper and gold mine) as well as the new Oyuu Tolgoi getting a lot of attention in Mongolia (so close to China and all).

Peru produces several other important other metals, many from porphrytic deposits:

Zinc
Lead
Molybdenum
Iron

Among those top three base metals, Peru has a modest but real share of world reserves, between some 4% and 8%, depending on whose mnumbers you believe.  Molybdenum (used to make steel tougher) is often found with copper.  Zinc and lead are often found with silver.

Production of these base metals in Peru is "reasonably stable".  These metals are produced in LARGE QUANTITIES there in Peru, the production figures are in the thousands of metric tonnes per year.

***

Oil and gas production is not as great as earlier hoped, although there seems to be enough natural gas in the southeastern jungles to justify another gas pipeline.  So, that´s good, I have earlier written about Peru´s great progress in powering some of Lima´s car fleets with NatGas as well as LNG (liquified natural gas).

There does not seems to be much progress in finding more oil however.  This would be a tremendous boon to Peru )and the world if they found enough).  Much of the country is unexplored, and I have been told that there are geological basins that *might* have oil and gas.

Gold And Other Metals Production In Peru

On this trip to Peru, I have finally had enough time to take some time to try and hook up with Peruvian experts in the gold mining industry (in particular) but also have a look at the other metals that Peru produces.

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
2001	4294		$1,166
2002	4750		$1,501
2003	5777		$2,102
2004	5956		$2,424
2005	6876		$3,055
2006	6674		$4,032
2007	5967		$4,187
2008	6418		$5,586
2009	6987		$6,805		peak production
2010	6346		$7,758
2011	6415		$10,104		price spike
2012	5370		$8,153
2013	5567		$8,172		(est.)
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

	Production
Country	(tonnes)
China	403
Australia	250
USA	230
Russia	205
South Africa	170
Peru	165
Canada	102
Indonesia	95
Uzbekistan	90
Ghana	89
http://goldinvestingnews.com/36495/2012-top-gold-producing-countries.html

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!

A Pretty Good Day In Lima

Saturdays back in the USA are sometimes a very leisurely day, or a day to run errands to get stuff done that may be hard during the week (food shopping, household chores, etc.).  Every married person knows this.

But, here in Peru, Saturdays are often busy, people doing other things.  Ameru works half the day, and they sold almost $1000 worth of bearings (not bad, Saturdays are usually extremely quiet), most of them to a customer in the provinces (which I like a lot, bigger footprint in Peru, and they pay in advance -- no credit risk!). I did a little bit of "work" but not much, they close at just after noon.

***

Just before my wife and her sister headed out (that story is coming very soon), I took "Los Lolos" (the family nickname for their parents, a few of you have met them!) to lunch.  Here is my photo of them while we were walking to get lunch this afternoon.  Ana is 83, Eleodoro is 93 (still works outside doing construction and stuff, I have shown him before in my blog).  When they walk together, they walk the "old-fashioned way", she takes his arm.  (Our daughter LOVES this stuff!)

***

My wife and here sister went off to see the Met!  The Metropolitan Opera of NYC is perhaps the best opera company in the world.  In Lima?  Well, The Met has a special deal, with quality cinemas now in 66 countries (and some 10,000 screens) where they show a live performance on some Saturdays at noon (US ET).  And they have one here in Lima.

(Sidebar: why do I even write here about opera?  Here´s a little secret for you socio-economic climbers out there: the richest and most connected of every city go to the opera, you want to get to know the right people, you go there, source: Esquire magazine.  Also, to make it (as a singer) in the opera, you have an excellent voice and work very hard to get there, only the top succeed, opera singers are not to compared to, say, Peter Frampton...)

My wife is a big-time opera fan, almost a fanatic (one of her friends is a fanatic).  She has been an opera fan ever since she lived in London in the 1970s and 1980s (two hitches there).  When we lived in the DC area many years ago (before we got married and for some 16 years thereafter), she subscribed almost year to go see the opera at the Kennedy Center, a very nice place to see opera.  When we moved to our current city, she has joined their opera as well, but there are fewer performances and the quality is not as good.  I´ll discuss one other drawback of the oepra in our town in just a bit.

The performance this week was Jules Massenet´s Werther, I had never heard of it before today, it is sung in French.  I provide a link below to one of the most well known passages, sung by the very same guy (Jonas Kaufmann) who was singing at the Met, and only the best of the best sing at the Met...

So, my wife and Lily go off to the opera, they did not need to dress up because who goes to the cinema all dressed up (no one)?  I asked my wife to provide information, some of you may like these comments...  First here is a handy table to be able to make a guess as to how YOUR opera experience might go, based on my wife´s experiences in the below venues:

Opera Venue	Audience Description & Behavior
The Met, New York City	NYC´s elite, very formal, very well behaved
The Kennedy Center, DC	The nation´s elite, VERY well behaved
The Opera in our city	Our city´s elite?, fairly poorly behaved
HD Cinema, Lima, Peru	The Lima elite, well behaved
HD Cinema in our city	Our city´s elite?, very poorly behaved

By "the Lima elite", of course I mean mostly the rich and white descendants of the Europeans.

And what do I mean by "poorly behaved"?  Well, everyone who goes to the opera (should) dress up, and be silent during the performances!  After all, opera productions are expensive to put on, and the rich and connected go there, so they should STFU! Sometimes there are quiet passges, and not all people (not even most) know the story lines and so are trying to pay attention while reading the subtitles...  It´s a respect thing.  And in most places they do.  But, not in our city!  The old ladies here talk among each other (or yell at their husbands), rustle papers (opening their snacks), smack their lips while eating and drinking...  Tut-tut!

The audiences in our city make my wife often want to pull her hair out!  It ruins the quality of the experience.  She even wrote to our local opera and suggested that they include an "Opera Etiquette" insert (English and Spanish) like some cities do.  The letter got nowhere, duh, and she is not just a subscriber, but a contributor (albeit a small contributor).

But, today things went very well.  Lily enjoyed the opera VERY MUCH and almost cried (that´s pretty normal at operas among women), she is now an opera fan, neither of them even KNEW that Lima had an HD screen showing it!  Now Lily (who likes culture as well) can see more of the opera as she can, her life will become a little better now,,, "gracias hermana!" (thanks, sister!).

***

When my wife is away, I am free...  I went to Starbucks (yes, they have one "on almost every corner" here too) and enjoyed a "Mocha Frappucino" (hey, it´s summer and hot now) while reading the News and Business sections of El Comercio, Peru´s biggest and most serious newspaper.  And Starbucks did a good job with my Mocha Frapucciono, the place was also jammed, I got one of the last places to sit down...

***

After walking back "home" and letting my coffee beverage settle (while wasting time on the Internet, although I DID get a joke out to my Joke List), I asked my 15-year old niece to take some pictures of me while doing my two favorite Tai Chi forms.  This is about the only exercise I do when down here, so I try to go three times a week.  I like the small nearby "Trinitarias Park", in Surco, a municipality of Lima; Tai Chi is much better done outside.

Here are three photos, taken by my niece Viviana, this first posture is from the "Yang Style Long Form", most movements in Yang Style are slow and graceful.  This posture is named (thanks wikipedia!) "Step Back and Ride the Tiger" (Tuì bù kuà hǔ, 退步跨虎):

Yeah, I'm getting kind of old and bald, so what are you going to do about it?  Please also note that static pictures show next to nothing about how Tai Chi flows, it is a wonderful exercise, and hey, it might come in handy some someday (it is a legitimate martial art, although almost practioner does it for their health).

This next one is from the more combative style Chen Xin Jia.  This is a more athletic form and is more similar to real combat (like karate's "katas" are).  It is also rarely seen in the USA.  Some of the movements are fast!  I am nowhere near mastering this form (or for that matter any of the others).  This one is hard and dynamic.  Here I am setting up a punch, setting up is slow, but the punch is fast:

Chen style Tai Chi, near the end of the form, setting up two punches from down low:

***

Here is a Youtube of Jonas Kaufmann singing one of the more famous selections from Werther, that my wife and her sister saw today.

 3:11

Massenet: Werther - Pourquoi me réveiller (Jonas Kaufmann)

• by 70Tamas
• 10 months ago
• 17,276 views

Jules Massenet: Werther Pourquoi me réveiller Werther - Jonas Kaufmann 

Blessed weekend, everyone!