Industry Trend Analysis - Fujimori Victory Would Be Added Benefit To Mining - APR 2016

BMI View: A Fujimori presidential victory will be a boon to Peru ' s mining sector, entailing minimal changes to the country's policy orientation and supporting investment over the coming years.

A Keiko Fujimori administration will bolster Peru's business environment by enacting a series of reforms aimed at promoting exports and driving investment in infrastructure, both of which would benefit Peru's mining industry. Peru's mining sector growth will continue to be supported by the government, based on our Americas Country Risk team's core view for centre-right opposition leader Keiko Fujimori to win Peru's upcoming presidential election. An established political figure who inspires both fervent support and adamant opposition, Fujimori will leverage voter concerns over security and inequitable economic growth to secure a close second-round victory in June against a more centrist opponent ( see: ' Election Preview: Fujimori Likely Victor Of Tumultuous Campaign ' , March 24).

While our Country Risk team highlights Peru's steady course as an investment-friendly economy committed to prudent macroeconomic policies, regardless of the election's outcome, a Fujimori administration in particular will bolster Peru's business environment through export-oriented reforms and infrastructure investment. Both of these developments will support the mining industry, which is an export-driven sector and relies heavily on infrastructure for transporting materials. For instance, Peru's copper exports increased 29.3% y-o-y in 2015. We forecast Peru's mining industry value to increase from USD20.6bn in 2016 to USD25.5bn by 2020, driven by strong copper production growth.

Solid Investment Despite Price Weakness
Peru - Mining Industry Investment (USDmn)
Source: Sociedad Nacional de Mineria, Petroleo y Energia, BMI, Bloomberg

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