Industry Trend Analysis - Government Support To Offset Protests' Impact - JUNE 2015

BMI View: Increasing public protests regarding Peru's mining sector will delay new projects from coming online. However, sector output growth will persist due to supportive government policies and major miner presence.

Continued friction between the public and mining corporations, concerning the environmental and social impact of the mining industry, will delay new projects from coming online. The Peruvian government estimates that the country's current mining projects pipeline totals over USD75bn, meaning that continued unrest will have considerable effects within the country. Nevertheless, Peru will remain a significant global producer of several base and precious metals, and we forecast the value of Peru's mining industry will grow from USD23.2bn in 2015 to 27.2bn in 2019. This would represent average growth of 3.4% year-on-year (y-o-y) over 2015-2019, significantly slower than 14.9% y-o-y over 2010-2014.

Protests by local communities will continue to cause project delays over the coming quarters. On May 24 2015, Peru's government declared a 60 day state of emergency in the country's Arequipa region due to ongoing violent public unrests against Southern Copper's Tia Maria mine. Since March 2015 there have been protests against the Tia Maria project due to concerns about the mine's environmental impact. As a result, on May 15 2015, Southern copper, a subsidiary of Grupo Mexico, delayed the project for 60 days to alleviate public concerns. The USD1.4bn project was set to come online by Q317 and produce 120kt of copper at full production capacity. However, we expect this deadline to be moved to Q118 as a result of the current situation.

Tia Maria Project To Be Delayed
Peru - Southern Copper Mine Project

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