BMI View: Peru's mining industry will be a regional growth outperformer, supported by a strong copper project pipeline, low operating costs and a favourable business environment over the coming quarters.
|e/f = BMI estimate/forecast. Source: National Sources, BMI|
|Mining Industry Value, USDbn||21.50||20.70||21.30||22.80||24.50||26.20||27.90|
|Mining Industry Value, USDbn, % y-o-y||-7.90||-4.00||2.90||7.10||7.60||6.90||6.40|
Latest Updates & Structural Trends
Peru's extractive industry will experience significant growth over our forecast period to 2020. We expect the sector's value to climb from USD21.3bn in 2016 to USD27.9bn by 2020, averaging 6.2% annual growth. In particular, we expect copper to outperform in terms of production growth due to a strong project pipeline and continued investment. Silver and gold will also benefit from a number of key projects, while tin and zinc output posts slower growth. The country will remain a top global producer of each of these metals.
Peru's copper sector will see significant growth, as low production costs encourage output and major projects come online. We forecast copper production to increase from 2.0 million tonnes (mnt) in 2016 to 2.6mnt by 2020, averaging 9.2% annual growth. In Q116, the country's copper output increased q-o-q by 52.0%, from 341 thousand tonnes (kt) in Q115 to 514kt. Key projects include MMG's Las Bambas mine, Freeport's expansion at the Cerro Verde mine and Southern Copper's ramp up plan at Toquepala.
We revised upward our 2016 silver production growth forecast for Peru, from 4.0% to 6.0% on the back of a strong project pipeline and stronger than expected Q116 data. For instance, Glencore reported a significant increase in silver output at the Antamina mine, with the company's 34% share reaching 1.9moz in Q116 compared to 969 thousand ounces (koz) in Q115.
Ongoing metal price weakness, anti-mining protests, and illegal mining will remain key challenges to Peru's mining industry. While these factors may result in project delays, Peru's low operating costs, supportive political environment and significant project pipeline will offset any production declines.
Peru's mining sector will be supported by the country's vast mineral reserves, open investment framework, and low operating costs. Peru will remain competitive relative to other Americas mining jurisdictions and we expect mining firms will continue to invest in the country. While the country's overall tax levels are relatively higher than its regional peers, miners in Chile still face elevated labour, electricity and water costs compared to Peru.
The Peru Mining Report has been researched at source and features BMI Research's mining and commodity forecasts for metals, minerals and gems, covering all major indicators including reserves, production, exports and values. The report also analyses trends and prospects, national and multinational companies and changes in the regulatory environment.
BMI's Peru Mining Report provides industry strategists, service companies, company analysts and consultants, government departments, trade associations and regulatory bodies with BMI's independent forecasts and competitive intelligence on the mining industry in Peru.
- Use BMI's independent industry forecasts on Peru to test other views - a key input for successful budgeting and planning in this mining market.
- Target business opportunities and risks in Peru's mining sector through our reviews of latest mining industry trends, regulatory changes and major deals, projects and investments in Peru.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity), Key Projects Tables and Competitive Landscape Tables.
BMI Industry View
Summary of BMI’s key forecasts and industry analysis, covering mining reserves, supply, demand and prices, plus analysis of landmark company developments and key changes in the regulatory environment.
Industry SWOT analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the mining sector and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (2009-2013) and forecasts to end-2019 for key industry and economic indicators, supported by explicit assumptions, plus analysis of key risks to the main forecasts. Indicators include:
- Mining industry: Industry size (USDmn), real growth (%), % of GDP, employment (‘000), workforce as % of total workforce, average wage (USD).
- Output: Production volumes (‘000 tonnes, carats etc.) for all major metals, minerals, ores and gems mined in each state, including bauxite, copper, gold, coal, lead, silver, tin, titanium, uranium, zinc etc.
- Exports: Value of exports (USDmn) for all major metals, minerals, ores and gems mined in each state.
- Commodity markets: Global demand, supply, stocks and benchmark prices (USD) for aluminium, copper, lead, nickel, tin, zinc, gold and steel.
BMI’s Mining Risk Reward Index
BMI’s Risk Reward Indices provide investors (mining companies and support service providers) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
Competitive Landscape Tables & Analysis
Comparative company analyses and tables detailing USD sales, % share of total sales, number of employees, year established, market cap/NAV, ownership structure, production and % market share.
Details and analysis of all current and planned developments (new ventures, capacity expansion and other investments) across the sector broken down by metal/ore.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
The Mining reports are based on an extensive network of primary sources, such as multilateral organisations (UN, WB, IMF), national chambers of commerce and industry, national statistical offices, government ministries and central banks, and multinational companies.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.