Peru Mining Report Q3 2016

Date: June 15, 2016
Pages: 62
US$ 1,295.00
Report type: Strategic Report
Delivery: E-mail Delivery (PDF)
ID: P98C115A408EN

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Includes 3 FREE quarterly updates

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.

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.
BMI Industry View
  Table: Peru Mining Industry Value Forecast (2014-2020)
Latest Updates & Structural Trends
Industry Forecast
Copper: Rapid Growth Rate To Continue
  Table: Copper Production Forecast (Peru 2014-2020)
  Table: Peru - Key Copper Projects
Structural Trends
Gold: Project Pipeline To Bolster Output
  Table: Gold Production Forecast (Peru 2014-2020)
  Table: Peru - Key Gold Projects
Structural Trends
Hochschild and Buenaventura To Dominate Sector
Protests To Continue Against The Sector
Lead: Growth To Plod On
  Table: Lead Production Forecast (Peru 2014-2020)
  Table: Peru - Key Lead Projects
Structural Trends
Silver: Solid Growth Ahead
  Table: Silver Production Forecast (Peru 2014-2020)
Structural Trends
  Table: Peru - Key Silver Projects
Tin: Slow Return To Growth
  Table: Tin Production Forecast (Peru 2014-2020)
Minsur To Scale Back Investment
Zinc: Brief Dip In 2016
Latest Developments
  Table: Zinc Production Forecast (Peru 2014-2020)
  Table: Peru - Key Zinc Projects
Structural Trends
Industry Risk Reward Ratings
Peru Risk/Reward Index
Industry Rewards
Country Rewards
Industry Risks
Country Risks
Americas: Risk/Reward Index
Key Takeaways
Latest Revisions
  Table: Americas - Mining Risk/Reward Index
Regulatory Development
Trade & Investment Risk Analysis
Commodities Forecast
Commodities Outlook
  Table: BMI Commodities Price Forecasts
Competitive Landscape
  Table: Peru - Largest Listed Mining Firms Financial Data, 2015
Company Profile
Buenaventura - Q3 2016
Latest Results
  Table: Cia de Minas Buenaventura - Key Financial Data
Company Profile - Grupo México - Q3 2016
  Table: Grupo Mexico - Key Financial Data
First Quantum - Q3 2016
Latest Results
  Table: First Quantum - Key Financial Data
Regional Overview
Industry Forecast Methodology
Risk/Reward Index Methodology
  Table: Weighting Of Indicators
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