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Call for SA mining to peruse Peru
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9th April 1999
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It is important that South African mining companies become involved in Peru, Peruvian Energy and Mines Minister Daniel Hokama tells Mining Weekly.

About 60% by value of Peru’s mining production last year was provided by gold and copper, each contributing about 30%.

South African ambassador Johann Kilian has already paid a visit Hokama in Lima, and both sides have expressed interest in establishing South African companies in Peru.

“As yet we have no technical or geological co-operation with South Africa, but it would be nice to develop such co-operation,” says Hokama.

“At the moment the country most interested in Peru’s mining industry is, without question, Canada – about 50% of investment in Peruvian mining is from Canada,” he points out.

Even Australian companies are entering the market, although Australia has no embassy in Lima, and covers that country from its base in Chile.

In the area of mining equipment, Peru itself has only a small manufacturing sector.

“Some mining peripherals are produced here, such as explosives, but most are imported, with the main sources being the US, Canada, Finland and Sweden,” reports Hokama.

While Peru is best-known for its large open-cast mines, the country does have a medium-sized underground mining sector.

“Although growth in the underground mining sector has not been as great as in the open-cast sector, there has been growth and investment nevertheless,” he adds.

And it is in underground mining that South Africa’s mining and mining-equipment expertise and technology is strongest.

Production costs in Peru’s underground gold-mines are about US$230/oz, while those for open-cast gold-mines are much lower.

At Barrick’s new Pierina mine they are expected to be about US$60/oz.

Pierina is likely to produce 800 000 oz/y of gold, worth about US$200-million.

“The new mines which have just started production, such as Pierina and Yanacocha, are not so important in terms of investment, but are very important in terms of output,” explains Hokama.

A mining project that does involve considerable investment is Antamina, a US$2,5-billion polymetallic, but mainly copper, mine.

“Antamina is located in a very poor area, so we expect important beneficial spin-offs from the project,” says Hokama.

The face of Peruvian mining has been transformed by privatisation: in 1990, the industry was overwhelmingly in State hands, but today 97% is in the private sector.

Since this and other reforms were introduced, mining production has grown by 40%, and it is estimated that, by 2007, it will have increased by 100% over the 1997 level.

“Privatisation in the mining sector has been highly successful – it has generated direct revenue of US$1,2-billion in cash, plus another US$4,5-billion in investment commitments,” says Hokama.

The only significant mine remaining in State hands is Cerro de Pasco, producing copper and zinc and which will be privatised this year.
Edited by: System Author


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