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Peru Mining Report Q3 2016

  • June 2016
  • -
  • Business Monitor International
  • -
  • 62 pages

Includes 3 FREE quarterly updates

BMI View: Peru's mining industry will be a regional growth outperformer, supported by a strong copperproject 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 expectthe sector's value to climb from USD21.3bn in 2016 to USD27.9bn by 2020, averaging 6.2% annualgrowth. In particular, we expect copper to outperform in terms of production growth due to a strongproject pipeline and continued investment. Silver and gold will also benefit from a number of keyprojects, while tin and zinc output posts slower growth. The country will remain a top global producer ofeach of these metals.

- Peru's copper sector will see significant growth, as low production costs encourage output and majorprojects come online. We forecast copper production to increase from 2.0 million tonnes (mnt) in 2016 to2.6mnt by 2020, averaging 9.2% annual growth. In Q116, the country's copper output increased q-o-q by52.0%, 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 backof a strong project pipeline and stronger than expected Q116 data. For instance, Glencore reported asignificant increase in silver output at the Antamina mine, with the company's 34% share reaching1.9moz in Q116 compared to 969 thousand ounces (koz) in Q115.

- Ongoing metal price weakness, anti-mining protests, and illegal mining will remain key challenges toPeru'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 investmentframework, and low operating costs. Peru will remain competitive relative to other Americas miningjurisdictions and we expect mining firms will continue to invest in the country. While the country'soverall tax levels are relatively higher than its regional peers, miners in Chile still face elevated labour,electricity and water costs compared to Peru.

Table Of Contents

Peru Mining Report Q3 2016
BMI Industry View 7
Table: Peru Mining Industry Value Forecast (2014-2020) 7
Latest Updates and Structural Trends 7
SWOT 8
Industry Forecast 10
Copper: Rapid Growth Rate To Continue 10
Table: Copper Production Forecast (Peru 2014-2020) 10
Table: Peru - Key Copper Projects 10
Structural Trends 11
Gold: Project Pipeline To Bolster Output 15
Table: Gold Production Forecast (Peru 2014-2020) 15
Table: Peru - Key Gold Projects 15
Structural Trends 16
Hochschild and Buenaventura To Dominate Sector 16
Protests To Continue Against The Sector 18
Lead: Growth To Plod On 19
Table: Lead Production Forecast (Peru 2014-2020) 19
Table: Peru - Key Lead Projects 19
Structural Trends 20
Silver: Solid Growth Ahead 22
Table: Silver Production Forecast (Peru 2014-2020) 22
Structural Trends 22
Table: Peru - Key Silver Projects 24
Tin: Slow Return To Growth 25
Table: Tin Production Forecast (Peru 2014-2020) 25
Minsur To Scale Back Investment 26
Zinc: Brief Dip In 2016 28
Latest Developments 28
Table: Zinc Production Forecast (Peru 2014-2020) 28
Table: Peru - Key Zinc Projects 29
Structural Trends 29
Industry Risk Reward Ratings 32
Peru Risk/Reward Index 32
Rewards 32
Industry Rewards 32
Country Rewards 32
Risks 32
Industry Risks 32
Country Risks 33
Americas: Risk/Reward Index 34
Key Takeaways 34
Latest Revisions 35
Table: Americas - Mining Risk/Reward Index 36
Regulatory Development 37
Trade and Investment Risk Analysis 37
Commodities Forecast 41
Commodities Outlook 41
Table: BMI Commodities Price Forecasts 41
Competitive Landscape 42
Table: Peru - Largest Listed Mining Firms Financial Data, 2015 43
Company Profile 44
Buenaventura - Q3 2016 44
Latest Results 46
Table: Cia de Minas Buenaventura - Key Financial Data 46
Company Profile - Grupo Mexico - Q3 2016 47
Table: Grupo Mexico - Key Financial Data 49
First Quantum - Q3 2016 49
Latest Results 52
Table: First Quantum - Key Financial Data 53
Regional Overview 54
Methodology 59
Industry Forecast Methodology 59
Sources 60
Risk/Reward Index Methodology 61
Table: Weighting Of Indicators 62

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