• Peru: Mining investment continues to fall; the start of Quellaveco operation boosts copper production

Mixed signals out of China on reopening versus steeply climbing cases and canceled policy meetings are seeing erratic trading ahead of US CPI data. The USD is trading mixed with US yields in narrow ranges overnight, while crude oil prices are stronger against losses in iron ore and copper (Asia benchmarks) in a mixed reaction to China reopening developments.

US inflation data out at 8.30ET will provide the final piece of the puzzle ahead of tomorrow’s Fed decision that will likely dictate the market mood for the rest of the year. 

The Latam backdrop is relatively quiet today as we continue to monitor developments in Peru. Yesterday, Pres Boluarte formally presented to Congress a bill to bring forward elections to April 2024, but this did not materially quash social unrest that is, in fact, worsening as casualties climb from clashes between protestors and police; it’s looking increasingly likely that elections will need to take place at some point next year. Peru’s stock exchange fell ~2.5% yesterday, its steepest decline since Sep 23, although the PEN again held up well gaining 0.4% in its first trading day post-Castillo’s removal.

Mining operations have, for now, not been impacted according to the head of the SNMPE (Peru’s mining and energy society). Late last night, however, the operator of the Cerro Verde mine noted that although production is not impacted (yet), the location is facing delays in the transport of people, supplies, and product. Highway blockages (among other logistical issues) could see mines curtail supply if transportation to/from the mines is increasingly challenged.

Pres Castillo, from his detention cell, accused Pres Boluarte of being an ‘usurper’ and spoke of himself as the legitimate president of the country—certainly fanning the flames of public turmoil. Leaders in Mexico, Colombia, Argentina, and Bolivia denounced the treatment of the former president in a joint statement released last night.

Brazil’s incoming Finance Minister Haddad meets with the BCB’s head Campos Neto and the Fin Min incumbent Guedes later today as we await more details on Lula’s fiscal and spending objectives—aside from the spending cap exclusion for social programs. The BCB published the minutes to its December policy meeting this morning, which highlighted that the bank will resume hikes if needed and whether to hold rates at elevated levels for a long period to ensure inflation convergence.

—Juan Manuel Herrera



Peru’s mining investment fell 7.1% y/y in October, according to data from the Ministry of Mining (chart 1). In the January–October period, mining investment increased 3.8% y/y. These monthly declines during the second part of the year (H2-2022) align with our expectations of a 4.2% overall drop for 2022. We expect mining investment to fall 11.3% in 2023.

Chart 1: Peru: Mining Investment

Mining output was mixed across the different products (table 1). Copper output increased 8.3% y/y in October, principally due to the start of Quellaveco operations in September. The mining company started with an output level of around 20,000 FMT (fine metric tonnes) per month. If it maintains the same levels for the remainder of 2022, it will exceed what was projected by the mining company for this year (75,000 FMT). Next year, it should produce at full capacity (300,000 FMT per year).

Table 1: Peru—Mining Output

Gold output also increased (+5.2%), despite the depletion of mines, as did that of lead (+3.0%) and tin (24.2%). On the other hand, the production of zinc (-5.4%), silver (-2.3%), iron (-8.2%), and molybdenum (-3.9%) fell.

Anglo-American’s Quellaveco project continues to decrease its investment. In October, investment fell 38.1% m/m (table 2) and we expect it to continue decelerating until the end of the year. Meanwhile, Antamina investment continues with plans to expand operations over the next eight years, as does Minera Yanacocha’s sulphide project.

Table 2: Peru—Top 20 Mining Companies by Investment Amount

In a press release at the end of October, Buenaventura announced that it would restart works on San Gabriel’s gold and silver mining project (USD470mn). Preliminary work began this year with architectural construction starting in 2023; it is expected to be finished by the end of 2024.

—Katherine Salazar