• Peru: A favourable Q1-24 for mining investment and output

Mining investment increased 17.2% y/y in Q1-24, surpassing our estimates. Although the greatest increase in investment came from Quellaveco, up 46% y/y, this was expected. What was less expected was the rapid execution of several brownfield projects, including Toromocho Expansion Phase II (Chinalco), Yumpag (Buenaventura), Inmaculada Replacement (Ares), and Antamina Replacement (Antamina). These projects drove spending on mining equipment up 114%. The 23% increase in exploration was also a little bit of a surprise.

There are other brownfield projects that are in the pipeline but are still awaiting permit approvals, including Raura Replacement (Minera Raura), Tantahuatay Replacement (Minera Coimolache), Huancapetí Expansion (Minera Lincuna), and Romina (Minera Chungar). Once these permits are obtained, these mines will start output three to five years after construction begins. The recent acceleration in brownfield projects reflects government initiatives in reducing approval times.

San Gabriel (Buenaventura) is the only greenfield project currently under construction and is expected to start operations in 2025. 

Chart 1: Peru: Mining Investment

Regarding recent investment announcements:

  • Corani (Bear Creek): another greenfield project that would become the world’s largest silver project. In its Q1-24 results, the mining company stated that it is awaiting the results of metallurgical tests, and when investment conditions in Peru improve, it will resume seeking financing to build the mine. Corani is located in Puno, a region sensitive to social protests that occurred during 2023.
  • Chalcobamba – Phase I (Las Bambas): mining company MMG announced that a long-term agreement with the representatives of the Huanquire community is still pending to ensure the operation of the pit. According to its Q1-24 results, the mining company will invest between $400 million and $450 million this year, aimed at expanding the tailings dam, Ferrobamba pit infrastructure (current operation), and executing Chalcobamba. These initiatives are part of their plans to extend the mine’s operation.
  • Minera Yanacocha (Newmont): again postponed the decision to execute Yanacocha Sulfuros and stated that this would be determined in two years. Regarding investment plans for 2024, Newmont stated that the expenditure will be similar to last year’s, between $300 million and $350 million, aimed at advanced engineering development, acquisitions, early earthworks, and plant construction.
  • San Gabriel (Buenaventura): continues under construction and is projected to start operations in 2025. According to its Q1-24 results, the entire project is 47% complete. Regarding the Yumpag project, Buenaventura received final operational approval on March 18th, 2024, allowing it to operate. For 2024, the mining company expects to execute an investment of between $300 million and $320 million, of which $220 million will be for San Gabriel.

Mining production

Output in Q1-24 performed favourably for all metals, partly due to y/y comparison at certain mines that had operated below capacity in the first two months of 2023 due to social protests. Additionally, mining companies continue to benefit from high metal prices, especially gold and copper.

  • Regarding copper, output increased 3.5% y/y in Q1-24, with high growth from Minera Antamina (+12.8% y/y) due to higher tonnage that offset lower grades; Southern Peru (+19.9% y/y) due to higher grades and mineral recovery; and Anglo American (+21% y/y) due to increased processing that offset lower grades. Additionally, there were increases in zinc (+4.7% y/y), lead (+13.4% y/y), iron (+6.1% y/y), and molybdenum (+26.2% y/y).
  • Gold output (+22.1% y/y) rose in Q1-24 due to higher output from Minera Yanacocha (+63.5%) due to higher leach recoveries from the use of injection leaching, and Minera Boroo Misquichilca (211.8% y/y) due to the start of the Carbonaceous Material Optimization Project (CMOP), which involves processing high-grade gold oxides that had been accumulated by the previous owner (Barrick Gold). Silver output increased (+9.3% y/y).
  • Meanwhile, tin output grew significantly in Q1-24 (+279.9% y/y), due to lower output in Q1-23, when the mine reduced its output capacity due to social protests.
Table 1: Peru - Top 20 Mining Companies by Investment Amount USD; Table 2: Peru - Mining Output

—Katherine Salazar