Mining investment down for third year running

04 December 2016

In common with most other mining countries, Peru has seen a substantial reduction in investment in the last three years. In 2015, investment flows were valued at $7.5 billion, compared with a record $9.7 billion in 2013. Investment is expected to have dropped even further in 2016, according to figures from the Ministry of Energy and Mines.

The drop is roughly in line with that seen at the worldwide level where investment fell a full 55% between 2012 and 2015. This tends to belie the argument, often used in the Peruvian press and in local specialist publications, that the drop in investment is due to such local factors as resistance from communities and the bureaucratic procedures that mining companies face in investing in Peru.

The fall in mineral prices, hastened by a fall-off in demand from China, has affected international companies across the board, reducing their profitability and cutting into the equity value of their shares (and thus reducing capital for investment).

The drop in investment in Peru is paralleled by figures for concessions authorised for mining activity. These rose, on an annual basis, every year from 2002 until 2013, but have dropped significantly since then. In 2013 they peaked at 26.8 million hectares, but are expected to reach 19.2 million in 2016.

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    The Peru Support Group exists to promote social inclusion, sustainable development and the observance of human rights in Peru. To that end the PSG highlights shortcomings in observance of established norms, whether international or local in nature, in its research, advocacy and publications. In so doing, it underscores the relationships that exist within the political system, how institutions work, and the effectiveness of policies that aim to reduce poverty and inequality within the context of sustainable development.

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