By Ronin 360
Today, the world is entering a new dynamic that redefines the demand for minerals and opens a completely different cycle. In the last 25 years, two large price waves have been observed: the first, driven by Chinese growth between 2000 and 2014, when its economy advanced at rates close to 10% annually; and the second, the current one, triggered by the global process of energy transition and amplified by the rise of artificial intelligence.
Both phenomena require unprecedented volumes of minerals, especially copper, for the mass manufacturing of electric cars, photovoltaic panels, wind turbines, transmission lines, data centers and increasingly sophisticated electronic systems.
This is not speculation, but a trend supported by evidence. S&P Global estimates that refined copper consumption could double in the next ten years, keeping prices high enough to support a new investment cycle. At the same time, the IMF warns that the energy consumption of data centers is already equivalent to that of France or Germany, and could triple between now and 2030, reaching the level of India, the third most intensive country in energy demand.
By taking advantage of this new environment, Peru could add approximately one additional percentage point of economic growth over the coming decades, as projected by the World Bank.
Peruvian advantage
The country’s strategic advantage is significant. Peru has a portfolio of 67 mining projects, totaling almost US$65 billion in potential investments, of which more than half – 36 projects – correspond to copper and concentrate around US$45 billion, equivalent to 71% of the total.
In the next two years, ten projects could begin construction, including Tía María, Zafranal and the Optimization of Cerro Verde. However, a good part of this portfolio continues without a clear start date due to regulatory, social and logistical demands that slow down its execution.
The potential exists, and it is exceptional, but it is still trapped in uncertainty that limits the country’s ability to compete with jurisdictions that have already decided to capitalize on the new cycle, such as Chile, Canada, Australia, or even several African nations.
The mining drive would also have a direct effect on national energy demand. Mining is one of the main consumers of electricity in Peru and its consumption has been growing even above the production rate of the sector itself. Today it represents around a third of all the electricity consumed in the country and close to 20% of its operating costs.
If copper production expands to respond to the increased demand associated with the global energy transition, the Peruvian electrical infrastructure must accompany that growth. This implies increasing generation capacity—especially that from non-conventional renewable sources, such as solar and wind—and strengthening transmission networks that allow energy to be transported to production centers.
The virtuous paradox is clear: the mining boom can become the greatest driver of the Peruvian energy transition, as long as the regulatory design is up to par.
This regulation, however, requires immediate improvements. A matrix that is more intensive in non-conventional renewable energies demands systems capable of managing the intermittency of solar and wind generation; more agile mechanisms to open the market for complementary services – including battery storage; transmission planning methodologies more consistent with the speed of demand growth; and clearer rules on vertical integration to attract investment without distortions. These are technical aspects, but together they determine the country’s capacity to sustain a cycle of simultaneous mining and energy expansion.
Sector challenges
The global energy transition has opened an exceptional opportunity for Peru, possibly the most important in recent decades, said Isaac Foinquinos, chief economist at Ronin.
However, Foinquinos warned that it is not an automatic opportunity. He noted that the country has the mineral resources, operational know-how and a relatively solid energy base to become a central player in the new decarbonized economy. He assured that what is needed is to unblock projects, reduce uncertainty and align regulatory and political decisions with the magnitude of the window that opens. “The energy transition needs Peruvian copper, but even more so, Peru needs the energy transition to recover a path of sustained growth that today seems to be diluted,” he said.
He added that, fundamentally, the macroeconomic advances of contemporary Peru have been supported by a mining sector that has managed to attract world-class investments thanks to a favorable price environment and a regulatory framework that, for a long period, transmitted stability and confidence.
“Mining has been, during the last 25 years, the most constant and decisive driver of the Peruvian economy,” he concluded.
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