In recent days, the news has focused on the volatility of the price of gold and, although the precious metal has registered drops in value, the truth is that it remains at prices high enough to favor the entry of new mining projects. The ounce Gold is currently trading at around US$4,900, which is 14.9% higher than what it closed in December last year and 73.5% higher than what it traded 12 months ago.
Silver continues the same upward trend, consolidating after surpassing the barrier of US$90 per troy ounce. What unites this metal with gold, apart from its status as a safe haven asset? Mainly, Peru is a leading producer and has a robust portfolio of mining projects. These plans would not only increase current extraction capacity, but would allow the country to maximize its tax revenues and earn foreign currency in the face of this international boom in precious metals.
The good news is that Peru has a portfolio of gold and silver mining projects exceeding US$9 billion that would allow it to take advantage of the new boom. The bad news is that so many regulations have been imposed on mining activity, with the supposed purpose of protecting the environment and communities from the supposed looting of formal mining companies, that they have paralyzed megaprojects. Of course, giving the green light to illegal, ancestral, informal mining or whatever you want to call it, without compliance with a single requirement, not even labor.
The missed opportunity
The largest gold project that could have lifted the population of Cajamarca out of poverty is that of Conga, from Newmont, stopped approximately 14 years ago with ideological reasoning of “water yes, gold no.” Conga’s projected investment exceeds US$4.8 billion.
Today Cajamarca, compared to what it was 14 years ago, continues to be a leader, but in poverty. Apurímac, Ayacucho and Huancavelica, which accompanied it at that time, are in a comparatively better situation.
Likewise, according to the project portfolio of the Ministry of Energy and Mines (Minem), another of those on the list is Inmaculada Reposition, from the Ares Mining Company, for US$1,319 million.
For its part, within silver, one of those that stands out is Corani, located in Puno, and whose disbursement would be US$579 million. This is one of the mines that would be among the eight that would enter into execution this year, as reported by Minem (see project table).
Antiminers
For the former president of the National Society of Mining, Petroleum and Energy (SNMPE) Carlos Gálvez, one of the reasons why these projects do not go ahead is the opposition of a group of anti-miners who generate conflicts when it comes to promoting formality.
“Social issues are what often affect the dynamism of the sector. We must also add that the limit of permits for the mines to proceed has been increased, which means that they take years to be executed,” he indicated.
Likewise, he recognized that the dynamism of gold is mainly due to the fact that it functions as a refuge from the volatility of the dollar. “It is the only metal that works like another currency,” he added.
However, he stated that, in the case of silver, the price increases due to the growing demand that responds to the energy change, as he noted that it is a metal that is needed for solar panels, fast charging systems for electric vehicles, among others.
Bottlenecks
For his part, the Public Policy Manager of the Peruvian Institute of Economics (IPE), Víctor Fuentes, considered that one of the bottlenecks for the projects in the portfolio to go ahead is related to illegal mining.
“Even when prices are high, paperwork problems can lengthen the start-up of a mine. There are also problems of conflict and illegal mining, which is a risk because it competes in terms of territory, since it is located in projects that are active, such as Pataz; in others that are not operating, such as Conga, and in areas that are reserved and should not function,” he added.
Carlos Gálvez stated that in the next elections we should opt for candidates who, in mining matters, guarantee compliance with the law and “do not give even a wink to illegal mining.”
Meanwhile, Víctor Fuentes considered that, to identify a candidate who really cares about mining development, it is necessary that he or she have a clear plan to unblock bottlenecks.
“We must also see how to reform the use of resources such as canons and royalties so that they become quality services and works for citizens. Another point is the frontal fight in the fight against illegal mining, this involves the closure of Reinfo, but also by identifying other points in the chain that are in the marketing companies and processing plants,” he added.
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