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Peru Mining Report Q2 2016

Peru Mining Report Q2 2016

BMI View: Peru's mining industry will experience solid growth in both value and production, supported bycompetitive operating costs, a stable business environment and a significant project pipeline over ourforecast period to 2020.

Latest Updates & Structural Trends

Peru's extractive industry will experience significant growth over our forecast period to 2020. We expectthe sector's value to climb from USD19.7bn in 2016 to USD24.1bn by 2020, averaging 4.1% annualgrowth. In particular, we expect copper and gold to outperform in terms of production growth due tostrong project pipelines and continued investment. Silver and lead will also benefit from a number of keyprojects, while tin and zinc output posts slower growth. The country will remain a top global producer ofeach of these metals.

Copper projects account for the largest proportion of new mine projects and expansions. The Peruviangovernment estimates that the country's 2016 mining investments will total USD6.5bn. The sector isdominated by global copper mining majors including Southern Copper (a division of Grupo México),Freeport McMoRan and Glencore Xstrata, which are boosting output by both expanding existingoperations and undertaking new investment projects. Increasing Chinese investment and mining activitywill stem from MMG and Chinalco.

Ongoing metal price weakness, anti-mining protests, and illegal mining will remain key challenges toPeru's mining industry. While these factors may result in project delays, Peru's low operating costs,supportive political environment and significant project pipeline will offset any production declines.

Peru's mining sector will be supported by the country's vast mineral reserves, open investmentframework, and low operating costs. Peru will remain competitive relative to other Americas miningjurisdictions and we expect mining firms will continue to invest in the country. While the country'soverall tax levels are relatively higher than its regional peers, miners in Chile still face elevated labour,electricity and water costs compared to Peru.


BMI Industry View
Table: Peru Mining Industry Value Forecast (2014-2020)
Latest Updates & Structural Trends
SWOT
Industry Forecast
Copper: Strong Growth To Provide Economic Tailwinds
Table: Copper Production Forecast (Peru 2014-2020)
Structural Trends
Table: Peru - Major Copper Projects
Gold: Steady Climb Ahead
Table: Gold Production Forecast (Peru 2014-2020)
Structural Trends
Hochschild and Buenaventura To Dominate Sector
Protests To Continue Against The Sector
Lead: Modest Gains After Strong 2015
Table: Lead Production Forecast (Peru 2014-2020)
Structural Trends
Silver: Production To Remain Solid
Table: Silver Production Forecast (Peru 2014-2020)
Structural Trends
Risks Slated To Downside
Table: Peru - Key Silver Projects
Tin: Minsur Cost Cutting To Limit Growth
Table: Tin Production Forecast (Peru 2014-2020)
Minsur To Scale Back Investment
Zinc: Declining Ore Grades To Weigh On Growth
Latest Developments
Table: Zinc Production Forecast (Peru 2014-2020)
Table: Peru - Key Zinc Projects
Structural Trends
Industry Risk Reward Ratings
Peru Risk/Reward Index
Rewards
Industry Rewards
Country Rewards
Risks
Industry Risks
Country Risks
Americas - Risk/Reward Divergence To Emerge
Key Takeaways
Latest Revisions
Table: Americas - Mining Risk/Reward Index
Regulatory Development
Trade & Investment Risk Analysis
Commodities Forecast
Commodities Outlook
Table: BMI Commodities Price Forecasts
Competitive Landscape
Table: Peru - Largest Listed Mining Firms Financial Data
Company Profile
Buenaventura
Latest Results
Table: Buenaventura - Key Financial Data
Global Company Strategy - Grupo México - Q2 2016
Table: Grupo México - Key Financial Data
First Quantum - Q2 2016
Latest Results
Table: First Quantum - Key Financial Data
Regional Overview
Methodology
Industry Forecast Methodology
Sources
Risk/Reward Index Methodology
Table: Weighting Of Indicators

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