Copper Mining in Peru Could Double in next 10 Years and Challenge Chile’s Dominance

21 April 2023


by James Hyland, MiningIR

Peru could double its copper production in 10 years to 5Mtpa if permitting delays and social issues could be resolved, Juan Luis Kruger, CEO of Minsur told delegates at the 2023 CRU World Copper Conference in Santiago, Chile. The country, which produced 2.2Mt in 2022 and counts with 98Mt of copper reserves, has seen its production grow 88% production since 2012 to become the world’s second-largest producer.

Is copper a critical mineral, essential to US economic and national security, and vulnerable to supply chain disruption? According to the US Geological Survey (USGS) and thus the US government, the answer is no. But copper shortages in the face of rising demand, coupled with rising insecurity and instability in copper-producing Peru, should give the Biden administration reason to consider making an exception and adding copper to the US list of critical minerals. Peru is the second largest producer of copper in the world after neighboring Chile. Since December 2022, Peru has been involved in an increasing number of anti-government protests that have turned violent. The protests began following the arrest and trial of President Pedro Castillo, whose support has been particularly strong in southern Peru, including the country’s second largest copper-producing region. Bloomberg estimates that 30% of the country’s output, or about 3% of global output, is at risk from political unrest.

Copper is an important component in renewable energy technologies (solar panels, batteries, wind turbines, etc. and therefore crucial to tackling climate change. Copper also has many wider applications in industry and defence. The International Energy Agency predicts that global demand for copper will double by 2040 due to increased demand for clean energy alone.

Vital mineral importance, as defined by the USGS, consists of three elements: 1) concentration of world production (weighted by a country’s supply capabilities and willingness), 2) import dependence , 3) economic vulnerability or if the US industry and defense Ability to adapt to sudden changes in the supply or price environment. Copper has been an important industrial metal since the turn of the 20th century, so it’s no surprise that the potential for economic turbulence in 2019-21 is highly rated. However, its potential for downtime and business risk is rated as low, but increasing.

The United States has a free trade agreement with the country that owns nearly half of the world’s copper mines

The identification of copper as critical to national and economic security will lead to increased scrutiny by the US Geological Survey, which tracks the metal’s markets, production and reserves. Industry advocates also argue that the designation could lead to a streamlined licensing process that would facilitate increased domestic production. Obtaining the necessary permits for a mining project is a complex process that requires not only federal permits, but also engagement with local and state authorities, environmental assessments, and the approval of the communities and other stakeholders that will host the projects. . These are good and necessary steps. But strengthening the country’s mineral supply chain will require accelerating these processes.

The US government needs to look at loopholes like in the case of Peru, and it can, even though the critical minerals list has just been updated: the law that created the list and the process for designating the critical minerals allows the Secretary of the Interior to designate more minerals to be on the list as needed without further congressional approval to add copper. Social problems in Peru and with neighboring Chile who recently refused to replace the existing constitution, but still provide a road map for a new supreme law in the country, suggest these events have shown that the time has come for the Biden administration to act.

Follow us on Social Media to receive emerging news updates:

Follow us Facebook:

Follow us Twitter:

Follow us Instagram:

Follow us on LinkedIn:

MiningIR hosts a variety of articles from a range of sources. Our content, while interesting, should not be considered as formal financial advice. Always seek professional guidance and consult a range of sources before investing.
James Hyland, MiningIR