Despite headlines about deadly protests and the collapse of funding for juniors, Ricardo Carrión and Alberto Arispe of Kallpa Securities in Lima remain steadfastly optimistic about the future of mining in Peru.
In this interview with The Gold Report, Arispe and Carrión highlight the mining-friendly government, the new production from many sources and point to several juicy projects that lack only the means to further unlock Peru's mineral riches.
The Gold Report: Canadian and Australian miners have realized a 25–30 percent premium due to the strong U.S. dollar. How has the U.S. dollar affected Peruvian miners?
Ricardo Carrión: Peruvian miners have realized a similar benefit due to currency exchange. This factor has resulted in lower costs for the Peruvian industry. In addition, miners have also benefited from lower prices in oil. But the question is has this cost reduction offset lower metal prices, and the answer is no. Lots of companies are still struggling with current market conditions.
TGR: How has the mining industry fared since President Ollanta Humala was elected in 2011?
Alberto Arispe: Humala ran in 2011 on a radical, antimarket platform. Presidential elections in Peru use the runoff system, so in order to win a majority in the second round of voting, he had to moderate his tone and make alliances with more moderate parties.
He then raised royalties and taxes on the mining industry. These were modest increases, however, made after much consultation with the industry. Given how radical Humala seemed at first, the industry was relieved.
Since 2013, Humala's administration has become openly market friendly and has worked to solve the problems faced by, for instance, Newmont Mining Corp. over its Conga project.