Peru signs US$940mn deal to expand phosphate mine

Peru's investment promotion agency ProInversión has guaranteed domestic phosphate production for the next 10 years after signing an addendum with company Fosfatos del Pacífico (Fospac) for the expansion of the Bayóvar mine in Piura region.

The investment committed in the expansion is put at US$940 million and the phosphate output will supply production of phosphoric acid and fertilizers, ProInversión officials said at a contract signing ceremony. 

Fospac is a mining subsidiary of Cementos Pacasmayo, one of the biggest cement companies in the region, and it has been producing phosphate since 2007 via an asset project agreement under which initiatives on public lands are awarded.

“Peruvian demand for phosphate is 250,000t per year; but this is because we 'underfertilize' agricultural activity in Peru. More technical agriculture could require close to 1Mt annually,” said Ángel Manero, minister of agrarian development and irrigation (Midagri).

According to ProInversión, Fospac is expected to produce 100,000t/y of phosphate during the first five years of the contract, with production rising subsequently and reaching 2.5Mt/y of phosphate rock by the 10th year.

PROJECTS AWARDED

With this new US$940mn addendum, ProInversión will end the first half of 2024 with US$5.07 billion in projects awarded. As of midway through June, the agency had awarded two big projects for a total of US$3.81bn – the Lima peripheral ring road (US$3.4bn) and San Juan de Marcona port (US$405mn) in Nazca province, Ica region. 

This week the agency awarded a first group of three electricity transmission projects for US$329mn and the Bayóvar phosphate initiative.

In the second half of the year, ProInversión is looking to award a series of projects, including a wastewater treatment plant in Puerto Maldonado (US$89mn) and the Huancayo-Huancavelica train (US$394mn). 

“We're going to achieve our goal of awarding US$8bn in 2024,” said José Salardi, executive director of ProInversión, at the ceremony.

RULE CHANGE FOR MINE EXPANSIONS

During the contract signing ceremony with Fospac, Henry Luna, deputy minister of mines, announced that a rule had been made official allowing concession-holding mines to increase their beneficiation capacity by up to 5% of the authorized installed daily capacity without the need to amend the beneficiation concession as previously established in mining regulations, which will boost copper and gold production.

Concession-holders may also increase their authorized installed capacity for daily mineral processing by up to 10% without changing their concession, as was published in the official gazette. 

"All processing plants nationwide [may take advantage of this rule change], so we will once again break the record in mining production in 2024," Luna said. "This, together with Fosfatos Bayóvar 9, will allow us to exceed the US$5bn that we had projected in mining investment."

At the moment, Peru's total annual copper production projection is 3Mt and Luna believes this will rise amid the current good prices and projected demand shortfalls in the future.