Spotlight: Quellaveco's key role in the Peruvian mining industry

Anglo American's Quellaveco copper project is set to drive Peru's mining production, which will help to offset an expected drop in investments next year.

The project, in Moquegua region in southern Peru, began commercial production in September, contributing more than 20,000t of copper that month and helping reverse the downward trend in output of the red metal seen earlier this year.

With Quellaveco operating at full capacity and expected to produce 300,000t of copper per year, and assuming there are no major interruptions at big mines such as Las Bambas and Cuajone, production of the metal is set to be much higher in 2023 than this year, which is only expected to see 0.4% growth compared with 2020. 

This will mean that Peru's mining GDP will jump 7.8% in 2023, according to a forecast from the economic studies area of Scotiabank.

COPPER PRODUCTION

Copper production was up 13.5% year-on-year to 229,990t in September, and rose 3.0% to 1,729,617t between January and September, according to the latest report from the energy and mines ministry. 

That compares with a drop of 1.5% reported in August and a 0.3% decline between January and August and would not have been possible if Quellaveco had not started operations. Without the 20,735t produced by Quellaveco in September, monthly growth would have been only 3.0% in September and just 1.8% in January-August.

The project, however, can contribute much more as production ramps up to full capacity in the coming months.

Output has also risen at other copper projects in the country, such as Antamina, Cerro Verde and Chinalco, but Southern Copper, which operates Cuajone, Las Bambas and Antapaccay, reported double-digit drops in production for both September and the first eight months of the year.

As far as other mining commodities are concerned, the situation is less favorable. Gold production dipped 9% year-on-year in September (254,368oz) and 0.7% in January-September (2Moz), while zinc output fell 14% (109,966t) and 13% (1,016,410t), respectively. Silver and lead production were also down for both periods.

EXPECTATIONS

According to Scotiabank, Quellaveco could contribute up to 0.5 percentage points to Peru's GDP growth in 2023. 

Meanwhile, BBVA Research forecasts that the Anglo American project will be one of the mainstays of the mining sector, as social conflict will remain high and affect the production of other mining units. 

The bank estimates that national copper production will be 2.4Mt this year and 2.8Mt in 2023. But without social conflicts hampering operations, production in 2023 would be close to 2.9Mt.

"We're going to see a growth in mining production in 2023. In terms of investment, Quellaveco represents almost 1% of Peruvian GDP. There is no similar project [of such magnitude] in the next few years," César Romero, head of research at brokerage Renta4, told BNamericas.