Peru January mining output rises on copper, zinc

Peru's mining production rose 13.9% in January as companies increased output at new mines and expansions, the government said in a preliminary report.

At the same time, manufacturing led by steel and precious metals refining, which is tracked a month earlier, gained 6.4% in December, the national statistics institute said in a January report.

January copper production jumped 25.7%, while zinc rose 11.3%, tin gained 18.1% and iron ore output rose 6.46%, according to the agency. Hudbay Minerals, Hochschild Mining, Tahoe Resources, Freeport-McMoRan and China Minmetals have all started up projects over the past two years.

Gold output fell 1.30% and silver slid 0.81%, the agency said.

Peru's export income rose 24.5% to US$3.02bn in January as commodities exports led by metals gained 36.4% to US$2.07bn, the agency said. Imports rose 1.2% to US$3.04bn, while machinery imports, mainly by the mining industry, dropped 12.7% to US$931mn.

Government spending on infrastructure rose 20.6% to 369mn soles (US$110mn) in January, the agency said. The construction industry has contracted due to cuts in spending by local and regional governments. Cement sales dropped 6.5%, the agency said.

President Pedro Pablo Kuczynski, who took office in July, has pledged to fast-track US$25bn in delayed infrastructure projects. Peru's economy is expected to expand 3.8% in 2017 compared with 3.9% last year, according to the finance ministry.

However, a broad-based economic slowdown since the end of 2016 means GDP will only grow 3.5% this year as the effect of recently inaugurated mining projects fades and the government reins in public spending, according to consulting firms such as Capital Economics.

"Peru's economy is likely to weaken in 2017 as the one-off boost from a surge in copper production fades and a gradual tightening of policy weighs on the non-mining sector," Capital Economics analyst Adam Collins wrote in a report. "While production will continue to rise this year, it will do so at a much slower pace."