Peru's metal mining industry: An overview of the year so far

To take my mind off the gawdawfulness of the Argentine soccer team last night I started playing with some Peru ministry figures for the country's mining sector (yes, I know I'm sad...no need to write in on that score). Those numbers became charts and although there is not great insight or revelation here, I think they're pretty useful as a snapshot of the country's industry right now so here we go. All numbers used are either from the Peru Central Bank or its Ministry of Energy and Mines.

First, here's Peru's total exports for the period in question, January 2009 to April 2009. As we can see, metals make up the majority of everything exported by Peru.

Here are some quick stats on the above:

• Total exports Jan-Apr 2009: U$7.09Bn
• Percentage metals in exports: 59.5%
• Percentage gold in exports*: 28.1%

Yep that's right; due to the sinking of copper compared to last year and the value held onto by gold in the period, Au is now Peru's biggest export by far. Also, did you know that nearly all of Peru's production is shipped to Switzerland? I did.

On to the next chart that compares 2008 to 2009. Yep, that's over $2.2Bn in lost exports you're looking at there. but of course, Peru's GDP is growing...............


Next is the breakdown of metals exported in the four months of 2009 and you can see that for all the talk about Peru being the world's biggest silver producer, the third biggest zinc producer and its polymetallic production nature, there are only two metals that really matter; gold and copper. As far as the country's economy goes, the rest are just noise.


Finally, this chart shows just how much metals values have dropped since 2008. The recovery in March/April 2009 compared to January/February is directly related to the recovery in spot copper, of course.

Now we move away from dollar values and look at volumes. The following charts show just how much of each metal has been mined in Peru per month since January 2008. Firstly gold, benefitting from recent production hikes at Yanacocha and Alto Chicama (the two big gold mines in the country):

Now that Cerro Verde is running at full tilt, copper production has been pretty steady.

Zinc production has dropped, probably due to the layoffs and mothballing of smaller mines:

Silver has stayed fairly steady. Buenaventura (BVN), PAAS and other large dedicated silver miners give Ag more stability, even though it's often a by-product more than a product.

Pb production has dropped for the same reasons as zinc; closures and layoffs, with 10,000 miners having been laid off in 2009 (which doesn't affect GDP growth either...oh no)

Tin numbers drooped a little but have remained largely steady:

In iron ore, nearly all the ballgame is Shougang at Marcona in South coastal Peru, so whatever happens there is the country results.

Moly has been hit very hard. Roasting circuits have been turned off and value of Moly sold has dropped by 88% YoY.

So all in all, if it weren't for Switzerland Peru would be in the doo-doo right now. Actually that's a little cynical, because if you're going to be a metals nation and export the stuff to progress and grow, then you couldn't really choose better than to have copper and gold as your big products. Gold has supported the drop in copper all this time, and if the Hoped™ for recovery does indeed happen quickly and world financial winds turn against gold and its safe haven reputation, copper is likely to take up the slack for Peru.

*thanks for the typo pickup, anon