“The Peruvian mining sector is the backbone of the national economy, and by virtue of this, there is overwhelming government support at the local, regional and national level – this creates a positive investment climate for foreign mining companies for junior mining and METS companies.” – Craig Dempsey, CEO of the Biz Latin Hub Group and Former Mining Executive.
Government Support Grows in Peruvian Mining Sector
Significant investment in recent years has seen increases in copper, gold and base metals production in Peru, turning the mining sector into the growth engine of the country. Growth within the sector has occurred due to the completion of a number of mega projects such as the USD$ 7.4 billion Las Bambas project, but also due to growth in the junior mining sector. The size and scope of growth experienced within the junior mining sector is in many ways unprecedented and can in-part be attributed to the permitting system in place within Peru.
The Ministry of Energy and Mines has granted the Regional Directorate of Energy and Mines (i.e Provincial Level) the authority to approve Small Scale Miners (PPM).This process of authorization is relatively fast and economical, requiring a lower threshold of studies and supporting documentation. It takes about 18 to 24 months to get through the entire process. For this to occur, a project must not exceed 2,000 hectares. Furthermore, the project can not have a maximum installed production and/or processing capacity of greater then 350 metric tons per day (for metallic production) or 1,200 tons per day (for non-metallic production). This system has resulted in an influx of junior foreign owned mining companies (many ASX and TSX.V) looking to either establish small operating mines (especially within the gold sector) as well as establish processing facilities and acquire feed stock from local miners (i.e Toll Milling).
Toll Milling Opportunities for Junior Mining and METS Companies
Furthermore, the “toll milling” model has become an attractive business model, often emulated by new players and well hyped within the markets (both ASX and TSX).
- Minera Gold
- Standard Tolling Corp.
- Anthem United Inc
- Montan Mining
- Inca Gold
Either mining direct or toll milling provides the opportunity for a junior mining company to enter the market and to produce on-going cash flows to support company operations. Although the toll milling market is becoming more crowded, it remains a ray of hope for companies that have been unable to find a project worth exploring or that have been unable to raise funding in order to undertake exploration. Tailing this explosion within the Peruvian junior mining sector is a significant opportunity for mining equipment, technology and services (METS) companies. They are able to provide systems, procedures and equiptment to support the current mining business model of toll milling in Peru. Presently, many of the processing facilities in use within Peru are locally manufactured, with less then desirable recovery rates and poor availability. Considering this, the specific opportunities for this sector include:
- Provision of Metallurgical Consulting services
- Provision of Consulting on Small Scale Mine Planning and Production
- Supply and Support of Small Gold Processing Plants (up to 350 tons per day)
- Provision of Equiptment Health Monitoring Systems
- Other General Support systems for Small Scale Operations.
The Peruvian mining sector is truly the lifeblood of the Peruvian economy, and as such, much government effort has gone into developing a legal framework that supports foreign investment. Subsequently, this has created an opportunity for junior foreign owned mining companies and METS within the market place. If you would like to get in touch to talk further about about the opportunities available in the Peruvian mining sector please contact Craig at [email protected].