Reuters reported that Peruvian mineral production will likely edge down for the fourth straight year in 2012 as reserves are depleted, demand slows abroad and social conflicts threaten to delay fresh projects.
Analysts said that the European debt crisis has also hit global metal prices even safe haven gold hurting exports and the profits of mining firms at a time when environmental protests are threatening future output in the world's No 2 copper and No 6 gold producer.
Mr Jose Miguel Morales head of the gold committee at the Society of Mining, Oil and Energy in Peru said that overall mining production will likely fall around 4% in 2012 and could suffer more in coming years if new mines are not developed.
According to official data, gold reserves readily available for production have fallen as much as 20% in the last decade to 2.7 million tonnes though proven copper reserves have risen 30% to 90.8 million tonnes.
Despite signs of lower output, Peru has only mined about 10% to 20% of its estimated mineral resources and exploration firms say big new discoveries are possible. The government says the mining sector an important component of gross domestic product will likely grow 3.3% this year.
Barrick Gold said that recently it expects its Peru gold output to be lower this year than in 2011. Reserves at its Pierina mine which is expected to cease production in 2014 are running out.
Protests from villagers and native communities who fear mining will cause pollution or provide them with little economic benefit have threatened USD 53 billion in planned investments for new projects just as existing mines, like Pierina, face retirement.
Mr Morales said that "Volume is declining, we expect by three or four percent this year. It's not much but if new mines don't start producing we are going to have bigger problems."
Peru's human rights office has documented around 250 social conflicts in the Andean country, mostly over natural resource extraction, and President Ollanta Humala pledged to solve them through dialogue when he took office a year ago.
But one such conflict has halted construction on Newmont Mining's USD 4.8 billion Conga gold and copper project, which Humala needs to fund anti poverty initiatives. Protesters have challenged his government's mediation ability.
Mining firms operating in Peru also worry the Antapaccay satellite deposit project, vital to increasing the life of Xstrata Copper's Tintaya mine beyond 2013, could be delayed due to recent protests in Cusco.
Source - Reuters
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