By Marco Aquino
LIMA (Reuters) – Peruvian output is expected to be flat for a third year in a row in 2025 as declining ore grades and a lack of new projects limit output, according to the country’s top mining association and industry analysts.
The South American country is a global copper power and ranks third in production after Chile and the Democratic Republic of Congo, which knocked Peru out of second place in 2023.
Still, poorer ore grades after years of extraction are making it harder for miners to maintain production levels, just as a major copper supply shortage looms over the next decade due to expected demand for electric vehicles, renewable energy and data centers.
The expected shortage has put pressure on some of the world’s largest miners to secure more supply through massive takeovers, such as BHP’s $49 billion bid for Anglo American (JO:), which was rejected this year .
Copper prices on the London Metal Exchange started the year just above $8,580 per tonne, and after falling from a record high of more than $11,000 per tonne in May, they are now around $8,869 per tonne.
Peru’s main mining association SNMPE expects the country’s copper production to reach about 2.8 million tons in 2025, matching 2023 and projected for 2024, as miners contend with lower quality resources and development bottlenecks for new projects.
“By 2025, Peruvian copper production is expected to be comparable to this year’s projected 2.8 million tons,” Victor Gobitz, head of SNMPE, said in an interview last week.
Peru’s Ministry of Mines has not issued a forecast for 2025 and did not respond to a request for comment.
Juan Carlos Ortiz, vice president of the Peruvian Institute of Engineers, said he expected flat production given the lack of new projects.
“We are going to repeat the 2024 copper production,” said Ortiz, who is also vice president of operations at Minas Buenaventura.
A dramatic turnaround seems unlikely in the short term. Peru’s last new mine was Anglo American’s Quellaveco, valued at $5.5 billion, which opened in 2022 with an expected annual capacity of 300,000 tonnes.
It currently accounts for more than 10% of domestic production.
INCREASE PRODUCTION
At best, Peru could get a boost from Southern Copper’s (NYSE:) Tia Maria project, with production expected in 2027, and Teck Resources (NYSE:)’ Zafranal, forecast for 2029. Together they would be about Add 150,000 tons of production. annual production.
Miners are also working to increase their processing capacity to compensate for poorer ore grades.
Most of the $3.8 billion invested in the sector so far this year has gone into concentrator plants and equipment, representing a 2% increase over last year.
Energy consumption in copper mines rose 2.3% year-on-year through October, according to private energy sector organization COES.
“What matters now is that the work continues,” Gobitz said, referring to small projects such as Tia Maria, Zafranal and mine expansions. “We don’t see a project like Quellaveco.”
Of Peru’s 10 largest copper mines, seven reported lower production through October, the last month for which official data is available, compared to last year.
At the largest, Freeport McMoRan’s Cerro Verde, production fell 5.4% year over year through October. Freeport previously told investors it expected lower ore grades to impact sales volumes in 2024.
“Annual production will vary depending on ore grade, but Cerro Verde’s 2024 operating numbers were strong,” Freeport spokeswoman Linda Hayes said.
She added that the majority of Cerro Verde’s spending is for operational improvements, and urged the Peruvian government to streamline regulatory processes and encourage exploration.
Despite Peru’s struggles, the country may have a chance to regain its No. 2 global position from its African rival. At the end of August, Congolese production fell by almost 6% compared to 2023, leaving room for Peru (less than 1%) to make slight progress.
