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PERU: Mining and Energy Investment Opportunities Eng. Jorge Merino Tafur Minister of Energy and Mines of Peru 1

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15 30 45 60 75 90 105 120 135 150 0 China India Tajikistán Kazajistán Source: IMF Vietnam Panamá Singapur Perú 73,2 Sri Lanka Perú Peru Em. Arab. Uni. Bangladesh (Var. Accrued.%) Kuwait Ghana Malawi Zambia Rep. Dom. Indonesia Argentina World’s GDP 2002-2010 Albania 59,9 Egipto Argentina Malasia Filipinas Moldova Pakistán Nigeria Turkía Libia Mali Rusia Marruecos Costa Rica Tailandia Tunisia Botswana 46,8 Hong Kong SAR Colombia Ecuador Paraguay Honduras MACROECONOMIC SOUNDNESS 45,9 Polonia Colombia Ecuador Corea Uruguay Lituania continue leading regional growth Bolivia Bulgaria Mauritania Serbia Kenia Romania Algeria Brasil Nepal Bosnia Chile Ucrania 40,3 39,5 Brasil Chile Montenegro Venezuela Chile Mexico Brazil Colombia Peru Argentina Belice Arabia S. Sudáfrica Israel Estonia Guatemala Rep. Checa Burundi Latvia YRM Australia Lexemburgo Venezuela Nicaragua Eslovenia Croacia Nueva Zelanda Average annual % variation) Grecia 3.0 Irlanda Suecia 3.4 Islandia El Salvador 3.7 México 18,9 España México 4.3 España Finlandia 4.7 4.8 EE.UU. Suiza Hungría Forecast - LATAM: Real GDP 2012-2014 Austria Noruega Dominica 6.0 Reino Unido Países Bajos FranciaSource: Central Reserve Bank of Peru, Ministry of Economy and Finance, IMF. Peru among the fastest growing economies in the world and it will Bahamas Alemania Japón Jamaica Dinamarca Portugal Haiti Italia

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FRIENDLY INVESTMENT ENVIRONMENTPeru offers a favorable legal framework for foreign investment …  Non discriminatory treatment: Foreign investors receive the same treatment as local investors.  Unrestrictive access to most economic sectors *.  Free transfer of capital.  Free competition.  Guarantee for Private Property.  Freedom to purchase stocks from locals.  Freedom to access internal and external credit.  Freedom to pay royalties.  Network of investments agreements and member of ICSID and MIGA.  Peru participates in the Investment Committee of the Organisation for Economic Co-operation and Development (OECD) – It promotes the implementation of the Guidelines for Multinational Enterprises. *Investments that require authorization: Located within 50 km in the frontier line and those destined to arms, ammunitions and explosive. Likewise, a principal local partner for investments in radio and television as well as in air transport is required.

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Why to invest in Peru? Peru will grow Real GDP growth from 6 to 6.5% in (Averages, Variation % Annual ) the next years 8 7.2 6.9 7 Average Growth 6.5 6.5 2000-2011 5.8% 6.0 6.0 6 5.6 5 4.2 4 3 2.5 2 1 0 91-95 96-00 01-05 06-10 2011 2012F 2013F 2014F 2015F Source: BCRP, INEI, MEF forecast

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Why to invest in Peru? Extended market of more than 4 billion people with a joint GDP of more than US$ 56 billion.COMMERCIAL INTEGRATION POLICY 96% of the Peruvian exports to the world.An economy working in the globalization process withpreferential access to the largest marketsInternational integration with the rest of the world fosters trade and investment Agreement in negotiation process Acuerdo en proceso de negociación Acuerdo vigente Agreement to Acuerdo por entrar en vigencia Agreement in force come into effect

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I. MINING SECTOR

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National ExportsApproximately 75% of the national exports correspond to mining products, petroleum and natural gas Exporting Sector Participation Mining Petroleum and natural gas Sector Fishery (trad. export) 25% Minero Agriculture Other sectors Hidrocarburos 75% Agricultural and Livestock Fishery (trad. export) 75% Textiles Mining sector + Wood and papers, and respective manufacture hydrocarbons Chemicals OthersSource: Monthly Mining Bulletin January 2012 – Ministry of Energy and MinesCentral Reserve Bank of Peru

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In the last years, mining exports haveincreased more than 8 times its value Mining Exports Mining Sector Exports per (US$ million) destination market 2011 41 % 35 % 24 % Copper Gold Other mineralsSource: MINEM - Central Reserve Bank of Peru Source: Adex Data Trade, Customs.

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Minig Activity in Peru Is the percentage of national territory where there is1% exploration and exploitation mining activity. 0.77% is the territory used by the mining units in exploitation stage. 0.27% is the territory used by the mining projects in exploration stage. Is the percentage of the territory granted as mining13 % concession requiring investments for mining exploration.

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Mining CompetitivenessPeru:Mining Production Position - 2011 Mineral Latin America World FOTO PERU Zinc 1 3 OMBLIGO DEL Tin 1 3 Lead 1 4 MUNDO Gold 1 6 Silver 2 2 Copper 2 2 Molybdenum 2 4 Mercury 2 4 Selenium 2 9 Cadmium 2 10 Phosphate Rock 2 13 Iron 5 17Source: U.S.Geological Survey-USGS-, The Silver Institute; Gold Fields Minerals Services-GFMS-International Copper Study Group -ICSG-; International Lead and Zinc Study Group-ILZSG-International Tin Research Institute - ITRI-; International Molybdenum Association-IMOA-Latin American Iron and Steel Institute- ILAFA-

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METAL MINING POTENTIAL... We are recognized around the world by our metalmineral proven and probable reserves Peru is one of the countries with the largest reserves of silver, copper, zinc, lead, tin and gold in the world. World % World Rank reserves COPPER GOLD SILVER LEAD TINSource: U.S.Geological Survey-USGS – Report 2012

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MINING INVESTMENT COMMITMENTS Mining Investment in Peru CHINACHINA BRAZILUNITED STATESCANADA MEXICOSWITZERLANDAUSTRALIA AUSTRALIA USAMEXICOBRAZIL SWITZERLAND CANADAPERUUNITED KINGDOMJAPANOTHERS Millions SOURCE: MINEM – ESTIMATED PORTFOLIO OF MINING PROJECTS SEPTEMBER 2012 ELABORATED BY MINING PROMOTION OFFICE - MEM

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MINING INVESTMENT COMMITMENTSThe estimated investment in mining projects exceedsUS$ 53,000 million dollars for thefollowing years Extensions US$ 8´635,000 8 Exploration Projects US$ 24´289,000 47 Projects with EIA approved 27 11 US$ 19´745,000 1 Projects with EIA Submitted US$ 754,000 EIA: Environmental Impact Assessment Source: Bulletin September 2012

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GOLD PROJECTS US$ 6,186 billion 12 % of estimated investment

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COPPER PROJECTS US$ 35.582 billion 66% of estimated investment

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COPPER PRODUCTION PROJECTION PERU VS CHILE (TMF) 10000 9000 8000 7000 6000 5000 Peru 4000 Chile 3000 2000 1000 0 2005 2010 2015 2020 2025 2005 y 2010: Actual Production (MINEM) 2015: Projections estimated in each country according to portfolio (MINEM) 2020: Increase in differences between 2015 and 2010 2025: Increase in differences between 2020 and 2015

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Mining Activities in Central Region Toromocho Project Influence area of operations Cem. Andino CarahuacraTiclio Andaychagua San Cristóbal 17

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TOROMOCHO PROJECTCHINALCO-ALUMINIUM CORP.OF CHINAProduction: 275 000 TMF/yearInvestment: US$ 3 450 millionsPower: 165 MWCompletion of the works: January 2014RELOCATION OF THE MOROCOCHA POPULATION: Starting from 2012Building of 1 450 housing with an investments of US$ 300 millions

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Toromocho Project Environmental Responsability1. Construction of Plant for the Treatment of Kingsmill Tunel Water: 1,1 m3/sec – Agreement with the State2. Investment: over US$ 45 million.3. Solution to pollution of Yauli River – La Oroya , after 70 years Treatment Plant: Treated water of Kingsmill Tunel Polluted water of Kingsmill Tunel 2012

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TOROMOCHO: MODERN MINING WITH SOCIAL AND ENVIRONMENTAL RESPONSIBILITY MOROCOCHA NEW CITY SCHOOLS – MARKETS – RECREATIONAL PARKS – WATER AND SEWAGE

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TOROMOCHO NEW MINING WITH SOCIAL INCLUSION INVESTOR: Construction of new cities Social Programs Environmental Commitment Water first Plant of Treatment of Kingsmill Tunel SUSTAINABLE STATECOMMUNITY DEVELOPMENT Framework agreementSupport to investment MINING Social FundSocial Agreements Protects drinking water use Participation of Sustainable the State PROJECT Development

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DEVELOPMENT ZONETOROMOCHO INDUSTRIAL MINING CLUSTER Plant of Treatment of • GENERATE AGGREGATE VALUE , Kingsmill Tunel GOLD, SILVER PRODUCTION CHAIN. MAQUILA CENTER FORUrban Ecotourism/ Livestock ESPORTATION TERMINAL(USEIndustrial Zone / Agriculture OF FTA).Commerce Terminal

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II. ENERGY SECTOR

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Peru 2012 Electricity Market Growth rates for 18 years Energy: 8% annually Natural Gas Market Growth rates for 7 years NG demand: 30% annually Liquid Hydrocarbon Market Annual Average Demand Variation Product LPG Gasolines and Gasoholes Residual Others

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Potential investments to be performed in the following years in US$ million Performed Potential(*) Sectors (1996-2010) (2011-2020) Mining 21 360 53 000 Hydrocarbons 8 600 25 000 Electricity 9 500 5 200 Total 39 460 73 200 Source: National Mining and Petroleum Society (*) SNMPE Estimate

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Peru, an Energy Hub of the Pacific Coast in South AmericaStrategic Location:Borders Ecuador, Colombia,Brazil, Bolivia and Chile.Large Energy Sources:Hydropower 69 445 MWNatural Gas: 77.72 TCFPetroleum: 3,055 MMBls.Non-conventional andrenewable energyIntensive energy in productiveusesActivities: Metallurgy and Mines.

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Hydroelectric Potential GENERATION PROJECTS ABOVE 100 MW NATIONWIDE BRAZIL The 15 Largest Hydroelectric Projects of the Atlantic basin. Power: 19 285 MW, out of a technically exploitable total of 70 000 MW.PACIFIC OCEAN

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Potential in natural gas Potential 50 TCF There is agrater numberof non-drilledstructures for future investments Fuente: MEM.

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Southern Gas Pipeline and Ethane Pipe GE 3250 MW Southern Gas Thermal Power Plant Pipeline of Quillabamba 200 MWPacificOcean Coast Ethane Pipe Matarani Port 1500 MW Reserve Power Plant Ilo Port ETHANE Petrochemical Plant

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Development Poles COLOMBIAin Peru ECUADOR Northern Cluster BRAZIL Mining Units and Projects Central Cluster PACIFIC OCEAN Southern Cluster BOLIVIA CHILE

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www.minem.gob.pe