3. 2
The Peruvian government continues to facilitate
the establishment and operation of businesses
SOURCE: Doing Business 2013
Peru ranks second in the region in the
improvement of business regulations ā¦
ā¦ and by 2050, it will be one of the fastest
growing economies in the world
Fastest growing economies
Ranking Country
1 China
2 India
3 Philippines
4 Egypt
5 Malaysia
6 Peru
4. 3
Peru offers a favorable legal framework to attract
foreign investment
ā¦ supported by legal stability agreementsKey economic policy guidelines ā¦
āŖ Non-discriminatory treatment: Foreign
investors receive the same treatment as local
investors
āŖ Free transfer of capital
āŖ Free competition
āŖ Guarantee for private property
āŖ Freedom to purchase stocks from locals
āŖ Freedom to access internal and external credit
āŖ Freedom to pay royalties
āŖ Network of investments agreements and
member of ICSID1 and MIGA2
āŖ Participation in the Investment Committee of
the Organization for Economic Cooperation
and Development (OECD) ā it promotes the
implementation of the guidelines for
multinational enterprises
Investors
āŖ Stability of the regulations regarding non-
discriminatory treatment
āŖ Stability of the income tax regime applicable
to dividends
āŖ Stability to use freely the most favorable
exchange rate available in the market
āŖ Stability of the free availability and remittance
of foreign currency, dividends and royalties
regime
Receiving companies
āŖ Stability of the recruitment regimes
āŖ Stability of the regimes for the promotion
of exports
āŖ Stability of the income tax regime
1 ICSID: āInternational Centre for Settlement of Investment Disputesā
2 MIGA: "Multinational Investment Guarantee Agencyā
6. 5
The mining sector has been the fastest growing
sector and is one of the top GDP contributors
SOURCE: Central Bank of Peru; INEI; IHS; Economy Ministry
1 Cumulative Annual Growth Rate
2 INEI 2007 input matrix (not published yet so no official trend data is available for it) shows that the mining share in the economy is 14,4%
3 Includes refining of non-ferrous metals
4 Estimated, 2012 official data in nominal prices has not yet been published
7%
2009
130
48%
13%
13%
10%
9%
7%
20072
107
47%
14%
13%
12%
9%
6%
2005
79
51%
14%
13%
10%
8%
5%
2003
72
60%
12%
11%
6%
7%5%
2001
63
61%
12%
12%
5% 7%4%
20124
7%
9%
12%
14%
13%
2011
181
46%
13%
13%
12%
9%
45%
197
GDP/capita
Thousand
USD
2.9 6.14.53.8
11.8
12.7
13.8
16.2
7.8
CAGR1, %
10.9
2.62.4
GDP nominal prices
Billions USD
20.8
Construction
Transp & Com.
Mining3
Commerce
Manufacturing
Other sectors
6.64
7. 6
āŖ ~30% of economic growth is due to
large investments and increasing
mining production
āŖ Additional growth means that the
economy will generate $ 57 billion
GDP more, or in per capita terms,
the mining sector will make the
average Peruvian 10% richer by
20161
āŖ One million direct and indirect jobs
are expected to be created
Looking forward, mining will continue to be the
growth engine of the economy
Economic growth
6.9
4.7
2016
2.2
2015
6.8
4.6
2.4
4.4
2.2
20142013
6.3
6.8
4.8
1.5
Explained by other sectors
Explained by mining sector
24 32 32
Share that mining
represents
35
1 $7.800 instead of $7.100
Percentage
SOURCE: Central Bank of Peru; IMF; INEI; Interviews with financial institutions
8. 7
Current mining portfolio investment has reached
its maximum historical values, and represents an
increase from its current production share
+35% CAGR
12,226
2007
24,693
54,610
20122011
53,761
2010
41,951
2009
35,471
2008
Peruvian mining
portfolio/
Worldwide
mining
investment
1.7
+118%
3.7
Peruvian mining
revenue/
Worldwide
mining revenues
Forecast mining portfolio invesment
Evolution ($ Millions)
International share
2011; Percentage
SOURCE: MEM; MEG; Global Mining CapEx Model
35% growth per year
9. 8
Metal production from Peru
Copper (tmf x 1000) Gold (Oz x 1000) Silver (Oz x 1000)
Promotion of private
investment
New mining projects
and expansions
10. 9
ā¦ which will significantly increase Peruās mining
production
SOURCE: MINEM
Mineral
Production
2016
Silver
Thousand
fine ounces
109,919 130,059
Zinc
Thousand
TMF
1,3 1,6
Lead
Thousand
TMF
230 285
Gold
Thousand
fine ounces
5,343 6,347
Production
2011
Copper 1,240 2,768
Thousand
TMF
Growth
2011-16
18%
23%
24%
19%
123%
11. 10
10
13
Rest
Iron ore
12
Gold
Copper
64
Copper, gold and iron ore capture 90% of the
investment portfolio, with copper explaining 64%
$ Million
Copper
Gold
Iron ore
Phosphate
Silver
Zinc
Potassium
Polymetallic
34,937
7,302
6,780
1,044
1,026
290
125
3,176
54,680
SOURCE: MEM
Percentage of total
Investment portfolio by mineral
2012
12. 11
6
7
10
10
16
18
22
9
China
Suiza
Japon
Mexico 2
Peru
Otros
USA
Canada
Australia
PerĆŗ recibe inversiones de diversos e
importantes paĆses
2012
$ Million
China
USA
Canada
Australia
Suiza
Japon
Mexico
Brazil
Sudafrica
Peru
Reino Unido
Otros
12,219
9,800
8,739
5,670
5,200
3,790
3,460
1,638
1,600
1,120
700
744
54,680
SOURCE: MEM
Percentage of total
Portafolio de inversiones por paĆs
La cartera de poryectos esta diversificado entre
varios paĆses.
14. 13
Silver 32
Zinc 31
Tin 31
Lead 41
Gold 61
Mercury 42
Copper 32
Molybdenum 42
Selenium 92
Cadmium 102
Iron ore 175
Phosphate rock 132
Peru is a leader in metallic and non-metallic
minerals
Mineral Production Ranking
Latin America World
SOURCE: MEM; USGS
16. 15
POTENCIAL MINERO
Reservas Mineras Probadas y Probables
Fuente: U.S.Geological Survey-USGS ā Report 2012
PerĆŗ se ubica entre los paĆses
con mayores reservas de plata,
cobre, zinc, plomo, estaƱo y oro a
nivel mundial.
17. 16
WE EVALUATED PERU AROUND FOUR KEY
ELEMENTS OF COMPETITIVENESS
Social Framework
ā¢ Reputation
ā¢ Conflict levels
ā¢ Community support
during operation and
project stage
Quality of Resources
ā¢ Availability and
existence in the country
ā¢ Worldwide economic
attractiveness
ā¢ Mineral Law
Institutional Framework
ā¢ Clarity of regulations
ā¢ Execution of the law
ā¢ Permit securing time
Cost structure
ā¢ Effective tax rate
ā¢ Direct and indirect cost
ā¢ Capex Intensity
18. 17
By 2016, Peru will be the second global producer of
copper significantly reducing the gap with Chile
SOURCE: Cochilco; MEM; Project Specific Information
2,8
+100%
0,8
+442%
2016
5,6
2014
5,5
1,6
2011
5,3
1,2
2008
5,3
1,3
2005
5,3
1,0
2002
4,6
ChilePeru
Annual copper production
Million tons
19. 18
Moreover the country is rich in economically
attractive minerals
SOURCE: MEM; USGS; McKinsey Basic Materials Practice
1
1
4
6
8
9
13
23
Tin
Zinc
Lead
Copper
Silver
Phosphate
Iron ore
Gold
1
4
2
3
6
Peruvian Reserves
Global share
Global
ranking
Current (2012) Expected (2020-2025)
Copper
Gold
Met Coal
Iron ore
Nickel
Silver
Zinc
Uranio
Lead
Potassium
Phosphate
Lithium
Copper
Gold
Met Coal
Nickel
Silver
Zinc
Uranio
Lead
Potassium
Phosphate
Lithium
Iron Ore
Economic
attractivenes
High
Medium
Low
Thermal Coal
Thermal Coal
8Tin
Tin
9
13
20. 19
Currently, more than 90% of copper operations in
Peru are in the first two quartiles of the cost curve
SOURCE: Wood Mackenzie
1 Includes cost to concentrate or cathode, transport, Tc/Rc
NOTE: Normal costing normalized by copper equivalent. Price used USD 362,7 c/lb in 2012
Copper cost curve 2012
600
700
Direct1, indirect cost and taxes
c/lb
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 Production
kt
0
100
200
300
400
500
Peru
Rest of world
40 52 2 6
x Peruvian production per
quartile
COPPER EXAMPLE
92% of Peruvian assets are in the
first two quartiles of costs
21. 20
300
200
100
0
Production
kt
15,00010,0005,0000
Direct1, indirect cost
and taxes
c/lb
700
600
500
400
100
200
0
300
400
500
600
700
Direct1, indirect cost
and taxes
c/lb
5,000 10,000 15,000
Production
kt
0
Moreover, by 2025 the country will continue to
have a competitive position on the cost curve
ā¦ while Chile will face higher costs
Peru will have 70% of its expected production in the
first two quartiles of the cost curve ā¦
PeruRest of World
x Percentage of Peruvian
production in each quartile
20 30 24 26
ChileRest of World
1 Includes cost to concentrate or cathode, transport, Tc/Rc
NOTE: Normal costing normalized by copper equivalent. Price used USD 300 c/lb in 2025
SOURCE: Wood Mackenzie
1282447
2025 2025
COPPER EXAMPLE
Chile will have the half
22. 21
Specifically, in energy Peru will maintain its cost
competitive advantage
SOURCE: Wood Mackenzie
ENERGY EXAMPLE
Energy cost
c/kWh
Ć 10
Zambia 6.4
EEUU 6.6
Peru 8.1
Canada 8.2
China 8.3
Mongolia 9.0
Argentina 10.4
Australia 12.7
Polonia 12.9
Chile 15.2
2012 2025
Ć 9
Zambia 5.4
Peru 7.2
EEUU 7.3
China 7.9
Argentina 8.3
Canada 8.3
Mongolia 9.4
Australia 9.9
Polonia 10.5
Chile 12.8
25. 24
DESARROLLO DE UNA NUEVA AGENDA MINERA
EN EL DESARROLLO DE LOS PUEBLOS
FACTOR INSTITUCIONAL
ā¢ Ensure that the regulations of the laws are
promoting investment and community
development
FACTOR SOCIO ā AMBIENTAL
ā¢ Promote the welfare of populations:
review of the distribution of Canon.
ā¢ Promote development boards
POSICIONAMIENTO / COMUNICACIĆN
ā¢ Educate the population about the significance of mining in the country`s development
ā¢ Improve the perception of Mining
ā¢ Establish an effective and periodic communities
MAINTAINING COMPETITIVENESS
ā¢ Developing infrastructure and cost indicators
ā¢ Have a proactive and preventive attitude for conflict management
DEVELOPMENT OF NEW MINING THAT
PROMOTES SOCIAL INCLUSION
4
3
21
26. 25
EACH OF THE INITIATIVES HAS BEEN DEFINED
BY CLEAR OBJECTIVES
Initiatives
1A) Ensure regulations
of operational
framework of the
laws.
1B) Review processes
to decrease the
permit approval time
2D) Motivate economic
and human growth
2E) Associate mining
with excellence in
water management
3) Improve perception
of mining
4) Supervise mining
competitiveness
Objectives
ā¢ Work on the regulations Law of Prior Consultation ensuring
competitiveness and that social development structures are not weakened
ā¢ Ensure SENACEās capacity in license management.
ā¢ Include participation of the MEM, other ministries of productive sectors
and and the private sector in defining the ZEEĀ“s
ā¢ Simplify exploration permits
ā¢ Review regulation of cases that do not require EIA modifications
ā¢ Reduce number of presentations / observations
ā¢ Reduce number of entities to deal with.
ā¢ Improve use and management of mining royalties.
ā¢ Promote development meetings to ensure access to basic services
ā¢ Promote and notify stakeholders on development knowledge and best
practices
ā¢ Promote the development of an independent institution with
excellence in water
ā¢ Ensure adequate communication on potential impacts
ā¢ Improve mining perception and interaction with communities
through and effective short and long term communication and costs.
ā¢ Safeguard the competitive advantage of the country development cost
structure indicators and preventing bottlenecks.
27. 26
ā¢ TRUST
ā¢ SOCIAL FUND
ā¢ SOCIAL PEACE
ā¢ WHILE OPERATING
PROFIT
ā¢ INFRASTRUCTURE
ā¢ EMPLOYMENT
ā¢ TRAINING
COMMUNICATION AND CONTINUOUS PRESENCE
IN THE AREA OF INFLUENCE OF PROJECTS
EXISTENCE AND
INTEGRATION
INTO COMMUNITY
Harmonious and
balanced
Participating
communities, local
governments and the
State
COMMUNITY
STATE
Social responsibility strategy before mining exploitation
Awareness
Social climate for investment
DEVELOPMENT
ROUNDTABLE
SUSTAINABLE
DEVELOPMENT
29. 28
Source: PROINVERSION
ECUADOR
COLOMBIA
BRAZIL
NORTHERN MACRO-REGION
TERRITORY DEVELOPMENT
BAYOVAR
PORT
Copper Projects
Silver Projects
Gold Projects
Iron Projects
Hydropower StationPACIFIC OCEAN
NORTHERN IIRSA
CAJAMARCA -PIURA TRAIN
C.H. RENTEMA
1525 MW
C.H. CUMBA 4
825 MW
C.H. MANSERICHE
7550 MW
C.H. CHADIN 2
600 MW
C.H. BALSAS
915 MW
Railroad Project
COPPER-GOLD PROJECTS
FOR US$ 20 000 Millon
ALTO MAYO PROJECT
768 000 Ha
CAJAMARCA - CHACHAPOYAS-
TARSPOTO TRAIN Study of Railroad
Estimated Annual Production Project
Copper 1.018.000 tmf
Gold 867.000 Oz
Phosphates 5.800.000 tm
BAYOVAR PROJECT
ā¢ FOSFATOS
ā¢ DIATOMITAS
ā¢ SALMUERAS
ā¢ CALCAREOS
COPPER
REFINERY
PROJECT
30. 29
CENTRAL MACRO-REGION
TERRITORY DEVELOPMENT
Copper Projects
Silver Projects
Gold Projects
Iron Projects
LIQUEFACTION PLANT
LA OROYA
METALLURGICAL
COMPLEX
CENTRAL IIRSA
PERU- BRAZIL
TRANSCONTINENTAL RAILROAD
BRAZIL
Source: PROINVERSION
CALLAO PORT
LA OROYA
Estimated Annual Production Project
Copper 530.000 tmf
Gold 160.000 Oz
Silver 7.500.000 Oz
Lead 16.000 tmf
Zinc 641.500 tmfCOBRIZA
MINE
TOROMOCHO
PROJECT
(CHINALCO)
31. 30
Source: PROINVERSION
Copper Projects
Silver Projects
Gold Projects
Iron Projects
SOUTHERN MACRO-REGION
TERRITORY DEVELOPMENT
FRACTIONATION
PLANT
BOLIVIA
CHILE
PACIFIC OCEAN
BRAZIL
INTER-OCEANIC
HIGHWAY
CAMISEA
MATARANI PORT
MARCONA PORT
GAS PIPELINE
Gas pipeline
Camisea Gas pipelineENERGY NODE
2000 MW
Estimated Annual Production Project
Copper 1.826.000 tmf
Gold 524.000 Oz
Silver 11.339.000 Oz
Iron 3.500.000 tm*
* Iron concentrate expansion project Marcona
Actual production: 6.500.000 tm
32. 31
PIPELINE FROM CAMISEA -
CUSCO TO SOUTHERN PERĆ
In Peru is developing a project to
build a pipeline to transport natural
gas from Camisea - Cuzco - to the
cities of Arequipa, Moquegua and
Tacna - located in southern Peru.
Tenders will be made for the design
and pipeline construction whose
extension is estimated at 1,100 km.
We have been preparing the
groundwork for the design of the
pipeline tender.
Investment: US$ 2 431 Million
Adjudication: IV Quarter of 2013
33. 32
PETROCHEMICAL - PERĆ
ACTUALES
PISCO
LIMA
(LurĆn)
ICA
HUANCAVELIC
A
AYACUCHO
APURIMAC
AREQUIPA
MOQUEGUA
MADRE DE DIOS
TACNA
CUSCO
PUNO
QUILLABAMBA
CUSCO
PUNO
CHILE
BOLIVIA
LAGO
TITICACA
SEGURIDAD ENERGĆTICA (Gasoducto)
AREQUIPA
MALVINAS
TACNA
TGP (SISTEMA ACTUAL + LOOP COSTA)
Gasoducto / Poliducto
JULIACA
MARCONA
ICA
CONTUGAS (SISTEMA ACTUAL)
Loop
TGP
PERU LNG (GASODUCTO)
CHIQUINTIRCA
Loop
TGP
PROYECTADOS
LOOP TGP (KM 88 ā KM 127)
GASODUCTO SUR PERUANO (Gasoducto)
MATARANI
ILO
Km
127
Km 88
ANTA
ESPINAR
ZONA DE
SEGURIDAD
ENERGĆTICA
ZONA DEUBICACIĆNDEL
POLOPETROQUĆMICO
SEGURIDAD ENERGĆTICA (Poliducto)
ABANCAY
ZONA DEUBICACIĆNDEL
NODOENERGĆTICO
In Peru, the natural gas is composed of
90% methane and 10% ethane.
Potential reserves amounting to 50 TCF
and has been developing the pipeline
from Camisea to the southern coast of
Peru.
For this reason it has promoted the
development of the petrochemical
industry of Natural Gas in the South of
the country,
It requires building petrochemical plants
of methane and ethane for obtain
Ammonia and Ammonium Nitrate and
Urea and ethylene and polyethylene is
the raw material for plastic finished
products.
Potential natural gas
reserves of 50 TCF
35. 34
Latin America : the hydraulic resource is
largely available
33%
69%
7%
75%
22%
70%
Percentage of Developed Hydraulic Resources (*)
The 67% of remaining
resources would allow to
produce 1,600 TWh/year
Peru 70,000
Argentina 44,500
Brazil 260,000
Chile 25,000
Colombia 93,000
Ecuador 24,000
Mexico 53,000
Venezuela 46,000
Total 640,000
Hydraulic potential
(MW) (approx)
Source: IHA White Paper February 2003 and OLADE. Figures from 2002, except from South America+ Central America + The Caribbean which figures are from 2006
(*) About technically and economically feasible potential
36. ITEM NAME
POWER
(MW)
FLOW
(m3/s)
FALL (m)
1 VIZCARRA 140 31 250
2 LLATA 01 210 36 325
3 LLATA 02 200 38 300
4 PUCHCA 140 57 130
5 YANAMAYO 160 75 160
6 PULPERA 220 82 150
7 RUPAC 300 98 175
8 SAN PABLO 390 118 185
9 PATAS 1 320 130 140
10 PATAS 2 240 136 100
11 CHISGON 240 148 90
12 BOLIVAR 290 190 85
13 BALSAS 350 198 100
14 SANTA ROSA 340 201 95
15 YANGAS 330 205 90
16 PION 350 222 100
17 CUMBA 410 231 100
18 RENTEMA 1,500 750 100
19 ESCUPREBRAGA 1,800 900 108
20 MANSERICHE 4,500 3,500 100
Hydropower development in
the MaraƱon Basin
Evaluate the MaraƱon River Basin,
specially in the lower basin projects
for its international significance as:
Manseriche and Rentema
hidroelectric projects.
