SANTIAGO, April 7 (Reuters) - Peru, fresh off a sharp rise in copper output, is upstaging top producer Chile as a prime place to hunt for new supplies as the historic rivals race to usher in new mines.
Chile, long the world leader in copper production, has struggled recently with slipping productivity and lackluster exploration. At the annual CRU World Copper Conference that the country hosted in Santiago this week, many pointed to Peru as an example for Chile to follow.
“In Chile for many, many years there has been no incentive for anything in terms of national policy. Peru on the other hand is making a special effort,” said Diego Hernandez, an industry veteran who heads trade body Sonami in Chile.
Now the world’s second biggest producer, Peru has benefited from lower production costs and untapped reserves, while Chile’s output has stagnated due to falling copper grades, thorny labor relations and high energy costs. The Fraser Institute’s annual survey had Peru leapfrogging its more developed neighbor as the best place for miners to do business in Latin America.
Peru has introduced policies to cut red tape. Forthcoming changes to rules on safety, training and mine closures will save miners money and time, said Peru’s Mines Minister Gonzalo Tamayo. The country is also studying how to promote shared infrastructure projects, from highways and railways to concentrates pipelines, to make scattered deposits feasible.
Peru has become a place “that we think is great for the mining business,” said Antofagasta Chief Executive Officer Ivan Arriagada.
Still, Peru has had to contend with anti-mining protests that have derailed major projects.
“The big question mark that can make Peru very expensive, is this unrest and conflicts,” said Marcelo Bastos, the chief operating officer of MMG Ltd’s massive Peruvian Las Bambas project, where disgruntled locals have disrupted transportation of copper concentrates.
Bastos said Las Bambas, which has only drilled a fraction of the concession, could hold as much copper as Chile’s Escondida copper mine, long the world’s biggest.
In the past, Peru and Chile have disputed everything from stretches of desert to the origin of the popular South American brandy Pisco. But Peru’s rapid rise in mining could help both countries.
“There’s a healthy competition. As neighbors we’re always looking at what’s happening on the other side, and that’s creating a virtuous circle,” said Luis Marchese, Peru country manager for Anglo American. The company is evaluating a possible expansion in Peru while output at its Los Bronces mine in Chile is flat.
Miners can save costs by tapping suppliers on both sides of the border and sharing know-how.
Governments could further help by, for example, connecting the electrical grids and easing border restrictions, said Luis Rivera, an Americas executive for Gold Fields.
Peru overtaking it as an investor darling had a silver lining for Chile, said Chile’s Deputy Mines Minister Erich Schnake.
“It’s in Chile’s interest for Peru to move forward because in the end this will create a mining hub,” he said.
Reporting by Mitra Taj, Additional reporting by Barbara Lewis; editing by Rosalba O'Brien and David Gregorio