CUAU:CC - Mining and Geopolitical Risk: A Closer Look at Peru

Peruvian President Pedro Castillo unnerved the copper industry when the Marxist candidate won a narrow election in 2021 by appealing to the working class, especially those working in or affected by the mining industry.

Why does this matter? Peru is the world’s second largest copper producer , having produced 2.2 million metric tonnes of copper in 2021 , second only to its neighbor Chile. Peru’s mining industry accounts for 62 percent of all exports and 8.8 percent of its GDP.

Marcial Garcia, mining lead at the consulting firm EY Peru, says many of the issues facing the mining industry in Peru are due to companies that have been in the country for decades and have a bad reputation largely from legacy issues. Conversely, Garcia says companies new to Peru that focus on establishing good relationships with the community from the beginning have quickly obtained a social license to operate.

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