December 2022
Peru holds reserves of 87Mt of contained copper, accounting for 10% of the world’s total reserves, ranking second globally. Peru is also the world’s second-largest producer of copper concentrate, producing approximately 13% of the total global copper concentrate supply.

Peru’s copper in concentrate output is expected to increase by 5.5% to 2,345kt in 2022, followed by a further increase of 9.3% to 2,563kt in 2023. New capacity will largely offset existing sites’ production disruptions related to community protests and declining grades.



Quellaveco Starts

The largest new capacity contribution in Peru over 2022 and 2023 will be Anglo American’s 60%-owned 300tktpa Quellaveco mine, the largest new mine developed in Peru after the start of Las Bambas in 2016. Quellaveco has achieved commercial copper operations, following the successful testing of operations and final regulatory clearance.

AME forecasts the mine to produce 90kt of copper in concentrate in 2022, ramping up to 330kt in 2023 and 350kt in 2024. AME’s forecasts are in line with Anglo American’s plan for Quellaveco to ramp up fully over the next 9-12 months, with production guidance at 80 – 100kt for 2022 and 320 – 370kt for 2023 and 2024.

Construction of the Quellaveco open pit and a 47Mtpa concentrating plant started in 2018, with estimated total capex of US$5.5bn, including the US$0.6bn additional cost of managing the impacts of the Covid-19 pandemic since 2020.

Quellaveco has an estimated 1.7Bt Ore Reserve at 0.53% copper and a 36-year Reserve Life. There is a potential for further expansion given its estimated additional Mineral Resources at 1.6Bt at 0.38% copper.

AME projects Quellaveco’s output to gradually decrease over its mine life from around 330kt in mid-2020s to below 200kt in mid-2030s due to expected declines in grades. However, potential exists to maintain stable production by throughput expansions. Anglo American has likely already started considering throughput expansions.

In 2021, Anglo American approved the construction of a Coarse Particle Recovery (CPR) plant to allow retreatment of coarse particles from flotation tailings to further enhance copper recovery rates. The CPR plant will also enable future throughput expansion.


Other Major New Capacity

Southern Copper is progressing the US$2.5bn Michiquillay project. Southern Copper acquired Michiquillay in 2018, and the company has indicated that it plans to start production in 2025 and produce 225ktpa of copper in concentrate for at least 25 years.

The Rio Blanco Copper and Molybdenum Mine in Peru is one of the world’s 10 largest undeveloped copper mines. The deposit has estimated resources of 7.41Mt of copper and 280kt of molybdenum. Zijin Mining holds 51% of the mine. The company is planning on constructing an open pit mine and concentrator facility which will produce 200ktpa of copper and 3ktpa of molybdenum in concentrate.

Zijin is currently undertaking a definitive feasibility study. Pre-production investment was estimated at US$2.5bn. AME notes that Zijin is also considering construction of a copper smelter and refinery facility to process the concentrate locally.


Protests Remain

Residents surrounding some major mines in Peru have been protesting the mines’ environmental and social impact over several years of their operations. They are also demanding a bigger cut of profits.

MMG’s Las Bambas mine had been blocked for over 500 days since the commencement of concentrate transport in 2016. The most recent protest began in November and forced the mine to reduce operations to 30% of its usual capacity.

In April, after residents of the Fuerabamba community entered the mine and set up camp inside it, the mine suspended operations for over 50 days until June, the longest in the mine’s history. The Las Bambas mine has halted construction of its new Chalcobamba pit, originally scheduled to start production in 2022 and boost the mine’s production to 300-320kt in 2022.

Southern Copper’s Cuajone mine was also stopped for nearly two months until April as a result of another protest. Local communities cut the company's water access and blocked a key railroad after the company decided to replace a 50-year-old water pipe that supplies nearby communities.

Glencore’s Antapaccay mine also encountered protests from local communities. They are also opposing the Coroccohuayco project at the Antapaccay mine. In response to the protest, Glencore said that it does not plan to execute its Coroccohuayco project in the next two years. The Coroccohuayco project would require a US$590m investment.

Community protests are not new in Peru and continue to threaten supply from the world’s second largest mined copper producer. There have also been rising concerns over the fragility of the country’s economy and its policy shifts, especially with proposed higher taxes and royalties.

Despite these concerns, Peru still attracts investment as it holds a wealth of mineral value, and the long-term outlook is positive. BHP, for example, has significant exploration interests in six different departments, Ancash, Apurimac, Arequipa, Ayacucho, Cusco, and Huancavelica.

BHP has received its initial permit to start drilling at Jatum Orcco, in Huancavelica. BHP has committed to invest around US$12m in exploration projects in Peru over the next ten months. In the long-term, the AME copper in concentrate forecast for Peru is expected to grow to 3,061kt in 2027.


Refined Copper Supply

Peru is expected to produce 395kt of copper cathode in 2022, including 295kt from Southern Copper’s Ilo smelter and refinery and 100kt from SX/EW operations (including Cerro Verde at 45kt, Toquepala at 27kt and Mina Justa at 29kt).

The largest new refined capacity contributions in Peru in 2022 and 2023 will be Minsur’s 60%-owned 51ktpa Mina Justa. The US$1.6bn Mina Justa has started production and is in the ramp-up stage.

We forecast that the Mina Justa will reach its full capacity in 2022, producing 42ktpa of copper cathode from a 12Mtpa oxide SX/EW plant. Mina Justa also produces around 51ktpa of copper in concentrate from a 6Mtpa concentrator.



Southern Copper has indicated it will be investing US$8bn in its projects across Peru, including the controversial Tia Maria copper project. Southern Copper's Tia Maria is an oxide SX/EW project located in southern Peru. The project is expected to produce 120ktpa of copper cathode for 20 years. Tia Maria is estimated to contain Reserves of 2.6Mt of contained copper. With an estimated initial capital expenditure of US$1.4bn, the mine’s capital intensity of US$5.29/lb ranks at around the industry average.

Southern Copper has experienced several setbacks since it first announced its intention to develop Tia Maria in 2010. Construction plans were halted and readjusted twice, in 2011 and 2015, due to fierce and at times deadly opposition by locals, who worry about Tia Maria’s impacts on nearby crops and water supplies.

The construction permit was approved in late 2019. However, the new President Pedro Castillo denied the Tia Maria project in 2021. Southern Copper plans to start production from Tia Maria in 2024, but protests and violence over the project have led to doubts as to when its development will actually be completed.

Beyond the Tia Maria project, Southern Copper is also progressing the US$2.6bn Los Chancas projects as well as a smelter expansion and a refinery at Ilo. The Los Chancas deposit is estimated to contain more than 3Mt of copper in resources.

Southern Copper is considering the development of an open pit mine, concentrator and SX/EW plant to produce 130ktpa of copper and 7.5ktpa of molybdenum from 2027. The main issues with the project have been the lack of infrastructure and complicated topography. Los Chancas is not currently included in AME's base case supply forecast.

On the other side, Cerro Verde’s copper cathode production is forecast to cease in 2025, when oxide reserves are expected to be depleted, while its sulphide reserves will support copper concentrate production until 2052.

Over the longer forecast period, Peru is expected to make new smelter investments and to give the green light to large-scale SX/EW projects such as Tia Maria. By 2040, AME expects the production of refined copper in Peru to reach 950ktpa.