Peru is a mining economy and the world’s second largest copper exporter. Metals and minerals account for 64 per cent of Peru’s exports. The export of metals and minerals, led by copper, directly accounts for 9.5 per cent of GDP, though the economic activity associated with and generated by mining services contributes more. The sector also attracts 30 per cent of Peru’s foreign investment. By 2023, 236,000 workers were directly employed in mining. According to the Peruvian Institute of Economy (IPE), every mining job indirectly generates 6.25 additional jobs elsewhere in the economy through consumption and investment.
Peru’s rich reserves of copper (an essential raw material in the manufacture of electric vehicles, and for the conversion and transmission of sustainable energy) mean the country is well placed to play a key role in global supply chains for projects to reduce carbon emissions and enable the global transition to a green economy. According to Peru’s Ministry of Energy and Mines, as of 2019 there were 48 new or expanded mining projects in planning or development; the total value of these projects was estimated at $57.8 billion – with 71 per cent of the total in copper.
But the history of Peru’s extractive economy has left a legacy of exploitation, economic inequality and exclusion, environmental degradation and tensions between the capital city, Lima, and the interior of the country where most of the extraction occurs. Laid over this are Peru’s ethnic and racial diversity and the differential effects of extraction on local communities. While modern mining practices by international companies have improved, in many cases distrust and a sense of political marginalization remain unchanged. At the same time, efforts by international and national investors to incorporate progressive and modern social, environmental and investment practices to address past abuses have not been uniform across the industry. Furthermore, the growth of both illicit and informal mining activity has brought new challenges.
Long-simmering political, social and economic tensions erupted in December 2022 after the then president, Pedro Castillo, was removed from office after attempting to dissolve the Congress. Castillo’s election in in 2021 had been heavily contested by the conservative party allied with Keiko Fujimori, the daughter of the late former dictator Alberto Fujimori. Those tensions, too, had been preceded by a steady parade of efforts by the Congress, led by pro-Fujimori legislators, to harass and remove past presidents, including Pedro Pablo Kuczynski and Martin Vizcarra.
The social protests that followed Castillo’s removal extended into early 2023. These protests had erupted mainly in the interior and the south of the country – both regions with large Indigenous populations and lots of mining. The protesters seized several towns and one mining operation, and cut off highways. The government’s response led to the death of more than 49 protesters at the hands of security forces, according to Human Rights Watch.
In the past, when popular and political opinion has shifted against the national government, the change in sentiment has focused on the country’s troubled history with mining. For many, the legacy of exploitation and socio-economic inequality often associated with natural resource extraction in Peru becomes the root cause of division and malaise. This factor became particularly evident after the 2022–23 protests that slowed mining production and exports.
Though other factors, both political and economic, contributed to the decline in economic growth around this time, the reduction in mining activity caused by the protests was an additional drag on Peru’s economy. After growing on average by 5 per cent annually between 2002 and 2019, Peru’s real GDP contracted by 0.6 per cent in 2023 and is expected to increase by just 2.5 per cent in 2024. The economic slowdown increased the fiscal deficit to 2.8 per cent of GDP in 2023, as a result of the decline in tax revenues. Further economic stagnation would affect revenues available for social programmes, on which, according to the World Bank, Peru spent only 1 per cent of GDP in 2020, compared to the regional average of 1.4 per cent. According to a recent report, Peru’s poverty rate has increased in the past two years, with 29 per cent of the population living below the poverty line in 2023, an increase of 1.5 percentage points from the previous year. Poverty rates were higher in rural areas, reaching 40 per cent in some regions.
The challenges faced by Peru in securing a more equitable, sustainable mining economy that provides broad-based benefits to society are multiple. The historical legacy of exploitation – both environmental and human – remains and needs to be addressed. At the same time, effective leveraging of global demand for Peru’s metals and minerals is key to financing socio-economic development and expanded social assistance.
Attitudes towards mining vary, reflecting the history of community relations with extraction projects and the government. Levels of support for mining among Peruvians also differ. An IPSOS survey conducted in 2021 revealed that 53 per cent of Peruvians believed that formal, legal mining benefited the country, while 41 per cent believed it hurt Peru. Those sentiments, though, were not uniform across Peru. Although 64 per cent of those living in the capital, Lima, saw mining as beneficial, only 47 per cent of citizens living in the country’s interior – where most of the mining occurs – felt the same way.
A 2023 survey of 601 Peruvians conducted by a consortium of consulting firms based in multiple mining countries (including Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guatemala, and Panama, as well as Peru) reflected the difficulties in changing those perceptions. When citizens were asked to name who they trusted to defend their interests in the mining sector, 78 per cent of the Peruvian respondents said they had little to no confidence in the official mining authority. The private sector fared little better, with only 28 per cent of Peruvians expressing trust in the mining companies, in contrast to 67 per cent expressing little to no trust in those same companies.
Despite this legacy of distrust and discontent, steps can be taken to address these multidimensional deficits to build a better future for Peru’s citizens and economy, and to develop global supply-chain resilience for the green transition. The responsibility for addressing those deficits rests with multiple sectors, including Peru’s national, regional and local governments, investors, academia, civil society, the international diplomatic and multilateral community and mining communities themselves. Given the fragility of the current government’s legitimacy and support, securing the confidence and support of all the necessary stakeholders will be difficult. For this reason, credible national and international non-governmental organizations (NGOs) and academic institutions should initiate the process, which will necessarily involve an iterative effort of trust-building over time to build confidence and a sustained, meaningful discussion.
About this paper
This research paper outlines a series of recommendations and steps across multiple sectors that will help identify and establish the processes, information and institutions necessary for Peru to work through the complex historical, institutional, social and political issues surrounding mining. The paper is intended to help build the foundation for a broad consensus on Peru’s socio-economic development and start a process of dialogue among communities, NGOs – including professional associations and universities – international and domestic investors in mining, and the different layers of government (from national to local) on the multiple dimensions, impacts and future of mining in Peru. In doing so, the paper aims to outline the ways that communities, the private sector and the state can be more effective, predictable and constructive stakeholders in that process.
