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By Mitra Taj
SANTIAGO, April 7 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
"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
"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)