The projects identified in the mining portfolio involve more than US$ 57 billion in investments that, if put into operation, would generate 2.3 million new direct and indirect jobs for the country, which is equivalent to the same number of jobs that have been lost last year due to the negative effects of the COVID-19 pandemic.

That was one of the conclusions of the study "Contribution of Mining to the National Economy", prepared by the Peruvian Institute of Economics (IPE), which was presented as part of the activities "Road to the 14th Gold, Silver and Copper Symposium", to be held in Lima in 2022.

"Mining is an important source of employment generation in Peru, not only because of the quality of jobs it creates directly, but above all, because of the employment it promotes through linkages with other economic activities. Currently, for every direct job in mining, 8 additional jobs are generated", said Diego Macera, manager of IPE.

Economic driver

He also pointed out that mining activity has had a positive impact on the national economy, as it contributes to the dynamism of private investment in a decentralized manner, favoring the development of the country's regions, and added that mining activity represents 10% of the national GDP and accounts for 16% of private investment.

Likewise, the mining sector -he stated- contributes significantly to the Peruvian government's revenues through different concepts, both tax and non-tax, among which are the Mining Royalties, the Special Tax on Mining (IEM) and the Special Tax on Mining (GEM, charges that are not found in other sectors).

Fiscal Impact

In this line, IPE also calculated the fiscal potential of mining activity taking as a starting point the date of execution of the projects according to the portfolio of the Ministry of Energy and Mines (Minem).

Thus, it analyzed two groups, the first made up of 15 mining projects that would be operational by 2025, and a second group of 27 mining operations that would be operational by 2030.

In this regard, Diego Macera commented that based on the estimates of the value of mining production for these two groups, it was calculated that in the first case (15 projects), tax revenues from the mining sector would be generated in favor of the Peruvian State for approximately S/ 43 billion between 2025 and 2035; while the contribution of the remaining 27 projects would be around S/ 96 billion in the period 2030 and 2040.

"At IPE we have calculated that the entry into operation of the two groups of project portfolio would imply an extremely positive impact for the country's development especially if we observe both the direct and indirect effects generated," remarked Diego Macera.

The study revealed that in the first 10 years of operation of these mining projects, a total of S/ 109 billion in direct and indirect fiscal revenues would be generated. In the following ten years, if the second group of projects starts operating, the Government would obtain additional revenues for S/ 240 billion.

Effect on exports

According to figures from the Central Reserve Bank (BCR) in recent years, the mining sector has contributed the most to the country's exports, generating foreign exchange for the stability of macroeconomic accounts.

Between 2010 and 2019, US$24,655 million in mining products were exported annually on average, representing an annual average of 58% of total exports.

The report by the Peruvian Institute of Economics estimated that with the entry into operation of mining projects in portfolio, mineral exports would increase by 66% compared to what was observed in 2017.

"Mining will be the driving force for the recovery and reactivation of the national economy. We need the political will of authorities to move forward with this valuable portfolio of mining projects that will contribute to Peru's development and will allow the Government to obtain more tax revenues to invest in closing social gaps and defeating poverty," said Diego Macera.