LATIN AMERICA SPECIAL — Peru continues to attract large

Despite some political uncertainty in the wake of President Alberto Fujimori’s seizure of power last spring, capital for major mine development projects continues to pour into Peru.

“The private sector, including foreign investors, is to play a crucial role in the development process of Peru,” said Daniel Hokama, minister of Mines and Energy at a recent conference in San Francisco.

Although the democracy appears shaky at times, Peru has been encouraging the same type of economic restructuring undertaken by Chile and Mexico. A less complex regulatory framework, greater investment security, and new labor laws are all symptoms of this reform.

Six companies, including one mining company, went private in Peru last year and the government’s schedule calls for the privitization of all state-owned companies by the end of 1994.

As if to applaud these measures, Newmont Mining (NYSE) announced recently that its 40% owned Yanacocha gold deposit will begin production this summer at a rate of 100,000 oz. per year. Startup costs are estimated to be US$37 million, and Newmont expects to develop adjacent higher-grade deposits to eventually triple annual production.

At a 300,000 oz.-per-year rate, cash costs would be about US$100 per oz. and the mine would have a payback period of six months.

Newmont, along with its Peruvian partner, Buenaventura, recently acquired an additional 130,000 hectares of ground along the volcanic belt that hosts the Yanacocha deposit.

Elsewhere in the mineral-rich country, Asarco’s Southern Peru Copper is proceeding with a US$300-million program to build solvent

extraction-electrowinning plants at two copper mines in Southern Peru, Toquepala and Cuajone, which together produce about 60% of Peru’s copper. A waste water treatment plant and tailings disposal facility will also be installed.

The construction phase of the project is expected to employ 1,000 people. Peru hosts about 5% of the world’s known zinc deposits, 2.8% of the world’s copper deposits, and 28% of the world’s silver deposits. Mining accounts for 11% of Peru’s gross domestic product and employs more than 500,000 of its people.