Peru's gold output will likely fall 20 percent this year

Peru's gold output will likely drop by 20 percent this year and keep falling through 2016 as ageing mines churn out less of the precious metal and a government crackdown curbs informal production, a ministry official said on Friday. Peru's Deputy Mines Minister Guillermo Shinno told Reuters that copper production is seen rising by 9 percent this year to around 1.5 million tonnes, less than the government's previous estimate of an increase of between 10 percent and 14 percent.
Shinno said in an interview that new mines will likely add at least another 400,000 to 450,000 tonnes of copper to Peru's annual output in 2015 - an increase of about 30 percent. Gold output, however, will continue to decline until 2017, when several small mines will support a rebound, Shinno said. He declined to forecast how much gold production would slide in coming years, or what output would look like in 2017.
"These are very strong production drops," Shinno said from his offices in Lima. Falling gold production and weaker-than-expected copper output has led Peru to revise down its economic growth forecast for this year several times. The government now expects a 4.2 percent expansion - the Andean country's weakest rate since 2009. Peru's gold output has been hit by dwindling reserves at Newmont Mining Corp's ageing Yanacocha mine and Barrick Gold Corp's Pierina deposit, which is in the process of closing.
A police crackdown on informal and illegal mining this year has also contributed to gold's 17 percent year-on-year production drop in the first seven months of 2014. Shinno said the Amazonian region Madre de Dios, where small-scale gold miners largely operate outside of the law, once contributed an estimated 20 tonnes of gold to Peru's annual output. That would have represented 13 percent of 2013 output. An ongoing process to register and regulate some of Peru's estimated 200,000 informal gold miners so they can continue working has faced several delays. "This has definitely impacted gold production, but we hope it will change as miners are formalised," Shinno said.