The tenth-largest gold-producing country in the world recently reported an impressive surge in output rates, according to data from the Ministry of Energy and Mines of Peru. In September of this year, Peru produced 13% more gold than the total output rate produced during the same period last year. This year’s September total came to 286,000 ounces compared to last year’s 254,000 ounces.
So, where is this surge in production coming from?
The Ministry of Energy and Mines of Peru explained that one mine, in particular, contributed to the recent positive performance levels. Minera Yanacocha, a gold mine in the Cajamarca region, increased production by over 77% between the two compared periods. Consorcio Minero Horizonte and Compañía Minera Poderosa also boosted production by 5.1% and 4.7%, respectively, though the primary surge in results came from Minera Yanacocha.
Minera Yanacocha is the fourth-largest gold mine in the world, producing just under 1 million ounces of gold per year, based on data from 2014. The 30-year-old project is South America’s largest gold mine and is currently 100% owned by Newmont Corporation, the biggest gold mining corporation in the world. Newmont owns high-yielding mines across the U.S., Canada, Mexico, the Dominican Republic, Australia, Argentina, Ghana, Suriname, and, of course, Peru.
When looking at individual companies, the Newmont-owned Minera Yanacocha accounts for over 9% of Peru’s total gold production rates. While corrupt, illegal gold mining practices may be a widespread issue in large portions of South America, Minera Yanacocha does not contribute to this. In fact, Yanacocha invested over $1 billion in social and environmental responsibility projects between its opening date and 2012 and continues to do so.
Despite this, artisanal mining (with 90% being illegal activities) still accounts for more than half of Peru’s economy, sustaining over 50,000 workers and deforesting 100,000 hectares (247,105 acres) of the Amazon Rainforest. Peru’s government is actively trying to crack down on these illegal mining operations, though the efforts take time and so far have seen minimal results as most activities end up resuming after being shut down. Essentially, the companies on paper, like Newmont, only show the surface of Peru’s gold industry.
Aside from Minera Yanacocha, Compañía Minera Poderosa accounts for around 8% of Peru’s production rates, and Consorcio Minero Horizonte accounts for 6.6%. Peru’s top production comes from the La Libertad region, producing 32.5% of the nation’s total gold. The Lagunas Norte mine is the largest in this region, sitting 140 kilometers from Trujillo and producing roughly 245,000 ounces of gold per year, based on 2018 data.
While the Lagunas Norte mine has estimated gold reserves of 3.95 million ounces, it did not contribute to Peru’s recent surge in production because the mine has been under care and maintenance for the past few years after transferring ownership. In 2019, Barrick Gold placed the mine under care in maintenance, then sold the operation to Boroo Pte Ltd for $81 million by June 2021. Boroo is still working on initiating the project’s next few phases of construction, which involves recovering carbonaceous oxide ore to extend the mine’s longer-term plans.
Once the Lagunas Norte mine opens back up to full production rates, we can expect Peru to achieve even more stellar output figures. A few of Peru’s other top-producing regions include Arequipa, contributing to 22.2% of gold production, and Cajamarca, contributing to over 20%. Minera Yanacocha is the largest mine in the Cajamarca region, likely contributing to a large portion of that 20% figure.
In May of this year, a fire broke out at an Arequipa gold mine controlled by Yanaquihua Mining, killing at least 27 workers. This electrical short-circuit led to the deadliest mining accident in Peru in the last few decades. Again, this incident likely contributed to a temporary dip in regional production, though Peru still managed to achieve stellar rates by September.
From January to September of this year, Peru produced 2.3 million ounces of gold, equivalent to 71.8 tons. This figure is nearly identical to last year’s nine-month total, according to the Ministry of Energy and Mines.
On average, Peru mines over 100 tons of gold per year, equating to around 4% of the globe’s annual production supply. To meet this average level, Peru will need to produce another 30 tons during the last three months of the year, which may be feasible if it keeps up with the surging levels. Once the Lagunas Norte mine finally re-opens, we can likely expect much larger totals from Peru.