Copper Renaissance: Strategies for Peru's Rise in Global Copper-Mining Markets

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This study examines how Peru, as the second-largest copper producer, can enhance local participation in its copper mining industry, which is dominated by large foreign firms.

This study explores how Peru can leverage its significant copper resources to develop local suppliers and allow the country to participate in the global production. Peru is the second-most important copper producer with significant potential, and the industry accounted for 5% of the country’s GDP in 2017. However, Peru’s copper mining industry is dominated by large foreign suppliers with little local input. Researchers reflect that power dynamics between these large foreign firms greatly inhibit the potential for smaller local firms to participate in the industry.

In light of these obstacles, and recognizing the significant economic potential for copper-mining for Peru, researchers suggest a few policy options. They assert that to develop strong and innovative local mining suppliers, Peru needs to: 1) focus on creating strong institutions to support the copper-mining development; 2) assist and facilitate the entry of the local providers to the mining global value chain; and 3) incentivize innovation and upgrading of the local providers.

These findings are relevant for several reasons, as they could be extended to lower-middle-income countries or countries with limited innovation capacity that do not use their geological resources to their full capacity. More specifically, the conclusions enumerated in this study hope to empower Peru to develop the copper-mining industry for local producers and take back a share of profit from foreign firms capitalizing on the country's resources.

Methods and Results

The researchers followed global value chain (GVC) methodology and used a mixed-methods approach, combining both quantitative and qualitative primary and secondary sources to understand the global industry dynamics and how these may affect procurement patterns in the Peruvian mining sector. They analyzed multiple academic, trade, and gray literature sources to cover private-sector engagement in the industry. This included reviews of the annual reports of 12 leading copper-mining companies (multiple years), reviews of both miner and supplier websites, sustainability reports, and private-sector databases (e.g. Orbis), as well as a review of relevant industry publications, including the World Copper Fact Book, Mining.com, Mining Global, and Global Mining Review among others.

In order to identify procurement patterns in the Peruvian mining sector, as well as the challenges and opportunities that Peruvian suppliers face in their insertion into copper global value chains, the researchers conducted more than 20 semi-structured, one-hour interviews between March and May 2019 with (I) mining companies in Peru, (II) Peruvian mining suppliers, (III) mining industry experts in Peru and Chile, (IV) government officials (current and former), and (V) education institutions. This information was supplemented with approximately 20 semi-structured interviews carried out between 2015 and 2018 with similar groups of actors, including key industry associations focused on the metal-mechanic sector.

From this data, researchers discovered key obstacles impacting local copper-mining development. They found that opportunities for domestic suppliers arise mainly in new mine developments.



Penny Bamber (Duke University), Karina Fernandez-Stark (Duke University), Oswaldo Molina (Universidad del Pacífico)

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Global Value Chains, Mining, South America