|
Peru Mining and Energy
The mining sector, including petroleum, accounted for
only 9
percent of GDP in 1988 but nearly half of the country's
export
earnings. Its share of total exports increased from 45
percent in
1970 to 48 percent in 1988. Copper alone accounted for
24.4
percent of total export earnings in 1970 and 22.5 percent
in 1988
(see
fig. 9).
Mining developed as an export sector, first for
precious
metals and then chiefly for nonferrous metals needed by
the
industrialized countries rather than by non-industrialized
Peru.
Mining has always been an enclave, only weakly related to
the
domestic economy for its supplies or for its markets. But
it has
been a principal provider of the foreign exchange and tax
revenue
needed to keep the rest of the economy going. That key
role made
the dominance of foreign ownership, especially in copper
and oil,
a focus of bitter conflict for many years. The sector
became the
center of intense debate over dependency, exploitation,
and
national policy toward foreign investment.
Foreign investment was the main source of mining
development
up to the 1960s, starting from the turn of the century in
copper
and extending to a wide range of metals after the highly
favorable Mining Code was enacted in 1950. The sector was
divided
between the largest mines, which produced roughly
two-thirds of
metal output and owned by foreign firms, and the
small-to-medium
size mines , which supplied the other one-third of output
and
were under Peruvian ownership. Following the Mining Code
of 1950,
foreign investment flowed into iron ore, lead, zinc, and
other
minerals, and metals exports grew from 21 percent of total
exports in 1951 to over 40 percent a decade later.
When the military overthrew the government of Belaúnde
in
1968, the immediate issue was a conflict with IPC, the
foreign
firm dominating the oil industry. The Velasco regime
quickly
nationalized IPC and then in the 1970s also nationalized
the
largest copper mining corporation, Cerro de Pasco. It
established
the Peruvian State Mining Enterprise (Empresa de Minería
Peruana-
-Mineroperú) as the main state firm for development of
copper and
the Peruvian State Mineral Marketing Company (Mineroperú
Comercial--Minpeco) as the new state mining marketing
agency.
Output of metal products was erratic in the early 1970s
but
then took a big jump with completion of a major new
copper-mining
project, Cuajone, in 1976. By 1980 value added in the
sector, at
constant prices, was 1.5 times as high as in 1970. But
then in
the 1980s, value added began to fall, along with
practically
everything else. By 1988 it was 14 percent below the 1980
level.
The decrease could be explained to some degree by the
general
disorganization of the economy, but more specific problems
were
caused by increased guerrilla violence interrupting
supplies and
deliveries, and by prolonged strikes.
Extraction, refining, and domestic marketing of oil
were
under control of the Petroleum Enterprise of Peru
(Petroleras de
Perú--Petroperú) from 1968 to 1991. Foreign firms have
been
allowed to participate in exploration for new fields,
although
negotiations over their rights often has proved to be
difficult.
One foreign firm, Belco Petroleum Corporation, maintained
offshore production until 1985, when its operations were
nationalized after a dispute over taxes with the García
government.
Output of oil products increased greatly in the course
of the
1970s: its value at constant prices was 2.7 times as high
in 1980
as in 1970. But then oil production joined the collective
downtrend: it fell sharply between 1980 and 1985 (see
table 14,
Appendix). Again, both the general disorganization of the
economy
and the increase in rural violence contributed to the
decrease.
Additionally controls on prices of oil products held them
far
below costs of production in the second half of the 1980s.
That
fact put Petroperú deeply into deficit and constrained its
ability to finance both production and exploration. In
1990
petroleum contributed US$263 million to the value of the
country's exports. The major changes introduced by the
Fujimori
government in 1990-91 included invitations for new
investment by
foreign oil companies, ending the monopoly position of
Petroperú.
Several foreign oil companies immediately entered
negotiations to
begin exploration activities, either independently or in
collaboration with Petroperú.
Data as of September 1992
|
