Peru, which has vast mineral resources, is the world's second-largest producer of copper and sixth of gold, but many Andean communities suffer from widespread poverty and worry mining projects will generate pollution but little economic benefit. The administration of President Ollanta Humala said in August it would essentially stop trying to overcome local opposition to US-based Newmont's Conga gold project in the northern region of Cajamarca - nearly conceding defeat in a protracted political battle.
Newmont has said it was temporarily suspending work on the Conga mine while it builds community water reservoirs and seeks local support for the project. "Conga must go forward," Merino said. "We don't have the luxury to lose an investment that big." Mineral shipments make up about 60 percent of Peru's export earnings.
Tensions over the spoils of natural resources have threatened to derail some $53 billion in investments over the next decade in the country, South America's fastest-growing economy. But Merino said that many plans are going forward - such as Xstrata Copper's $1.47 billion Antapaccay mine, HudBay Mineral's $1.5 billion Constancia project and the expansion of Freeport McMoran's Cerro Verde copper mine. Southern Copper is also working on a revised environmental plan for its $1 billion Tia Maria project. He said new projects slated to come online through 2014 will allow the Andean nation to churn out an extra 1 million tonnes of copper per year - on top of the 1.3 million it produces now.
"They'll be good years," he said, adding that Peru could produce more than 5 million tonnes of copper by 2030. That would put in the same ballpark as the current output of global leader Chile. Merino also said that Brazilian firm Odebrecht could wait several years to build its own natural gas pipeline in Peru or instead participate in the $1.8 billion government-led construction of a parallel pipeline which Peru's Congress approved last week. Odebrecht's bigger, $5.8 billion pipeline has been delayed over guarantees for natural gas supplies, the terms of its concession and questions about how to finance the project.
Merino said the certificates needed to privately finance Odebrecht's project would not be ready until 2018, and that this was too long to wait for Peru, which relies on natural gas to fuel its growing electrical generation. "Our problem is different. We have to prioritise the country's energy security," Merino said. "We can't rely on a certificate that is taking its time."
The government will start the auction process for the pipeline's construction "very soon", he said "Odebrecht can either wait until the gas is certified in 2018 or participate in our project now." Merino said the government has fast-tracked the pipeline and wants all permits granted in one year and construction finished in three.