Andean Flagship Sessions 1
From Resources to Influence — Latin America's Mining Shift 2
Pillones Project: First Public–Private Partnership In Peru 20 Years Transforming Arequipa And The Sustainability Model Of The Country José Antonio Estela Ramírez1 Presenting author: jestela@samienergy.com 1 SAMI Energy Consulting (Peru) ABSTRACT The global demand for minerals to drive the energy transition poses a profound challenge: how to deliver these resources faster, smarter, and more responsibly. Within the framework of the World Mining Congress 2026, the Pillones Dam Project in the Arequipa region of Peru offers a proven two-decade case that directly addresses this imperative. Inaugurated on August 15, 2006, Pillones marked a milestone as Peru’s first formal Public-Private Partnership (PPP). In the absence of a specific legal framework at the time, the project broke institutional ground and became a precedent for the subsequent development of PPP legislation in the country. The collaboration between the public company EGASA and Minera Cerro Verde gave rise to the “Virtuous Water Circle,” a territorial circular economy model that integrated water storage, renewable generation, urban supply, agriculture, wastewater treatment, and industrial reuse into a regenerative system. By transforming a region affected by water scarcity into a hub of shared prosperity, the project increased renewable energy capacity by 20%, secured drinking water for more than 350,000 people, and catalyzed over USD 5 billion in subsequent investments. This case demonstrates that a circular economy approach applied to water management can become the structural foundation for sustainable mining growth and social stability in strategic regions worldwide. KEYWORDS Public-Private Partnership (PPP), Circular Economy, Water Security, Sustainable Mining, Integrated Water Resource Management (IWRM), Climate Resilience, Renewable Energy Generation, Strategic Infrastructure. 1. INTRODUCTION The global energy transition has placed unprecedented pressure on the mining industry, demanding faster, smarter, and more responsible operations. This challenge calls for models that harmonize economic growth with environmental regeneration and social cohesion, particularly in regions where water constitutes a strategic resource. In southern Peru, the region of Arequipa — the country’s second-largest regional economy and one of Latin America’s leading copper hubs — faced, prior to 2006, chronic water scarcity and a 3
heavily polluted Chili River. In this context, the Pillones Dam Project was developed, located at approximately 4,300 meters above sea level in the province of Caylloma, about three hours by road from the city of Arequipa. The dam, with a storage capacity of 80 million cubic meters, forms part of the water system that supplies the Chili River basin and the Charcani hydroelectric power plants. Its implementation marked the beginning of the “Virtuous Water Circle,” a territorial circular economy model that transformed scarcity into resilience through Peru’s first formal water-related Public-Private Partnership. This paper analyzes how high-altitude water regulation infrastructure enabled the multiplication of water availability, energy capacity, and social stability in a strategic mining region. 2. THE GENESIS OF AN INNOVATIVE ALLIANCE 2.1 Technical Problem: Water Scarcity and Waste In the early 2000s, the region of Arequipa faced a critical combination of structural water scarcity, high climate variability, accelerated urban growth, and mining expansion. The average annual flow of the Chili River during the dry season was approximately 9 m³/s, insufficient to simultaneously sustain agriculture, urban supply, hydroelectric generation, and industrial growth. Technical analysis showed that during peak flow periods, significant volumes of water reached the ocean without prior regulation or storage, limiting the system’s capacity to redistribute water during the dry season. The solution was the design of the Pillones Dam (80 million m³), capable of storing surplus flows and releasing an additional 3.5 m³/s during the dry season, increasing water availability by nearly 30%. As a result, total regional storage capacity rose from approximately 260 million m³ to more than 400 million m³ when considering the integrated reservoir system. 2.2 Institutional Challenge: Multisectoral Water Allocation Constraints Simultaneously, structurally divergent sectoral interests coexisted regarding the use of water resources. On the one hand, EGASA sought to increase hydroelectric generation at the Charcani power plants through enhanced flow regulation and storage capacity. On the other hand, Minera Cerro Verde needed to secure new water sources to enable its productive expansion and projected operational growth. At that time, the mining company consumed approximately 40 MW of electrical power and employed around 700 workers; two decades later, its electricity demand has risen to nearly 450 MW, and its workforce exceeds 5,000 employees, reflecting an expansion of more than tenfold in its operational scale. 4
The challenge was not merely technical, but institutional: the existing operational framework lacked coordination mechanisms and efficient allocation instruments capable of reconciling energy generation, mining expansion, urban water supply, and agricultural use without triggering distributive conflicts and social risks. 2.3 Governance Challenge: Enabling Public-Private Cooperation The primary challenge was not technical, but one of governance. There was no specific legal framework in place to structure a water-related Public-Private Partnership under a shared financing scheme. It was necessary to secure a Supreme Decree signed by three Ministers of State, which prioritized the productive use of the regulated resource and enabled Cerro Verde to finance 40% of the investment. This institutional arrangement transformed a potential competition over water into a cooperative model of shared value creation. Following Pillones, additional water infrastructure projects were made possible: Chalhuanca (26 Mm³), Bamputañe (40 Mm³), San José de Uzuña (10 Mm³), the La Tomilla II drinking water plant, and the La Enlozada wastewater treatment plant. Thus, the Virtuous Water Circle was born. 2.4 Financial Structure and Social Foundation The Pillones Project had a total cost of USD 20 million, was constructed between 2002 and 2006, and was financed 60% by EGASA and 40% by Cerro Verde. Beyond the financing structure, the decisive element was a strategic territorial development agreement. Through a process of continuous dialogue and community participation, local communities facilitated land access and their voluntary resettlement in exchange for new infrastructure built with durable materials and equipped with basic services that had previously been unavailable, including electricity, potable water, and sewerage systems. The new housing, together with a church, community center, school, and complementary facilities, established a solid foundation of trust and social legitimacy for the project. 3. THE VIRTUOUS WATER CIRCLE: PILLONES AS A CATALYST The “Virtuous Water Circle” did not emerge spontaneously nor as the result of multiple independent projects. It was activated by the construction of the Pillones Dam, which acted as enabling infrastructure and a systemic catalyst for regional water development. Pillones represented a turning point that transformed a context of scarcity and competition over water resources into a platform for coordinated expansion. Following its implementation, the technical, institutional, and financial conditions were established to allow the progressive incorporation of new reservoirs—Bamputañe (40 Mm³), Chalhuanca (26 Mm³), and San José de 5
Uzuña (10 Mm³)—as well as complementary infrastructure for potable water supply and wastewater treatment. In this way, Pillones not only increased storage capacity by 80 Mm³ but also triggered a sequence of investments that consolidated an integrated water management system. 3.1 Securing the Source: The First Loop of the System The starting point of the circle is water security. With Pillones as its foundation and the subsequent expansion of the reservoir system, regional storage capacity exceeded 400 million m³, reducing seasonal variability and ensuring water availability during the dry season. Securing the source activated the first feedback loop: water reliability enabled more stable planning of energy generation, urban expansion, agricultural development, and mining investment with reduced risk. 3.2 Renewable Energy: Regulation that Multiplies Capacity The regulation initiated with the Pillones Dam—and subsequently reinforced by the new reservoirs incorporated into the system—made it possible to optimize the operation of EGASA’s six Charcani hydroelectric power plants, which together have an installed capacity of 170 MW. Greater flow stability and availability increased the average capacity factor from approximately 50% to 60%, raising annual renewable generation by about 20%, from 750 to 900 GWh/year. Without the need to construct new hydroelectric plants, the expansion of the water regulation system maximized the utilization of the existing 170 MW installed capacity, demonstrating how storage infrastructure can function as a multiplier of clean energy and operational efficiency. 3.3 Society and Territory: Expanding Well-Being Water security enabled the provision of potable water to more than 350,000 people through the Miguel de la Cuba Ibarra Treatment Plant and supported the expansion of 5,000 hectares of agricultural land within the Chili River basin. In parallel, the La Enlozada wastewater treatment plant - made possible under the same institutional framework—treats 95.5% of Arequipa’s wastewater, restoring the Chili River and improving the overall ecological quality of the basin. 3.4 Industrial Circularity: Mining Integrated into the Water Cycle With the regulatory foundation established by Pillones, Cerro Verde incorporated approximately 1 m³/s of treated wastewater as process water, decoupling its growth from freshwater extraction. This scheme enabled more than USD 5 billion in subsequent investments, consolidating mining as an integrator within the water cycle rather than a competitor for the resource. In parallel, the treatment and diversion of wastewater—particularly through the La Enlozada plant—contributed to the cleanup of the Chili River, reducing pollutant discharges and 6
improving water quality conditions downstream. This environmental recovery was associated with improved public health indicators, including a reduction in water-related gastrointestinal diseases among the local population. 3.5 Cumulative Impact and Structural Legacy The progressive interconnection of these loops—water security, renewable energy, social development, environmental restoration, and industrial reuse—generated a multiplier effect in the regional economy, associated with the creation of more than 200,000 direct and indirect jobs over the past two decades. International recognition through the Climate Positive Award 2022 confirms that the model was not an isolated project, but rather a replicable framework for territorial development based on strategic infrastructure. 7
4. LEGACY AND QUANTIFIABLE IMPACTS Two decades after the construction of Pillones, the results confirm that the model generated a structural transformation in the region, with measurable economic, energy, labor, and water-related impacts. 4.1 Economic and Productive Development 8
The environment of water security and energy stability enabled more than USD 5 billion in subsequent mining investments. Copper production increased from 87 thousand metric tons of fine copper (MTF) in 2002 to 471 thousand MTF in 2023, consolidating the region as one of Latin America’s leading copper hubs. In parallel, the regional average annual growth rate reached approximately 8.4%, while real regional GDP increased by 47% between 2007 and 2023. 4.2 Energy Security Optimization of the water management system increased renewable generation at the Charcani power plants by 20%, from 750 to 900 GWh/year, strengthening the clean energy matrix without the need for new hydroelectric infrastructure and maximizing existing installed capacity. 4.3 Employment Impact and Social Dynamism Economic dynamism was reflected in the labor market: the economically active population grew from 570,000 people in 2005 to 789,000 in 2024 (+38%), while effective employment expanded by more than 215,000 additional jobs (+41%), evidencing a sustained multiplier effect across the territory. 4.4 Water Security and Sanitation Regulation increased dry-season water availability by approximately 30%, reducing structural vulnerabilities. In addition, the treatment of 95.5% of wastewater consolidated environmental and public health improvements within the Chili River basin, strengthening overall system resilience. Taken together, these results demonstrate that Pillones was not merely a storage project, but a strategic infrastructure investment that enabled a new equilibrium between water, energy, production, and social well-being. The model illustrates how integrated water governance can function as a territorial policy instrument capable of aligning economic growth, decarbonization, and social stability in strategic mining regions 5. STRUCTURAL TRANSFORMATION OVER TWO DECADES The comparison between the pre-Pillones context and the current scenario reveals a structural shift in the region’s productive, energy, and environmental capacity. 5.1 Before Pillones (Early 2000s) Arequipa was already a dynamic regional economy, but it operated under severe water constraints that limited productive expansion without generating water-related conflicts. ● Copper production: ~87 thousand metric tons of fine copper (MTF) (2002) ● Mining electricity demand: ~40 MW ● Direct employment at Cerro Verde: ~700 workers ● Regional economically active population (EAP): ~570,000 people (2005) ● Average dry-season flow of the Chili River: ~9 m³/s ● Surplus flows without sufficient regulation ● High urban and agricultural vulnerability to drought 9
Existing infrastructure was insufficient to sustain large-scale mining expansion while maintaining social and environmental stability. 5.2 Two Decades Later (2024–2025) The system activated by Pillones transformed these structural constraints into installed capacity and territorial resilience: ● Copper production: ~471 thousand MTF (2023) → More than fivefold increase ● Mining electricity demand: ~450 MW → Approximately tenfold increase ● Direct employment at Cerro Verde: >5,000 workers ● Real regional GDP: +47% (2007–2023) → Representing 5.4% of national GDP ● Regional economically active population: 789,000 people (2024) → +38% since 2005 ● Effective employment: +215,000 additional jobs (+41%) ● Dry-season regulated flow: → +30% increase in water availability → ~12.5 m³/s annual average in the Chili River 5.3 Cumulative Environmental Impact Beyond productive growth, water regulation and agricultural expansion within the Chili River basin (5,000 ha) generated estimated environmental benefits, including: ● Approximate carbon capture of 0.6 MtCO₂e ● Storage of 2.0 Mm³ of water in soils ● Prevention of 0.64 Mt of soil loss ● Estimated generation of 2.0 million MWh of biological energy. Although these figures remain preliminary and subject to future scientific validation, they suggest that the model moves beyond conventional storage toward territorial regeneration. 10
6. CONCLUSIONS The success of Pillones goes beyond ESG discourse and stands as a tangible operational model of strategic infrastructure. Recognized with the Climate Positive Award 2022 by Green Cross UK, it demonstrates strong potential for replication in other arid and mining regions worldwide. In just over two decades, copper production in Arequipa increased from 87 thousand metric tons of fine copper (MTF) in 2002 to more than 470 thousand MTF in 2023—an increase of more than fivefold (8.4% average annual growth). In parallel, real regional GDP grew by 47% between 2007 and 2023, reaching 5.4% of national GDP, while mining electricity demand increased tenfold. The labor impact was equally significant: the economically active population rose from 570,000 people in 2005 to 789,000 in 2024 (+38%), and effective employment expanded by approximately 215,000 jobs (+41%). What is extraordinary is that this productive, economic, and employment growth did not result in hydrological collapse. On the contrary, the regulation initiated by Pillones increased dry-season water availability by 30%, strengthening regional water security. Moreover, the model evolved from a storage-based logic toward a dynamic of territorial regeneration: environmental restoration of the Chili River, large-scale wastewater treatment, 11
agricultural expansion with ecosystem benefits, and the decoupling of mining growth from freshwater extraction. Pillones served as the enabling infrastructure that allowed mining expansion to translate into regional development without compromising water security, giving rise to the Virtuous Water Circle—a model in which productive growth finances infrastructure that, in turn, strengthens resilience, decarbonization, and territorial regeneration. More importantly, this model demonstrates that strategic infrastructure, when articulated under a public–private governance framework and integrated water management approach, is replicable in other arid and semi-arid regions where mining expansion faces water constraints. Pillones is not an isolated case; it is an operational precedent for transforming scarcity into a platform for sustainable and regenerative development. 7. ACKNOWLEDGEMENTS The Pillones Project was the result of effective coordination among the public sector, the private sector, and the local community. Recognition is extended to the Empresa de Generación Eléctrica de Arequipa (EGASA) and Sociedad Minera Cerro Verde S.A.A., whose institutional decisions made it possible to structure and implement the project under a pioneering public–private cooperation framework. Acknowledgment is given to Hayllee Llosa for her role in initiating the early dialogue spaces that facilitated the subsequent negotiation process. Likewise, Fernando Chaves Belaúnde, Project Manager of Pillones and advisor to EGASA, is recognized for his technical contribution during the formulation and development phases. The community of Pillone is also acknowledged for its participation in the implementation process within the framework of the established agreements. Special recognition is extended to Dr. Julia Torreblanca of Sociedad Minera Cerro Verde S.A.A. for her role in managing the permits and authorizations related to the water use license. The author notes having served as Project Manager of the Pillones Project on behalf of EGASA during its development and construction phase and expresses appreciation for the trust granted by the EGASA Board of Directors in leading the project. The Pillones case reaffirms the importance of institutional coordination and cross-sector cooperation in the execution of strategic infrastructure in contexts of high pressure on water resources. 12
Inauguration ceremony of the Pillones Project (2006). From left to right: Fernando Chaves Belaúnde (second from left), Julia Torreblanca (third), and José Estela (fifth), together with the Presidents of EGASA and Sociedad Minera Cerro Verde. Panoramic view of the Pillones Dam reservoir at full storage capacity. 13
REFERENCES [1] Congreso de la República del Perú. (2004). Ley N° 28314: Ley que establece medidas para la promoción de la inversión privada en obras públicas de infraestructura y de servicios públicos. Diario Oficial El Peruano, Lima, Perú. [2] Congreso de la República del Perú. (2009). Ley N° 29338: Ley de Recursos Hídricos. Diario Oficial El Peruano, Lima, Perú. [3] Poder Ejecutivo del Perú. (2004–2006). Decretos Supremos que viabilizan la priorización del uso del recurso hídrico almacenado en el Proyecto Pillones. Lima, Perú. [4] Empresa de Generación Eléctrica de Arequipa S.A. (EGASA) & Sociedad Minera Cerro Verde S.A.A. (2006). Informe Final del Proyecto Represa Pillones. Arequipa, Perú. [5] Sociedad Minera Cerro Verde S.A.A. (2020). Círculo Virtuoso del Agua: Modelo de Gestión Integrada del Recurso Hídrico en la cuenca del río Chili. Arequipa, Perú. [6] Ministerio de Energía y Minas (MINEM). (2025). Producción minera por departamento 2001–2025. Lima, Perú. [7] Ministerio de Energía y Minas (MINEM). (2024). Anuario Minero 2024. Lima, Perú. [8] Instituto Nacional de Estadística e Informática (INEI). (2024). Producto Bruto Interno por Departamentos 2007–2023 (Año Base 2007). Lima, Perú. [9] Instituto Nacional de Estadística e Informática (INEI). (2024). Avance Económico Departamental: Arequipa. Lima, Perú. [10] Instituto Nacional de Estadística e Informática (INEI). (2025). Compendio Estadístico Arequipa 2025. Lima, Perú. [11] Superintendencia Nacional de Aduanas y de Administración Tributaria (SUNAT). Series estadísticas utilizadas por INEI para el cálculo del PBI departamental. Lima, Perú. [12] Green Cross UK. (2022). Climate Positive Award 2022 – Recognition of the Water Virtuous Circle Model. London, United Kingdom. 14
Strategy For The Promotion Of Mining Investments And The Sustainability Of The Mining Sector, Peru – 2026 J. Pineda1 1Director of Projects and Research, Earth Institute, Perú (jose.pineda@earth-institute.net) Scope / Topics: Critical Minerals, Strategic Materials & Mineral Policy Abstract To achieve the global goal of Net Zero by 2050 and mitigate the serious environmental problem on the planet, minerals will be required for renewable and green energy technologies. Peru is a major mining country; however, in recent years, several mining investment projects have been severely affected by a lack of political will, obstacles and excessive permits imposed by the government, socio-environmental conflicts, and others. The objective is to analyze how the mining investment promotion strategy impacts the sustainability of the Peruvian mining sector; as materials and method, it is based on consolidating the lessons learned executed (1990-2025). and as a result, the assessment of the dimensions of the mining investment promotion strategy (international environment, governance and lessons learned or knowledge) is presented, together with the mining sector sustainability index (ISSM), which at the end of 2025 shows a value of 62% (medium and decreasing rating), giving rise to conclusions and recommendations to take advantage of the strengths and opportunities of higher international prices and demand for minerals that the world will require in the coming years to promote clean and renewable energy, resuming the promotion of mining investments and the sustainability of the Peruvian mining sector, with proactive participation of the state and the actors involved. Keywords Sustainable development, investment promotion strategy, mining project portfolio, mining Peru 1. INTRODUCTION This research is an update of the Author's Articles published in the Earth Institute Journal “Strategy for the Promotion of Mining Investments and the Sustainability of the Mining Sector, Peru-2025” (Pineda, 2025). From a theoretical perspective, the Mining Investment Promotion Strategy focused on the sector's sustainability is based on lessons learned and proposals from Climate-Smart Mining (World Bank, 2020). This aims to contribute knowledge for current and future generations in the joint effort to promote responsible investments. From a practical point of view, the strategy has been effectively applied in Peru, although 15
there is a lack of documentation that allows for the extraction of lessons learned and facilitates continuous improvement, which is a significant contribution of this research. In social and environmental terms, the strategy based on Climate-Smart Mining ensures responsible management of the environment and social dimensions, aligning with the objectives of sustainable development. Economically, there is an urgent need to promote investment for Peru's economic recovery, especially considering the increase in poverty and the national economic recession that began in 2023, exacerbated by the global post-Covid-19 pandemic context. Therefore, it is essential to apply best practices and strategies derived from global and local experiences to effectively foster mining investment with a focus on sustainable development. 16
2. METHOD The research follows the theory of strategic planning, specifically regarding investment promotion strategies, which integrate the diagnosis of dimensions, the evaluation and formulation of strategies and plans oriented toward achieving a vision—in this case, an agenda of “sustainable development.” This theory also suggests that every plan should include monitoring and control mechanisms for corrective measures and/or continuous improvement, precisely to measure the “sustainability of the mining sector” through its indicator (ISSM). Figure 1 summarizes the overall picture of the theory and the scope of the research. This is an applied research study; a descriptive method, a lesson-learned study; a documentary, non-experimental design. The population analyzed consists of the results of the mining investment promotion process implemented in Peru from 1990 to 2025, using a non-probability sample. Two successful cases of investment promotion in mining projects in Peru (Antamina and Las Bambas) were selected by convenience sampling. The independent variable (x) is the Investment Promotion Strategy; and its dimensions are: x1: International Environment for Promoting Mining Investments (International Competitiveness) with a weight of 40%; x2: Governance (internal competitiveness) with a weight of 40%; and x3: Lessons learned and continuous improvement of the Promotion Strategy (Experience or Knowledge) with a weight of 20%. The assessment of xij indicators is green when the range value varies from 70% to 100% (opportunity, strength); yellow when the range varies from 50% to 70% (medium, average); and red when the range is less than 50%, which signifies risk or weakness. The sustainability of the mining sector is a dependent variable (y), and its indicator is the mining sector sustainability index (ISSM), which is a function of x: y = f(x) = 40%x1 + 40%x2 + 20%x3, as described in Figure 1. 17
Figure 1 – Theory and the scope of the research 3. RESULT As a result, the Mining Sector Sustainability Index (ISSM) is presented, which at the end of 2025 and with values published during 2026 to date, shows an average value of 62% (Table 1). Table 1 – Mining Sector Sustainability Index (ISSM). x INDEPENDENT VARIABLE: MINING INVESTMENT PROMOTION STRATEGY Dimensions / Indicators Criteria for evaluating indicators Weight Value x 1 International Context for Promoting Mining Investments (International Competitiveness) 40% 70% x 11 Global environmental problems Is there an opportunity for increased demand for minerals in the future? 80% x 12 Sustainable Development Goals Global SDG Index Peru 2024 (United Nations) 73% x 13 Climate-Smart Mining (CSM) Is Peru referenced in the CSM's global strategy? 75% x 14 International minerals market Are there pricing opportunities? Is there market interest? 74% Copper and gold prices 80% Metal buyers 75% Mining Potential Index (Fraser, 2025) * 66% x 15 Political Perceptions Index (Fraser, 2025) * *5-year average; mining investment attraction index. 51% x 2 Governance (Internal Competitiveness) 40% 56% x 21 Constitutional and legal framework Is there a legal framework that promotes investment? 60% Legal Framework 80% Obstacles in granting licenses and permits 40% x 22 State policies Are there adequate policies? What is the vision? 75% x 23 Mining Potential Cost competitiveness, internal logistics? 67% Mining history and tradition 79% Internal logistics 55% 18
x 24 Evolution of the Economy Are the indicators rising? Are they falling? 45% GDP per capita 50% Poverty Index 40% x 25 Mining Investment (executed and projected) Is the magnitude of mining investments adequate? 52% Investments made (1990-2025) 75% Currently under development 40% Future portfolio 40% x 26 Social and Environmental Conflict in Mining How do they affect mining investments? 40% x 3 Lessons learned and continuous improvement of the Promotion Strategy 20% 58% x 31 Results of the Investment Promotion Process in the Antamina Mining Project (1996-2001) Is it possible to develop mine in 5 years? 58% Experience (Antamina) 75% Current Experience 40% x 32 Results of the Investment Promotion Process in the Las Bambas Mining Project (2003-2015) Conflict management and state presence? 58% Experience (Las Bambas) 75% Current Experience 40% x 33 Operationalization of the Promotion Strategy Is there the infrastructure and experience to carry out the strategy? 60% Existing infrastructure and resources 70% Past experience 70% Current experience 40% 19
y DEPENDENT VARIABLE: SUSTAINABILITY OF THE MINING SECTOR Indicator : Weight Value ISSM Mining sector sustainability index: y = f(x) = 40%x1 + 40%x2 + 20%x3 100% 62% Range (%) Assessment: Dimensio ns: [70, 100] High, strength, opportunity Internacional Context {Average x1j} 40% 70% [50, 70> Medium, Average Governance {Average x2j} 40% 56% [0, 50> Low, weakness, risk Lessons learned {Average x3j} 20% 58% 4. DISCUSSION 4.1 Peru, a mining country The Peruvian economy depends directly on mining; “Peru is a mining country,” as evidenced by the evolution of GDP per capita and copper production in the last 100 years in Peru, shown in Figure 2, where we clearly see three defined stages: The first stage, up to 1967, shows constant economic and mining growth with private investment, and prior construction of large infrastructures such as the Central Railway, the Central Highway, hydroelectric plants, the La Oroya Metallurgical Complex and others, based on the mining potential, particularly in the center of the country, with the awakening of copper, with mining explorations in the north, center and south of the country. As a second stage, this growth was unfortunately interrupted in 1968 by a statist and nationalist model, which led Peru to its greatest economic, social, environmental, and political crisis by the end of 1990, as detailed in the Central Reserve Bank of Peru's (BCRP) publication "The Great Depression of the Peruvian Economy." This publication highlighted the significant economic losses caused by public enterprises, corruption, bureaucracy, and a lack of investment (BCRP, 2015, p. 92). In other words, by 1990, Peru was on a completely different path, contrary to the Sustainable Development model promoted by the United Nations since 1987. As a third stage, the new government that began in 1990 embraced the opportunity presented by the global agenda promoted by the United Nations. A change in policy was necessary, shifting towards a "Social Market Economy," including the free market and the promotion of private investment under the global agenda of risk management and sustainable development—principles consolidated in the new Political Constitution of Peru, in force since 1993. 20
Figure 2 – Peru, a mining country Three decades later, since 1990 we can see sustained growth in GDP per capita (increasing 7 times; from US$1,200 in 1990 to US$8,452 in 2024) according to the World Bank, supported by mining growth, in this case copper (increasing 8.6 times, from 0.32 million tons in 1990 to 2.74 million tons in 2024) according to the Ministry of Energy and Mines (MINEM, 2025). The political polarization during the general elections and change of government in 2000 increased social conflicts and greatly affected the continuity of the privatization process and the granting of service concessions to the private sector, which had become the main drivers of investment and modernization in the country. The Central Reserve Bank of Peru (BCRP), in its June 2017 report "Determinants of Social Conflicts in Mining Production Zones," mentions that social and environmental conflicts associated with mining projects in Peru have paralyzed US$18 billion in investment (10 percent of GDP) in recent years. Regarding copper, the suspension of major mining projects in Cajamarca (Michiquillay, Conga, La Granja), Piura (Río Blanco), Arequipa (Tía María), and others, has delayed the growth of copper production projected in the 1992 Annual Mining Reference Plan. This plan, which aimed to reach Chile's production levels within three decades, only achieved 50% of that target. One of the direct consequences of mining conflicts, including the "Conga No Va" conflict, is evident in the drop in gold production from 208 to 107 tons between 2005 and 2024, as reported by the Ministry of Energy and Mines (MINEM) (see Figure 3). 21
This represents a 50% decrease in two decades, due to reduced production at Yanacocha, delays in the execution of the Conga mining project (gold and copper), which is currently suspended pending a more favorable social climate for mining investments, and other setbacks. The damage is twofold, coinciding with an increase in the price of gold. In other words, losses are not only incurred due to lower production, but also in missing out on the higher price of gold as an opportunity in the international market. Figure 3 – The Missed Gold Opportunity: Lower Production During the Gold Price Season Regarding poverty, at the end of 2023 the Central Reserve Bank registered a negative GDP of 0.6% (the beginning of an economic recession). Poverty has grown to 29% in 2023, regressing to a rate equivalent to that of 2010 (30.8%) (INEI, 2025). This represents more than a lost decade, and poverty will continue to increase in the country if investments are not urgently promoted and the national economy is not reactivated. This will negatively impact on the country socially, environmentally, and economically, contrary to the vision of sustainable development referenced in the 1993 Constitution. 22
4.1 Peru's Mining Investment Attractiveness Index Table 2 shows a drop in the mining investment attractiveness index in Peru from 81.6% in 2018 to 44% in 2023 and 61.2% in 2024, mainly affected by the drop in the rating of political perception, even reaching the lowest historical level (34%) in 2022, and as a consequence the drop in the mining potential index to 44.4% in 2023 although it recovers its rating of 65.9% in 2024 (Fraser, 2025, p.14). This decline in the mining investment attractiveness index in Peru should be interpreted as reflecting how our country has fallen in its Mining Potential ranking, from 8th place in 2018 to 42nd in 2023 (its lowest position ever). Even after recovering to 25th place in 2024, it has been overtaken by other countries where exploration is underway and large copper and cobalt deposits are being discovered, such as Congo (an African country), which in 2024 surpassed Peru as the second largest copper producer, attracting the world's largest mining investors. Table 2 – Mining Investment Attractiveness Index – Peru / Average 2020 - 2024 Index (%) 2018 201 9 2020 2021 2022 2023 2024 Avera ge Attracting mining investment 81.6 75. 1 70.4 61.6 60.7 44.0 61.2 60 Political perception (40%) 79.7 67. 0 75.2 46.3 33.8 43.4 54.2 51 Mining Potential (60%) 82.8 80. 6 67.2 71.9 78.6 44.4 65.9 66 Position in Mining Potential 8 12 30 24 17 42 25 4.3 Strategies for promoting mining investments “From Problem to Opportunity” described in Figure 4, attempts to outline the global context of the research area aimed at understanding the problem and the opportunity to propose strategies for promoting mining investments and their impact on the sustainability of the mining sector. In other words, when a country's economy enters a recession (red), it has direct consequences on the social dimension (more unemployment, informality, crime, poverty, etc.) and the environmental dimension (for example, a lack of resources to promote energy transition or renewable energy technologies to achieve the Net Zero goal). Conversely, when the economy is growing (green), it has a positive impact on the social and environmental dimensions, based on global policies such as those proposed in the World Bank's Climate Smart Mining initiative. This dynamic of migrating from red (negative) indicators to green (positive) indicators allows for growth and a trend towards achieving the Sustainable Development Goals (SDGs), as 23
promoted by the United Nations, of which Peru is a member country. Therefore, from the perspective of the problems (social, economic, and environmental), Peru can take advantage of the great opportunities that the international environment offers (models of good governance; the global climate change agenda; the climate-smart mining strategy, among others), decisively promoting investments in all productive sectors, including, of course, mining. For this purpose, there is a portfolio of mining projects that can be developed with a vision of sustainable development, capitalizing on the opportunity presented by higher mineral prices due to the high demand for metals in the coming years to meet the energy transition. To achieve this, all stakeholders must work together, including the government, investors, civil society, and academia. Figure 5 shows the mining investment promotion strategy, which is influenced by three dimensions, including i) International context for promoting mining investments; ii) Governance (internal competitiveness) and iii) Lessons learned and continuous improvement of the promotion strategy. Figure 4 – From Problem to Opportunity Figure 5 – Components of the mining investment promotion strategy 24
Figure 6 illustrates the strategy for implementing the promotion plan. In other words, there is sufficient experience to resume investment promotion efforts, but this requires the government's firm political will to unblock investments and assign personnel with experience in these processes. Figure 6 – Operational phases of the promotion strategy 25
Figure 7, adapted from the Climate-Smart Mining initiative (World Bank, 2020), shows the components of social and environmental programs to be included in the promotion of investments in mining projects, including the social strategies or programs that are currently being implemented (mining canon, mining royalties, works for taxes, public-private partnership and others) and environmental programs that are in progress (Environmental Management Plan, Citizen Participation Processes, others). Figure 7 – Social and environmental program for the promotion of mining investments 5. CONCLUSIONS The Mining Investment Promotion Strategy has a significant impact on the sustainability of the mining sector in Peru. The proposed strategy, based on successful case studies implemented in Peru since 1990, is available to the authorities for implementation and consolidation. This is one of the main contributions and objectives of this research, with a vision aligned with the global agenda for 2050. The international context for promoting mining investments significantly impacts the sustainability of the mining sector. The United Nations' Net Zero by 2050 goal, as a solution to the global environmental problem, and the World Bank's Climate-Smart Mining initiative, both of which contribute to achieving the Sustainable Development Goals, represent a historic opportunity for emerging mining countries like Peru, given the projected increase in consumption of key minerals such as copper and others, coupled with higher prices. Governance (internal competitiveness) significantly influences the sustainability of the 26
mining sector. While the legal framework, state policies, mining potential, procedures, infrastructure, and experience exist to promote investment, these investments have been declining in recent years due to socio-environmental conflicts, obstacles in permitting, and the current government's lack of knowledge and political will. Lessons learned and continuous improvement of the promotion strategy significantly impact on the sustainability of the mining sector. All the experience gained from promoting over US$115 billion in mining investments in Peru since 1990 should be leveraged and used to realize Peru's US$64 billion mining investment portfolio. Antamina offers us a valuable lesson, a success story, demonstrating that it's possible to develop a large-scale mining project in just five years—from exploration and permit approval to construction, testing, and commissioning. Unfortunately, today's mining projects typically take an average of 15 years to become a reality. Antamina symbolizes the remarkable teamwork undertaken between 1996 and 2001 (government, investors, and civil society) to promote this large-scale mining project with a vision of sustainable development. The "Sustainable Development Model for Promoting Private Investment in the Las Bambas Mining Project" has been duly recognized for its successes in various forums, including the Congress of the Republic and events such as the Mining Convention. It received the winning award in the 2004 Business Creativity Competition. This process demonstrates that it is possible to reverse major social conflicts through a proactive state presence and by achieving social agreements for the common good of all parties involved. The Mining Sector Sustainability Index (ISSM) of this research (62%) is like the 2020-2024 average value of the Fraser Mining Investment Attractiveness Index (60%), a rating with a downward trend that should be reversed with the annotations indicated in this research. As a general recommendation, the global sustainable development agenda with a vision to 2050 should be followed (risk management, sustainable development, net-zero, land-use planning and governance), along with the opportunities of the energy transition, which anticipates high demand for minerals and higher international prices that can be leveraged by mining countries like Peru. This requires a renewed strong political will from the government to promote investments in mining in particular, eliminating all bureaucratic obstacles, reversing socio-environmental conflicts with local and regional development strategies and plans based on large investment projects, making good use of past experiences, and appointing officials with the necessary knowledge for effective management, continuous improvement, and collaborative work among stakeholders, including the government, investors, civil society and academia, contributing knowledge, strategies, and initiatives for the common good, for the benefit of the country. 27
References Private Investment Promotion Agency [PROINVERSIÓN, Perú]. (1996-2014). Privatization of the Antamina and Las Bambas Mining Projects. Private Investment Promotion Agency [PROINVERSIÓN, Perú]. (September 2005). LAS BAMBAS, A model of sustainable development. Central Reserve Bank of Peru [BCRP]. (December 2015). The great depression of the Peruvian economy. World Bank [World Bank]. (2020). Climate-Smart Mining: Minerals for Climate Action. World Bank [World Bank]. (2021). Diagnosis of the Mining Sector - Peru. Ombudsman's Office - Peru. (2007). Extraordinary Report on socio-environmental conflicts due to extractive activities. Fraser Institute [Fraser]. (2025). Survey of Mining Companies 2024. National Institute of Statistics and Informatics [INEI, Perú]. (May 2024). Peru: Evolution of Monetary Poverty 2014-2023. Ministry of Economy and Finance [MEF, Perú]. (2020). Multiannual Macroeconomic Framework 2021-2024. Ministry of Energy and Mines [MINEM, Perú]. (2019). Vision for Mining to 2030. Center for Convergence and Good Mining and Energy Practices. Ministry of Energy and Mines [MINEM, Perú]. (May 2025). General Directorate of Mining Promotion and Sustainability. Mining Yearbook 2024. Ministry of Energy and Mines [MINEM]. (April 2025). Portfolio of Mining Investment Projects. United Nations (1987): Report of the World Commission on Environment and Development (Brundtland Report). United Nations (2025). Sustainable Development Report. United Nations (2024). Office for Disaster Risk Reduction - Regional assessment report on disaster risk in Latin America and the Caribbean (RAR24). Pineda, J. (2025). Strategy for the Promotion of Mining Investments and the 28
Sustainability of the Mining Sector, Peru-2025. Earth Institute Journal 2025(2), pp. 13-33. Porter, M. (1989). Competitive Advantage of Nations. Office of the Prime Minister [PCM, Perú] - Commission for Sustainable Mining Development. (February 2020). Final Report "Proposals for regulatory, management and public policy measures to strengthen the sustainability of the mining sector 29
Structural Analysis Of The Latin America And Caribbean Copper Concentrate Trade Network *Maria Valeria Aguinaga Fonseca1 1Technology Management, Economics and Policy Program, Seoul National University, (*Presenting author: mvaleriaaguinaga@gmail.com) Abstract Copper is a critical mineral underpinning the global energy transition, with demand projected to grow steadily under electrification and decarbonization scenarios. At the same time, structural supply constraints and increasing geopolitical concentration have intensified concerns regarding trade resilience and mineral governance (IEA, 2025). While Latin America and the Caribbean (LAC) plays a central role in global copper concentrate supply, its structural positioning within global trade networks remains insufficiently examined beyond aggregate export indicators. The objective of this research is to provide structural, network-based evidence on LAC’s positioning within the global copper concentrate trade network, with the aim of informing strategic decision-making, trade coordination, and mineral policy in the context of rising demand for critical minerals. Using a longitudinal Social Network Analysis (SNA) of bilateral trade data (HS 2603) from UN Comtrade and BACI for the period 2010–2024, the study models countries as nodes and trade flows as weighted, directed edges. Network metrics—including weighted out-degree, betweenness centrality, clustering coefficients, and modularity-based community detection—are applied to identify structural roles and patterns of global embedding. The results indicate increasing network centralization and consolidation around dominant demand hubs, with LAC exporters integrated into global communities rather than forming a cohesive regional cluster. Differentiated structural roles emerge among key exporters, reflecting scale-driven, brokerage, and autonomous positioning within the network. These findings provide system-level evidence relevant to discussions on critical mineral governance, trade alignment, and strategic coordination under conditions of accelerating energy transition demand. Keywords Copper, trade networks, Latin America, Social Network Analysis 1. INTRODUCTION Copper is a critical mineral for the global energy transition, playing a central role in renewable energy technologies, electrification systems, and low-carbon infrastructure. Recent assessments indicate that declining ore grades, rising production costs, and a slowdown in new resource discoveries are intensifying structural constraints in the copper market, reinforcing concerns about long-term supply security (IEA, 2025). In this context, the resilience, 30
transparency, and strategic governance of mineral supply chains have become central concerns for policymakers, industry actors, and international organizations (Lebdioui, 2022). While China has consolidated its position as the world’s largest metallurgical and processing hub, it remains structurally dependent on imported raw materials sourced from a limited number of producing regions, including LAC, Africa, and Indonesia (IEA, 2025; Fernandez, 2024). In this context, rising demand for critical raw materials also presents an opportunity for mineral- and metal-exporting countries to increase trade revenues while addressing broader socio-economic development needs (Atakhanova et al., 2025). Against this backdrop, understanding how producing regions are structurally embedded within global trade networks is essential for assessing vulnerabilities, dependencies, and strategic leverage. The existing literature on LAC’s copper and mining sectors has largely relied on macroeconomic indicators, production volumes, export values, and bilateral trade statistics to evaluate regional performance (Tercero & Soulier, 2016; Casanova et al. 2016; Alessandri, 2021). While informative, these approaches provide limited insight into the relational structure of trade flows and are insufficient to capture structural dependencies, brokerage roles, and power asymmetries within global commodity systems (Aguinaga,2024). Although network-based approaches have been increasingly applied in economic history and international trade, the use of Social Network Analysis (SNA) to examine copper concentrate trade—particularly in a Latin American context—remains limited. This gap is especially relevant for LAC, a region that combines global importance in copper supply with persistent weaknesses in regional integration. Trade relations in resource-intensive sectors are predominantly organized through global trade structures rather than intra-regional linkages, constraining the formation of cohesive regional trade communities. As a result, conventional indicators struggle to capture whether LAC exporters function primarily as global anchors, intermediaries, or peripheral actors within the evolving organization of copper concentrate markets. This structural concentration raises questions regarding resilience, strategic coordination, and long-term positioning of Latin American exporters in a geopolitically evolving mineral market. This study analyzes the structural organization of the global copper concentrate trade network between 2010 and 2024, with particular attention to LAC’s position within evolving global trade communities. By applying a longitudinal Social Network Analysis framework, the research examines how key exporters are embedded in global trade structures, distinguishing between scale-driven anchors, brokerage actors, and structurally autonomous participants. Specifically, the analysis seeks to determine whether LAC exporters operate as a cohesive regional bloc or as nationally differentiated actors integrated into demand-driven global networks. It further assesses how shifts in modularity and community composition reflect changing patterns of trade centralization and global embedding. Through this structural perspective, the paper provides system-level evidence that complements conventional trade 31
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