Silver has a deep-rooted history in Peruvian culture and, throughout the years, has played a role in everything from religion to politics. First used as luxurious ornaments in the late first millennium B.C.E., silver’s Peruvian mining history jumpstarted in the 12th century under the Chimú Kingdom of the northern coast. According to the Silver Institute, silver production in Peru between 1600 and 1800 averaged over 3 million troy ounces per year.
Peru has steadily grown its silver production levels and has maintained its top-three ranking from 2018 to 2019. The South American nation produced 3,000 metric tonnes of silver in 2021, down from 4,160 metric tonnes in 2018. However, reports indicate that Peru hosts significant orebodies abundant in the metal on which mining companies can capitalize.
Today, Peru is one of the world’s three largest producers of silver. Peru potentially holds the world’s largest reserves of silver, with 91,000 metric tonnes.
In this article, we’ll walk you through a brief history of mining in Peru. We’ll also discuss why the country could play a key role in growing the global renewable energy sector amid geopolitical crises and financial uncertainty.
The growth of the global mining sector
When European conquerors discovered white metals in the Americas in 1492, the following events changed the course of silver mining. Prior, silver was mined around 3,000 BCE in Anatolia — modern-day Turkey. Later, it moved to Spain, where the mines became a major supplier for the Roman Empire and an essential trading component along the Asian spice routes.
However, the Spanish conquest of the Americas in the late 1400s took silver production to another level. Between 1500 and 1800, Bolivia, Peru and Mexico accounted for over 85 percent of world silver production and trade. During that period, mining technology and techniques spread to other countries, including the U.S. By the 1870s, silver production had grown from 40 to 80 million ounces annually. Further technological advancements and exploration tools allowed production to grow even more — 120 million ounces annually.
The 20 years between 1900 and 1920 resulted in a 50 percent increase in global production, bringing the total to about 190 million ounces annually. These increases resulted from substantial silver discoveries in Canada, the United States, Africa, Mexico, Chile, Japan, and elsewhere. New mining techniques contributed to a massive rise in overall silver production, especially in Peru, where breakthroughs included steam-assisted drilling, mine dewatering and improved haulage, enhancing miners’ ability to separate silver from other ores.
Investment in Peru’s mining sector
In the 1990s, Peru’s president, Alberto Fujimori, implemented several market reforms that led to the growth of Peru’s mineral sector. In 1995, the Peruvian government passed a land law granting mining corporations the right to use land sites for their operations in exchange for cash considerations for landowners. Moreover, the Fujimori administration passed several tax reforms that exempted mining corporations from taxation and paying royalties until they recouped their initial investment and reduced red tape for foreign investment. It also privatized state firms and financial institutions — these changes allowed for a dramatic increase in foreign investment, spurring an uptick in production. Between 1990 and 1998, Peru’s exports increased by over 85 percent, with the mineral industry accounting for 50 percent of its total exports.
Over the years, silver production continued to grow, due in large part to these policies. According to Jose Miguel Morales, chairman of Sociedad Nacional de Minería Petróleo y Energía’s Gold Committee, silver output in Peru grew by 30 percent between 2000 to 2004 (13,000 metric tonnes) to the period between 2004-2009 (17,000 metric tonnes).
In 2009, silver production in Peru reached 123.9 million ounces of silver, according to figures from The Silver Institute, compared to 709.6 million ounces produced worldwide for the year. With an 18 percent share of global production, Peru ranked number one in silver output in 2010, followed by Mexico, China, Australia and Bolivia.
As of 2020, Peru ranked No. 2 as the highest producer of silver in the world and number 1 in South America. Moreover, silver production and metals mining accounted for nine percent of Peru’s GDP, and at least 22 percent of its foreign direct investment is directed toward the mining sector. Peru also holds 18.2 percent of the world’s silver reserves and other precious metals needed for the industrial sector.
With growing silver and metals production, Peru continues to pique global mining investors’ attention. By investing in mining operations in Peru, investors can capitalize on the growing opportunities in Peru, which has solid financial ratings from S&P, Fitch and Moody’s, while contributing to the country’s economic health.