1

Mining and Energy Investment Opportunities

Eng. Jorge Merino Tafur Minister of Energy and Mines of Peru

PERU:

Perú 73,2

Argentina59,9

Colombia 46,8

Ecuador45,9

Brasil40,3

Chile 39,5

México 18,9

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Venezuela

Mexico

Argentina

Brazil

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Colombia

Peru

Peru among the fastest growing economies in the world and it will

continue leading regional growth

World’s GDP 2002-2010

(Var. Accrued.%)

Forecast - LATAM: Real GDP 2012-2014 Average annual % variation)

Source: IMF Source: Central Reserve Bank of Peru, Ministry of Economy and Finance, IMF.

MACROECONOMIC SOUNDNESS

Peru

Non discriminatory treatment: Foreign investors receive the same treatment as local investors.

Unrestrictive access to most economic sectors *.

Free transfer of capital.

Free competition.

Guarantee for Private Property.

Freedom to purchase stocks from locals.

Freedom to access internal and external credit.

Freedom to pay royalties.

Network of investments agreements and member of ICSID and MIGA.

Peru participates in the Investment Committee of the Organisation for Economic Co-operation and Development (OECD) – It promotes the implementation of the Guidelines for Multinational Enterprises.

*Investments that require authorization: Located within 50 km in the frontier line and those destined to arms, ammunitions and explosive. Likewise, a principal local partner

for investments in radio and television as well as in air transport is required.

Peru offers a favorable legal framework for foreign investment …

FRIENDLY INVESTMENT ENVIRONMENT

Peru will grow

from 6 to 6.5% in

the next years

Real GDP growth (Averages, Variation % Annual )

Source: BCRP, INEI, MEF forecast

5.6

2.5

4.2

7.26.9

6.0 6.06.5 6.5

0

1

2

3

4

5

6

7

8

91-95 96-00 01-05 06-10 2011 2012F 2013F 2014F 2015F

Average Growth 2000-2011

5.8%

Why to invest in Peru?

Extended market of more than 4 billion

people with a joint GDP of more than US$

56 billion.

96% of the Peruvian exports to the world.

Acuerdo en proceso de negociación Acuerdo vigente Acuerdo por entrar en vigencia Agreement in force Agreement to come into effect

COMMERCIAL INTEGRATION POLICY

An economy working in the globalization process with

preferential access to the largest markets

Agreement in negotiation process

Why to invest in Peru?

International integration with the rest of the

world fosters trade and investment

I. MINING SECTOR

National Exports

Approximately 75% of the national exports correspond to mining products, petroleum and natural gas

Source: Monthly Mining Bulletin January 2012 – Ministry of Energy and Mines

Central Reserve Bank of Peru

Sector

Minero

Hidrocarburos

75%

75% Mining sector +

hydrocarbons

25% Other sectors

Exporting Sector Participation

Mining Petroleum and natural gas

Fishery (trad. export) Agriculture Agricultural and Livestock Fishery (trad. export) Textiles Wood and papers, and respective manufacture Chemicals Others

Mining Exports (US$ million)

Source: MINEM - Central Reserve Bank of Peru

41 %

Copper Other minerals

35 % 24 %

Gold

Mining Sector Exports per

destination market 2011

Source: Adex Data Trade, Customs.

In the last years, mining exports have increased more than 8 times its value

Is the percentage of national territory where there is exploration and exploitation mining activity.

is the territory used by the mining projects in exploration stage.

1 %

0.77% is the territory used by the mining units in exploitation stage.

0.27%

Minig Activity in Peru

Is the percentage of the territory granted as mining concession requiring investments for mining exploration.

13 %

Mining Competitiveness

FOTO PERU

OMBLIGO DEL

MUNDO

Mineral World Latin America

Silver 2 2

Zinc 3 1

Tin 3 1

Lead 4 1

Gold 6 1

Mercury 4 2

Copper 2 2

Molybdenum 4 2

Selenium 9 2

Cadmium 10 2

Iron 17 5

Source: U.S.Geological Survey-USGS-, The Silver Institute; Gold Fields Minerals Services-GFMS-

International Copper Study Group -ICSG-; International Lead and Zinc Study Group-ILZSG-

International Tin Research Institute - ITRI-; International Molybdenum Association-IMOA-

Latin American Iron and Steel Institute- ILAFA-

Peru: Mining Production Position - 2011

Phosphate Rock 13 2

Source: U.S.Geological Survey-USGS – Report 2012

METAL MINING POTENTIAL

... We are recognized around the world by our metal mineral proven and probable reserves

Peru is one of the countries with

the largest reserves of silver,

copper, zinc, lead, tin and gold in

the world.

COPPER

GOLD

SILVER

LEAD

TIN

World

Rank

% World

reserves

SOURCE: MINEM – ESTIMATED PORTFOLIO OF MINING PROJECTS SEPTEMBER 2012 ELABORATED BY MINING PROMOTION OFFICE - MEM

MINING INVESTMENT COMMITMENTS

Mining Investment in Peru

CHINA

UNITED STATES

CANADA

SWITZERLAND

AUSTRALIA

MEXICO

BRAZIL

PERU UNITED KINGDOM

JAPAN

OTHERS

Millions

CHINA

BRAZIL

MEXICO

AUSTRALIA USA

SWITZERLAND

CANADA

MINING INVESTMENT COMMITMENTS

The estimated investment in mining projects exceeds

US$ 53,000 million dollars for the following years

EIA: Environmental Impact Assessment

8

11

1

27

47 Projects with EIA approved

US$ 19´745,000

Extensions

US$ 8´635,000

Exploration Projects

US$ 24´289,000

Projects with EIA Submitted

US$ 754,000

Source: Bulletin September 2012

US$ 6,186 billion

GOLD PROJECTS

12 % of estimated investment

66% of estimated investment

US$ 35.582 billion

COPPER PROJECTS

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

2005 2010 2015 2020 2025

Peru

Chile

COPPER PRODUCTION PROJECTION

PERU VS CHILE (TMF)

2005 y 2010: Actual Production (MINEM)

2015: Projections estimated in each country according to portfolio (MINEM)

2020: Increase in differences between 2015 and 2010

2025: Increase in differences between 2020 and 2015

17

Cem. Andino

San Cristóbal

Andaychagua

Carahuacra Ticlio

Mining Activities in

Central Region

Toromocho Project

Influence area of operations

TOROMOCHO PROJECT

Production: 275 000 TMF/year Investment: US$ 3 450 millions Power: 165 MW Completion of the works: January 2014 RELOCATION OF THE MOROCOCHA POPULATION: Starting from 2012 Building of 1 450 housing with an investments of US$ 300 millions

CHINALCO-ALUMINIUM CORP.OF CHINA

Toromocho Project

Environmental Responsability

1. Construction of Plant for the

Treatment of Kingsmill Tunel

Water: 1,1 m3/sec – Agreement

with the State

2. Investment: over US$ 45 million.

3. Solution to pollution of Yauli River

– La Oroya , after 70 years

Treatment Plant:

Treated water of Kingsmill Tunel

2012

Polluted water of Kingsmill Tunel

TOROMOCHO: MODERN MINING WITH SOCIAL

AND ENVIRONMENTAL RESPONSIBILITY

MOROCOCHA NEW CITY SCHOOLS – MARKETS – RECREATIONAL PARKS – WATER AND SEWAGE

INVESTOR: Construction of new cities

Social Programs

Environmental Commitment

COMMUNITY Support to investment

Social Agreements

STATE Framework agreement

Social Fund

Protects drinking water

use

MINING

SUSTAINABLE

DEVELOPMENT

PROJECT Sustainable

Development

Participation of

the State

TOROMOCHO NEW MINING WITH SOCIAL INCLUSION

Water first

Plant of Treatment of

Kingsmill Tunel

Urban

Industrial Zone

Commerce

Ecotourism/ Livestock

/ Agriculture

Terminal

INDUSTRIAL MINING CLUSTER

• GENERATE AGGREGATE VALUE ,

GOLD, SILVER PRODUCTION

CHAIN. MAQUILA CENTER FOR

ESPORTATION TERMINAL(USE

OF FTA).

DEVELOPMENT ZONE

TOROMOCHO

Plant of Treatment of Kingsmill Tunel

II. ENERGY SECTOR

Peru 2012 Electricity Market

Growth rates for 18 years

Energy: 8% annually

Growth rates for 7 years

NG demand: 30% annually

Natural Gas Market

Liquid Hydrocarbon Market

Product

Annual Average

Demand Variation

Gasolines and Gasoholes

Residual

Others

LPG

Sectors Performed Potential(*)

(1996-2010) (2011-2020)

Mining 21 360 53 000

Hydrocarbons 8 600 25 000

Electricity 9 500 5 200

Total 39 460 73 200

Source: National Mining and Petroleum Society

(*) SNMPE Estimate

Potential investments to be performed

in the following years in US$ million

Strategic Location: Borders Ecuador, Colombia, Brazil, Bolivia and Chile.

Intensive energy in productive uses Activities: Metallurgy and Mines.

Large Energy Sources: Hydropower 69 445 MW Natural Gas: 77.72 TCF Petroleum: 3,055 MMBls. Non-conventional and renewable energy

Peru, an Energy Hub of the Pacific

Coast in South America

GENERATION PROJECTS

ABOVE 100 MW

NATIONWIDE

The 15 Largest Hydroelectric Projects of

the Atlantic basin.

Power:

19 285 MW, out of a technically exploitable

total of 70 000 MW.

Hydroelectric Potential

PACIFIC OCEAN

BRAZIL

Potential

50 TCF

There is a

grater number

of non-drilled

structures for

future

investments

Potential in natural gas

Fuente: MEM.

Thermal Power Plant of Quillabamba

200 MW

GE

3250 MW

Coast Ethane Pipe

Southern Gas Pipeline and

Ethane Pipe

1500 MW

Reserve Power Plant

ETHANE Petrochemical Plant

Southern Gas Pipeline

Pacific

Ocean

Matarani Port

Ilo Port

ECUADOR COLOMBIA

BOLIVIA

CHILE

BRAZIL

PACIFIC

OCEAN

Development Poles in Peru

Northern Cluster

Central Cluster

Southern Cluster

Mining Units and Projects

www.minem.gob.pe