Can Peru capitalise on the global copper boom?

A new commodities boom – triggered by the global transitions to clean energy and digital technology – is driving up demand for copper. Peru is one of the world’s leading producers of the metal, but political instability, weak institutions and illegal mining could curtail any potential gains.

Peru is well placed to benefit from the global shift to clean energy and digital technology. It is the world’s third-largest copper producer, mining around 2.7 million tonnes each year. The country’s central bank estimates that output could double if the pipeline of new mining projects under study or awaiting approval comes on stream as planned.

The price of copper hit $6 per pound for the first time in early 2026 and it has since reached record highs (see Figure 1). The metal is a core input for electric vehicles, power grids, data centres and defence systems. In principle, this should tee up Peru for a bright economic future.

And yet, despite this favourable global environment, Peru’s economy is currently growing at around 3% a year – roughly half the pace that it sustained during the previous commodity boom between 2004 and 2013. Whether it converts higher copper prices and geological potential into sustained development will depend on addressing the institutional constraints that deter investment.

Figure 1: Copper price, 1960-2026

Source: World Bank.
Notes: Monthly data through June 2026. Prices are in nominal US dollars.

Why is copper suddenly so valuable again?

The twin transitions to clean energy and digital technology are driving renewed demand for critical minerals such as copper. A typical electric vehicle uses roughly four times as much copper as a petrol car, and wind farms, solar parks, transmission lines and the data centres behind artificial intelligence (AI) all consume it in vast quantities.

Supply is struggling to keep pace. The International Energy Agency (IEA) projects a shortfall of around 30% by 2035, as ore grades fall, capital costs rise and new discoveries dry up (IEA, 2025). Only 14 of the 239 major copper deposits discovered since 1990 have been found in the past decade (S&P Global, 2024).

Against this changing backdrop, mining countries have captured the attention of global investors. Chile and Peru together account for around 35% of global copper output, placing the Andes at the heart of efforts to supply the soaring demand of buyers such as China, which alone consumes more than half of the world’s refined copper (International Copper Study Group, 2025).

China’s dominant position in this critical supply chain has led the United States to safeguard its own economic security by sourcing more of its copper within the western hemisphere. That concern reflects a broader shift. The World Economic Forum identifies geoeconomic confrontation as the gravest risk facing the world over the next two years (World Economic Forum, 2026).

What did the last boom bring – and why is growth slower now?

Peru experienced a similar boom in the recent past. During the ‘super cycle’ between 2004 and 2013 – a decade-long period of elevated commodity prices driven by China’s industrialisation – high metal prices and rising mining investment propelled annual Peruvian growth to around 6%, and these gains reached low-income households.

At the start of the 2000s, around 60% of the population lived below the international poverty line of $6.85 a day (2017 PPP – purchasing power parity), 12 percentage points above the average for Latin America and the Caribbean (see Figure 2). By 2013, the country had nearly closed that gap, with the rate down to about 35% (World Bank, 2023).

Figure 2: Poverty rates in Peru and Latin America and the Caribbean (LAC) as a whole, 2004-24

Source: World Bank.
Note: LAC: Latin America & Caribbean.

During this period, Peru also accumulated international reserves, earned an investment-grade credit rating and enlarged its middle class. The 2004-13 boom also raised productivity, which boosted potential GDP growth (Werner and Santos, 2015).

Yet those advances rested on shaky institutional foundations. Once the tailwinds faded, the momentum for growth-enhancing reform ebbed away with them. Building consensus around a more modern and effective state proved elusive. That failure to strengthen government effectiveness, regulatory quality and the rule of law is what now prevents favourable external conditions from triggering a new investment boom to harness Peru’s geological potential.

The consequences are visible in the country’s growth figures. Peru’s GDP expanded by 3.4% in 2025, above the regional average, but only about half the pace during the boom era (see Figure 3). Over the past decade, growth has averaged just 2.4% (International Monetary Fund, IMF, 2026).

Copper output has plateaued over the last two years, at around 2.7 million tonnes. And with few new projects coming through, Peru had slipped to third place in global production, behind the Democratic Republic of Congo, by 2024 (US Geological Survey, 2026).

Part of this is down to social conflicts, set against Peru’s difficult geography. Disputes over land and water regularly halt operations once they begin, and high-altitude mines depend on long transport corridors to the coast, where a single roadblock can paralyse a billion-dollar operation for weeks.

Even so, the potential prize remains large. The central bank believes that the projects now in the pipeline, which are worth close to $47 billion, could double Peru’s copper production and allow it even to overtake Chile as the world’s largest producer. This would add output worth around 6.5% of GDP over the life of the mines (Central Reserve Bank of Peru, 2025). Bringing these prospective sites into production is the main economic task facing the next government.

Figure 3: Peru’s GDP growth and copper price, 2002-26

Source: World Bank; International Monetary Fund, World Economic Outlook.
Note: 2020 and 2021 are omitted because the pandemic-driven contraction and rebound distort the scale. The 2026 copper price is the average through June 2026, and 2026 GDP growth is the IMF forecast.

How does the US-China rivalry reshape the picture?

Competition between China and the United States is transforming who buys Peru’s minerals and who finances these investments. China is already Peru’s largest trading partner and a growing source of outward foreign direct investment (OFDI), with an estimated stock of more than $37 billion spanning mining, energy and infrastructure, according to the China OFDI Monitor of the LAC Academic Network on China (Red ALC-China, 2025). Chinese firms control major assets, among them Las Bambas and Toromocho mines and the new megaport at Chancay.

The United States has begun to push back. In February 2026. it signed a critical minerals framework with Peru, one of several agreements intended to shore up supply and curb the role of Chinese firms in priority supply chains (US State Department, 2026). Canada followed with its own mining cooperation deal a month later (Natural Resources Canada, 2026).

Washington is wielding trade policy too. Since 2025, it has levied a 50% tariff on semi-finished copper imports, and a review due by the end of June 2026 could extend duties to refined copper itself (Federal Register, 2025). Peru, which ships mostly concentrate, a semi-processed form of copper that is smelted and refined abroad, would feel little of that directly, but the measures underline how strategic the metal has become.

Stepping back, the US-China rivalry widens Peru’s options for finance and investment, but it also brings pressure to align with one bloc, which would narrow the country’s policy flexibility.

What stands in the way?

Peru’s obstacles are mainly political and institutional. The country has had eight presidents in less than a decade. A ninth, Keiko Fujimori, takes office today after one of the closest elections in its history, in which she edged ahead of Roberto Sánchez only after a count that stretched on for days.

She will govern a bitterly divided country, and that divide bears directly on mining. Sánchez drew his strongest support from the southern Andean regions that hold a large share of Peru’s copper and have long resisted large-scale mining. So Fujimori’s government must forge consensus precisely where opposition to the industry runs deepest – and do so without a congressional majority of its own.

The cost of the institutional dysfunction is clearest in mining itself, where Peru has steadily lost its appeal to investors. In 2018, it ranked ahead of 83% of the jurisdictions in the Fraser Institute’s global mining survey. By 2025, that share had fallen to 40% (see Figure 4), leaving it behind Brazil, Chile, Mexico and the leading mining provinces of Argentina (Fraser Institute, 2026).

Peru’s slice of global exploration spending shrank from 6.3% in 2017 to 3.8% in 2024, and junior explorers, who once supplied around half of that spending, now account for less than a quarter, thinning the pipeline of future discoveries (World Bank, 2026).

Figure 4: Peru’s mining investment attractiveness, 2015-25

Source: Peruvian Institute of Economics; Fraser Institute, Annual Survey of Mining Companies 2025 (2026)

Several forces lie behind the decline. Social conflict around mining projects has intensified, much of it rooted in a sense that nearby communities are excluded from the resulting economic gains.

That grievance has institutional roots. The decentralisation framework is too weak to turn fiscal revenues from mining into local development. Sub-national governments receive close to 2% of GDP a year in resource revenue and account for more than 40% of public investment, yet weak execution blunts its social impact, and many projects have stalled for years as a result (IMF, 2025).

The ministry responsible for mining policy has also churned through ministers, whose average tenure has fallen to under five months since 2021, from 30 months during the boom years in the early 2010s, leaving it without steady direction (Videnza Instituto, 2026). And the permitting system is slow and ill-calibrated, with the journey from identifying a prospect to breaking ground taking three to four years and requirements falling almost as heavily on simple exploration as on complex projects (World Bank, 2026).

A further problem affects the mining sector directly. Record metal prices have driven a rapid expansion of illegal mining, which the IMF now identifies as a threat to medium-term growth and to Peru’s standing as a reliable mining destination (IMF, 2026).

Peru is the region’s largest exporter of illegal gold, the volume of which rivalled output of legal gold in 2025 (see Figure 5), and illegally mined copper accounts for up to an estimated 5% of copper exports in 2024. The illicit flows involved have become Peru’s largest single source of money laundering, far above drug trafficking.

The state’s main response has backfired: a formalisation scheme known as REINFO, extended repeatedly since 2016, now allows illegal operators to encroach on legal concessions, which raises security costs and discourages new investment.

Figure 5: Peru’s gold exports by origin, 2005-25

Source: Peruvian Institute of Economics calculations based on data from the Ministry of Energy and Mines and the Central Reserve Bank of Peru.
Notes: Gold of legal origin corresponds to production reported to Ministry of Energy and Mines, excluding its production estimates attributed to the regions of Arequipa, Madre de Dios, Piura and Puno. Gold of illegal origin is estimated as the difference between official export records and recorded gold production. According to the Central Reserve Bank of Peru, the total volume of gold exported includes estimates of shipments not recorded by Customs.

What would it take to capitalise on the boom?

The reforms required to help Peru to capitalise on the current copper boom are well understood, even if they are politically challenging.

The most immediate is to make governance of the mining sector work better. Predictable permitting and a credible rule of law would unlock the stalled pipeline. That requires modernising institutions, digitalising and streamlining the permitting system to cut approval times and add predictability, and strengthening coordination among the many regulatory agencies.

Tax policy is another area of focus. Reforming fiscal decentralisation so that mining revenues reach the communities around the mines through better infrastructure and public services would defuse much of the social conflict that stalls investment.

There is also the issue of illicit mines. Tackling illegal mining by closing legal gaps and building a credible path to formalisation would protect both the formal sector and the rule of law.

Mining is, in this respect, a test case for the country. Peru lags on digitalisation, innovation, the adoption of AI and the formalisation of its economy. The mining sector is one of the clearest places to begin closing those gaps, with spillovers to the rest of the economy. None of this requires new resources so much as functioning institutions and policy continuity.

Peru’s underlying position is strong. It holds the world’s third-largest copper reserves, ranks among the most macroeconomically stable economies in Latin America, and occupies a geopolitical position that would let it benefit from the tug-of-war between China and the United States. What it currently lacks is the institutional quality and political stability to convert that potential into lasting, shared prosperity.

Peru has stood at the edge of a copper boom before, and the new super cycle offers another chance for the country to grow. But the current conditions will favour only those that can guarantee predictability and clear rules, and it will not wait. The decisive factor lies not in the ore beneath the Andes but in the institutions above it. Peru’s capacity to govern its mineral wealth is what will decide whether this boom transforms the country or merely passes through it.

Where can I find out more?

Mining sector diagnostic: Peru: The World Bank’s assessment of Peru’s mining institutions, the gap between rules and their enforcement, and a reform agenda for the sector.
The long-term impact of a resource-based fiscal windfall: evidence from the Peruvian canon: A study by Fernando Aragón and Hernán Winkler, which finds that the mining revenue transferred to municipalities through the canon (a legal framework for redistribution) brought little measurable improvement in public services, poverty or inequality.
The macroeconomic threat of illegal mining: IMF analysis of how illegal gold and copper mining are eroding Peru’s growth, public finances and rule of law.