Peru aims to double its gold output by 2010

By JCK Online Staff -- JCK Online, 5/10/2004 2:00:00 AM

Peru aims to more than double manufacturing and exports of gold jewelry to $200 million a year by 2010, as part of a wider plan to boost exports, government and industry officials said at a gold industry conference in Lima this week.

Peru is the sixth biggest gold producer in the world, and with new mines coming on line, hopes to jump into fifth place next year, but it is a tiny producer of gold jewelry, Reuters reports.

In the past, gold miners received a tax benefit for exporting their gold, but new rules have changed that, and this month gold will be exchanged on a local commodities market for the first time.

"It was irrational, it was hard for manufacturers here to get gold," Juan Carlos Mathews, director of international trade development for the Trade Ministry, reportedly said.

Eighty percent of world gold production goes to gold jewelry. But only 4% of Peru's gold was transformed to jewelry last year in Peru, or approximately seven tons, Giampiero Scotto, president of the jewelry committee at ADEX, the exporters association in Peru, reportedly said.

Scotto reportedly estimated Peru could create 10 additional jobs for every mining job, if it developed the jewelry industry.

Current jewelry exports are worth between $56 million and $95 million depending on whether jewelry manufactured with imported gold on the understanding that it will be exported again, is counted.

One business idea that could point the way for Peru is a joint venture between Italy's privately held Silmar group, one of the 10 biggest producers of gold chains in the world, and Chilean firm De Oro, which would buy its gold from Peru's Yanacocha mine, owned by Newmont Mining Corp with Peru's Compania de Minas Buenaventura as partner, Reuters reports.

The joint-venture partners are seeking financial partners and plan soon to bring gold chain making equipment from Italy to Peru, Reuters reports. The mission is to become the South American leader in making and selling gold jewelry, mostly with exports to the United States.

"We want to be producing 10 tons of jewelry a year within five years in Peru," Gianni Nichele, general manager of Silmar, reportedly said.

Mathews said improving design and developing new brands was key to increasing jewelry production here.

"We expect a 15% rise in jewelry exports this year, and then the idea is to maintain a yearly rise of 20%," Mathews reportedly said.

He said Peru's exports make up only 16% of gross domestic product, compared with 35% in neighboring Chile and 54% in Mexico. Increasing jewelry output could be a part of increasing that percentage.