Peru: The Indian Gold Rush

The South American nation of Peru has emerged as a key supplier of gold to India, with trade volumes between the two nations seeing a significant increase over the past decade. From 2014 to 2023, Peru exported a remarkable 357.23 tonnes of gold to India, making the South American country a crucial partner in meeting the considerable demand for the precious metal in India. As of 2023, India has emerged as the second-largest buyer of Peruvian gold, further cementing trade ties between the two nations.

The Kundan Group, one of India’s leading gold importers, has been a significant beneficiary of this trade relationship. According to Peru’s Ambassador to India, Javier Manuel Paulinich Velarde, between 2014 and 2023, Kundan Care Products and Kundan Refinery, among other companies associated with the group, imported 73.65 tonnes of gold from Peru. This volume represents a remarkable 20.6 per cent of all gold Peru sold to India during this period. In 2022 alone, Peru’s gold exports to India reached a staggering value of $1.9 billion.

A record year ahead

Peru’s gold exports to India are expected to reach new highs in 2024. According to Ambassador Javier Manuel Paulinich, these exports are projected to increase by 36 percent compared to the previous year, reaching an unprecedented level of $3 billion. In the first half of 2024 alone, India’s gold imports from Peru increased by 81 percent year-on-year, totaling $1.47 billion. This increase in gold trade is vital for both economies. For Peru, the revenue generated from gold exports plays a crucial role in supporting its mining industry, which in turn contributes significantly to the country’s GDP and provides employment opportunities.

For India, which meets most of its gold demand through imports, these shipments are essential to meet high domestic demand for jewelry and investments.

India’s investment opportunity in Peru’s mining sector

Despite being one of the largest buyers of Peruvian gold, India has not yet made substantial investments in Peru’s mining sector, a fact highlighted by Ambassador Velarde during the recent India Gold Conference. In contrast, other countries such as China, Canada, Mexico and the United States have already established a strong presence in Peru’s mining industry. This gap in investment represents a significant opportunity for Indian companies.

Peru is rich in mineral resources, particularly gold, which is the main mineral exported to India. In 2023, Peru’s total gold exports reached $8.5 billion, of which India accounted for $2.2 billion. However, while India accounts for 26 percent of Peru’s gold export market, Peruvian gold only makes up about 6.2 percent of India’s total gold imports.

Opportunities on the horizon

Peru is actively seeking to attract Indian investment, particularly in its growing mining sector. Currently, six major gold projects in Peru are at the investment stage, with a total value of close to $7 billion. In addition to these, there are 18 gold exploration projects underway, with a preliminary investment of $220 million. These projects represent a significant opportunity for Indian companies to invest in the exploration and exploitation of gold deposits in Peru.

Mining has long been a pillar of the Peruvian economy. Over the past decade, the sector has contributed more than 8 percent to the country’s GDP and accounted for more than 65 percent of its total exports. Furthermore, between 2003 and 2022, Peru attracted more than $17 billion in foreign direct investment (FDI) for mining-related manufacturing activities. The metals sector, which includes mining-related manufacturing, accounted for 28 percent of this FDI, generating nearly 12,000 direct jobs.

As one of the top ten gold producers globally, the potential for further growth in this sector in Peru is immense. With gold deposits spread across regions adjacent to the Andes mountain range, there is a wealth of opportunity for exploration and development. Indian investors, who have so far been notably absent from Peru’s mining landscape, are being encouraged to capitalise on these opportunities.

A strategic partnership for the future

As Peru continues to strengthen its trade ties with India, the South American country is also keen to deepen its economic partnership by inviting Indian investments in its mining sector. The ongoing projects and abundant gold reserves represent a lucrative opportunity for Indian companies to expand their presence in one of the most resource-rich regions in the world. With both countries set to benefit from this collaboration, the future of India-Peru relations looks brighter than ever.

Note: This is an article republished from the «Financial Express» media outlet through a cooperation agreement between both parties for the dissemination of journalistic content. Original link.