September 5, 2014 / 11:37 PM / 3 years ago

Exclusive: Peru's gold output will likely fall 20 percent this year - official

Panoramic view of Yanacocha Latin American's biggest gold mine in the andean city of Cajamarca, north of Lima, November 21, 2006.Pilar Olivares

LIMA (Reuters) - Peru's gold output will likely drop by 20 percent this year and keep falling through 2016 as aging mines churn out less of the precious metal and a government crackdown curbs informal production, a ministry official said on Friday.

Peru's Deputy Mines Minister Guillermo Shinno told Reuters that copper production is seen rising by 9 percent this year to around 1.5 million tonnes, less than the government's previous estimate of an increase of between 10 percent and 14 percent.

Shinno said in an interview that new mines will likely add at least another 400,000 to 450,000 tonnes of copper to Peru's annual output in 2015 - an increase of about 30 percent.

Gold output, however, will continue to decline until 2017, when several small mines will support a rebound, Shinno said.

He declined to forecast how much gold production would slide in coming years, or what output would look like in 2017.

"These are very strong production drops," Shinno said from his offices in Lima.

Falling gold production and weaker-than-expected copper output has led Peru to revise down its economic growth forecast for this year several times.

The government now expects a 4.2 percent expansion - the Andean country's weakest rate since 2009.

Peru's gold output has been hit by dwindling reserves at Newmont Mining Corp's aging Yanacocha mine and Barrick Gold Corp's Pierina deposit, which is in the process of closing.

A police crackdown on informal and illegal mining this year has also contributed to gold's 17 percent year-on-year production drop in the first seven months of 2014.

Shinno said the Amazonian region Madre de Dios, where small-scale gold miners largely operate outside of the law, once contributed an estimated 20 tonnes of gold to Peru's annual output.

That would have represented 13 percent of 2013 output.

An ongoing process to register and regulate some of Peru's estimated 200,000 informal gold miners so they can continue working has faced several delays.

"This has definitely impacted gold production, but we hope it will change as miners are formalized," Shinno said.

Peru is the world's third-biggest copper exporter and fifth-largest gold producer.

Shinno said Chinalco's new copper mine Toromocho, which is still ramping up, has helped offset an unexpected drop in output from Antamina because of lower ore grades, Shinno said.

BHP Billiton and Glencore Xstrata each have 33.75 percent stakes in Antamina, one of Peru's biggest copper mines. Teck owns 22.5 percent and Mitsubishi Corporation 10 percent.

Antamina's copper output fell 38 percent in July and 9 percent in the first seven months of the year from the same periods in 2013, according to official data.

Shinno said the massive mine is expected to return to its previous levels of production by early next year.

In 2013 Antamina produced 461,000 tonnes of copper.

Reporting by Mitra Taj and Teresa Cespedes; Editing by Lisa Shumaker

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