With exports for US$1.42 billion FOB during the first half of 2001, mining accounted for 43.43% of Peru's total exports, making it the country's leading currency earner. While exports for the period fell 8.73% over the first half of Year 2000, the importance of mining is likely to stay steady and even increase, thanks to the development of major projects such as Antamina, which will produce 600 million pounds of copper and 300 million pounds of zinc a year. The company stands to become the world's largest joint copper-zinc producer.
Large-scale projects such as Antamina are set to keep coming on-line as Peru is estimated to have 16% of the world's known mineral reserves, including 15% of the world's copper reserves and 7% of zinc reserves. These resources have made Peru the world's second-ranked silver and tin producer, the fourth-ranked lead and zinc producer, seventh in copper and eighth in gold.

Given that Peru has not fully tapped its geological potential (the country has only drilled into 12% of its estimated mineral resources), unlike other producers, the country is in a position to double or even triple current production levels, above all in base metals. All these factors, together with the ongoing development of a series of projects, points to investment in the mining sector topping US$10 billion during this decade.

Today, based on the amount of land currently used for agriculture, the leading crops in Peru are rice (11.7%), potato (10.2%), hard yellow maize (9%) and seed corn (8.3%). Coffee (38.5%) and asparagus (21.7%), meanwhile, are the leading currency earners in the agricultural sector. Leading foodstuffs imports are: wheat (18.6%), soya (14.7%) and hard yellow maize (11.9%).

Agricultural exports in the first half totaled US$58.72 million, down 26.14% over the first half of last year. However, Peru only grows export crops on 60,000 hectares of land, making export figures highly volatile.

The sugar industry, meanwhile, is currently attracting new operators to the Peruvian agro-industry sector. The growing and processing of sugarcane has traditionally been dominated by sugar cooperatives. These were large-scale several decades ago, but today are experiencing severe hardship, particularly those which have yet to line up a strategic partner to run the operation. Faced with this problem, which has complex social implications for many communities along the Peruvian coast, the State is trying to come up with alternatives to boost the sector. For example, the law continues to protect the equity of these ventures, preventing them from being shut down and sold off. What is more, the government has designed the Agrarian Financial Rescue (RFA) for the entire agricultural sector to refinance business debts.

As the country has succeeded in putting an end to its internal security problems, foreign investment in the tourism sector has risen steadily. Major international hotel chains have set up operations in Peru, including Marriott International, Hilton Hotels Corporation, Swissôtel, Sol Melia, Accor, Orient Express Hotels, Best Western, Bass Hotels & Resorts, Starwood Resorts & Hotels, Sonesta Hotels, Resorts & Nile Cruises and Golden Tulip.
These investments have gone hand-in-hand with an increase in the number of international arrivals in Peru, a growth rate which has topped the worldwide average. This has also spurred a spectacular increase in tourism earnings. Over the past decade, international arrivals in Peru grew 12.9% a year, substantially higher than the world average annual growth rate of 4%, according to the World Tourism Organization.

The new Peruvian government, meanwhile, has announced the creation of the National Tourism Corporation to boost the sector. The government estimates that by end 2006, the country will receive 3 million visitors a year. Currently, a million people a year visit Peru, with currency earnings topping US$900 million in 1999.

Amongst the various industrial sectors, the textile industry is the country's third-largest export earner behind mining and fishing, and the leading exporter of manufactured products. During the first half of the year, the textile sector exported US$343.9 million, equivalent to 10.5% of Peru's total exports and 33.3% of exported manufactured products. Because of the important standing of the local textile industry as a currency earner, Peru, together with the other members of the Andean Pact (Bolivia, Colombia, Ecuador and Venezuela) have formed a lobby to urge the US Congress to permit the entry of duty-free textiles and garments into the United States as part of the broadening scope of the Andean Trade Preferences Act (ATPA).
This benefit would help Peruvian textile exports save 21% of current customs duties imposed by the US government, and boost textile sales from US$700 million in the Year 2000 to US$2 billion by 2005.

Unlike the success of textile mills focusing on exports, firms that based production on the domestic market have faced complications due to dwindling local demand as a result of international crises and the 1997-98 El Niño phenomenon. Other sectors linked to local markets faced similar problems, forcing them to restructure their debts. During Year 2000, some 222 companies (13.07% of Peru's companies) underwent restructuring.

The new Peruvian government has announced a package of measures aimed at reactivating the industrial sector as well as spurring local demand. This will be complemented by regional economic processes and an active policy of helping Peruvian companies to be more competitive on international markets. In addition, the government will spur the effective defense of the Peruvian market against dumping, undervaluing and contraband.

Through June 2001 there were 251 concessions to handle public telecommunications services in Peru, including local and long-distance fixed telephone services, cellular, cable and others. However, many of these services are clearly dominated by the various subsidiaries of Spanish group Telefonica, which operate in Peru.

Telefonica started operating in Peru in 1994, after winning the tender for state telecommunications companies Compañía Peruana de Teléfonos and Entel Peru, which were legal monopolies. The sell-off represented a milestone in the Peruvian privatization process due to the size of the bid: US$2 billion.
This privatization marked the start of the gradual liberalization of the Peruvian telecommunications sector, which was finally opened up in August 1998, when local and long-distance fixed telephone services were made available to other operators. Thanks to this drive to open up the market, the sector developed swiftly, growing at an average annual rate of 21.6% since 1994. What is more, the lack of market penetration by most of the services underlines the potential for further growth in the future.
The sector was the leading focus of foreign investment during the past decade, concentrating a little over a quarter of total foreign capital. From 1995-2000, investment in the sector totaled US$3.48 billion. Investments are expected to grow by an additional US$1.5 billion from 2001-2003, when new goals will be set for the sector

On February 14, the government awarded the concession to operate Lima's Jorge Chavez International Airport, Peru's largest airport, to the Lima Airport Partners (LAP) consortium, which is made up of German firm Flughafen Frankfurt Main, US Company Bechtel Enterprises and Peruvian construction firm Cosapi. In exchange for the concession, the consortium is committed to investing US$1.21 billion during the 30-year concession, in addition to payment of royalties and other services.
The investment commitment includes, among other things, the construction of a new terminal (or the modernization of the current terminal) to qualify the Lima airport for the IATA B airport rating. The consortium is also committed to building a second runway, an air cargo center, a new fuel plant, a hotel and a shopping mall. The investments will turn Jorge Chavez into a regional hub, where flights from various airlines heading for South America will concentrate.

The privatization process also includes the main airports in the provinces, such as Arequipa, Trujillo, Iquitos and Cusco. In Cusco, the government is also studying the possibility of building a new airport in the area of Chincheros.
At the same time, the government is also looking to attract investment and private management for the country's ports. The first step was the 1999 award of the 30-year concession for the Matarani terminal in the department of Arequipa, to Santa Sofía Puertos, a consortium controlled by the local Romero Group. The company will pay the State an annual royalty equivalent to 5% of its income, and is committed to upgrading the port. However, the concessions for the other ports included in the privatization process depend on whether the General Ports Law is promulgated. The ports initially included in the bill of law were Salaverry, Paita, Ilo, Callao, Chimbote and San Martín.
In highway infrastructure, Peru has 78,436 km of roads, of which only 9,411 km (12%) are paved. Of the paved roads, in 1994 the government awarded the concession to operate the Arequipa-Matarani road to local construction firm Graña & Montero, which is committed to investing S/.14.4 million in repairing the 104.7 km road. The company later raised its investment commitment by an additional S/.3.4 million.

The process of attracting private investment for the country's road infrastructure decided mainly that the North and South Pan-American Highway should be divided into 11 stretches, to be awarded as concessions. In exchange for the concessions to operate these stretches of the heavily-transited Pan-American Highway, the operator will have to take on the commitment to build roads into the country's interior, which will be partly financed by the State. In total, the government aims to tender out 6,739 km of roads and line up investment commitments for US$1.2 billion.

To date, the process has not been as successful as originally hoped. After carrying out preliminary studies, it was found that most of the road networks did not have enough traffic, and that there was not the necessary public funding to finance the construction of penetration routes. This apparently has created the need to redefine the proposal, eliminating the project of building roads into the interior and limiting the number of highway concessions to 10 (Highway Concession Number 10 was eliminated).

Peru spreads over a surface of approximately 1,285,215 square km and has sovereign territorial rights over 60 million hectares in the Antarctic.
In a bid to conserve representative samples of its flora, fauna and landscapes, Peru has introduced a number of legal and social mechanisms to protect its biological diversity.
These efforts are channeled through the National System of Natural Areas under State Protection (SINANPE) created in 1990 within the General Bureau of Natural Protected Areas and Wildlife as a division of the National Institute of Natural Resources (INRENA).
To date, SINANPE monitors a total of 50 natural areas or conservations units that comprise approximately 10% of the national territory.
In turn, these areas are classified by category of use, including national parks, reserves and sanctuaries, historical and national sanctuaries, reserved zones, game reserves, protection forests and communal reserves. (PROMPERU)