Resources Policy xxx (xxxx) xxx–xxx

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Resources Policy
journal homepage: www.elsevier.com/locate/resourpol

Innovation in an unfavorable context: Local mining suppliers in Peru

Oswaldo Molina
Universidad del Pacífico in Lima, Perú

A R T I C L E I N F O A B S T R A C T

JEL Codes: Recent changes in the mining industry have opened new opportunities for technological upgrading by local
O13 suppliers in developing countries. This paper explores the factors that foster or hinder innovation in such a
O32 context. We employ a case study methodology to analyze a sample of Peruvian mining contractors that in-
Keywords: tegrated into knowledge-intensive stages of the value chain in recent years. Our main findings reveal that
Mining technological efforts are largely driven by the mining companies’ demands, which favor incumbent over
Peru emergent suppliers due to their experience in the local market. In order to integrate into the more knowledge-
Innovation intensive stages of the value chain, we identified that these firms followed two strategies: (i) identification of
Value chain
local-specific market niches where foreign competition is scarce, and (ii) partnerships with global suppliers and
Suppliers
specialization in high-quality and customized complementary services. Still, all the suppliers in the sample are
Incumbent firms
very new in technologically complex activities, and their innovations remain limited from a global perspective.
Our findings suggest that this is partly due to a weak institutional setting, scarce support from external orga-
nizations, and limited coordination channels in the sector.

1. Introduction
During the last decades, Natural Resource Industries (NRIs) have
experienced huge transformations, increasingly becoming more in-
novative and specialized. Specifically, new historical circumstances and
recent changes in global markets, technology, and institutions are
opening new opportunities for the development of local suppliers and
linkages with a high potential for technological diversification (Marin
et al., 2015). Regarding mining, Urzúa (2012) argues that the sector's
model of production has shifted from the traditional “enclave” system
to a highly disintegrated one, where key services along the production
chain are being outsourced to independent firms. Considering that
mining activity has a heavy weight in the economic activities of many
developing countries, there is an increasing interest in the emergence of
knowledge-intensive and diversified local suppliers, as they may pro-
vide technological solutions that enhance the competitiveness of this
industry, both at the local and international levels (Bravo-Ortega and
Muñoz, 2015).
For relatively small firms in developing countries, integrating into
the more knowledge-intensive stages of the value chain is particularly
important because it allows them to access global markets and new
sources of knowledge, with potential spillovers for the local economies
(Giuliani et al., 2005). The existing literature argues that attention
should be paid to how governance patters in global value chains in-
fluence innovation efforts among local firms in developing countries.
Due to the differences in size and capabilities that characterize firm
linkages in such contexts, opportunities for upgrading are highly de-
pendent on the value chain leaders’ strategies (Humphrey and Schmitz,
2002; Gereffi et al., 2005). However, some recent studies have stressed
the importance of a firm's own learning trajectory and institutional
setting over its possibilities for engaging in technologically complex
relationships with larger companies (Morrison et al., 2008; Pietrobelli
and Rabellotti, 2011). According to their authors, both external and
internal factors should be considered as dynamic and mutually depen-
dent forces in order to understand upgrading patterns in developing
countries.
The aim of this study is precisely to explore how the dynamics in
this industry and the development of technological capabilities influ-
enced innovation efforts among local mining suppliers in a developing
economy, thus allowing for their integration into more knowledge-in-
tensive stages of the value chain. Therefore, we focus on the case of
Peru, a middle-income country that is highly dependent on mining
activities. We base our analysis on the study of a sample of the most
innovative suppliers in the country, which were identified after con-
sulting with important mining companies and industry experts.
Specifically, we conducted detailed interviews with each of the selected
firms, which allowed us to gather information on how they built the
skills required to engage in innovation efforts, as well as the role that
their relationships with larger actors in the global value chain had in
this process. Additionally, we included two research and educational
institutions in our sample, in order to understand the influence of the
external sources of knowledge and human capital on these firms’

E-mail address: o.molinac@up.edu.pe.

http://dx.doi.org/10.1016/j.resourpol.2017.10.011
Received 5 April 2017; Accepted 19 October 2017
0301-4207/ © 2017 Elsevier Ltd. All rights reserved.

Please cite this article as: Molina, O., Resources Policy (2017), http://dx.doi.org/10.1016/j.resourpol.2017.10.011
O. Molina
technological trajectories.
Our research revealed that opportunities for upgrading among local
suppliers are largely driven by the mining companies’ demands. Since
these firms typically value international reputation and expect a high
degree of technological capabilities, local firms face important barriers
to have their innovations valued and compete with the standard sup-
pliers in the global value chain. However, recent trends in the mining
industry have opened important learning and upgrading opportunities
for local suppliers. The cases we studied provide evidence that a small
group of incumbents has been able to achieve innovations in recent
years and use that to expand their markets. These firms benefitted from
their experience and contacts in the local market, which favored them
over less developed emerging suppliers. Still, we found that the sup-
pliers in our sample followed different strategies to integrate into the
more knowledge-intensive stages of the value chain. While a first group
of suppliers focused on developing novel products that provided solu-
tions to very specific and rather unattended needs in the local market,
the remaining firms benefitted from partnerships with global mining
suppliers and specialized in providing high-quality and customized
complementary services.
These findings suggest that the direction and scope of the innova-
tion efforts by local mining suppliers depend on their upgrading stra-
tegies. Whereas firms specializing in providing competitive com-
plementary services tend to achieve incremental technological
improvements, radical innovations are more likely to occur among
suppliers focusing on a very specific market niche. Still, all these firms
are very new in knowledge-intensive activities, and the scope of their
innovations remains limited from a global perspective. According to our
research, this may be partly due to a weak institutional setting and
scarce support from external organizations (i.e., government, educa-
tional and research centers, among others). Furthermore, mining sup-
pliers have no coordination channels, which hinders the transmission of
knowledge and their possibilities to access the mining companies’
technological demands. We therefore argue that policies should be or-
iented to strengthen the linkages between mining suppliers and external
sources of knowledge, as well as the coordination channels among the
firms in the sector.
Our results are relevant for several reasons. First, they provide
evidence that technological upgrading can indeed occur in NRIs in
developing countries, even when conditions for innovation and gov-
ernmental support are weak.1 This provides supportive evidence to the
recent strand of literature that challenges the previously accepted view
that economic sectors such as mining do not provide opportunities for
local technological sophistication. Second, this paper explores a gen-
erally overlooked issue in literature on technological upgrading in de-
veloping countries, which is the distinction between incumbent firms
and new ventures when analyzing how linkage dynamics influence
innovation patterns. Third, evidence on the nature and scope of in-
novation activities by local mining suppliers in developing countries
remains scarce. Therefore, we contribute by generating new qualitative
information that helps understand the dynamics of this process and
complement previous findings in other countries.
Moreover, our findings might be indicative of the beginning of a
process of technological maturity among Peruvian mining suppliers. We
have shown that, by seizing their local experience and contacts, some
incumbent firms in the country have recently begun to shift towards
more knowledge-intensive activities. Particularly, our research suggests
that specific niches pose opportunities for local firms to take advantage
of their local experience and provide innovative solutions to unattended
needs in the sector, thus expanding their markets and gaining an in-
ternational reputation. However, we also provide evidence on how
institutional weaknesses may limit the possibilities for technological
1
Peru only invested 0.12% of its GDP in R & D in 2015, well below the Latin American
average (0.67%).
2
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upgrading considerably. Considering the emerging opportunities for
local linkages in the mining industry, we believe that policies should
address this issue by improving the conditions for capability building in
the sector and facilitating the flow of information regarding the mining
companies’ technological demands.
This paper proceeds as follows. In Section 2, we introduce the the-
oretical framework that will guide our analysis and briefly describe the
current opportunities that the Peruvian mining sector offers for tech-
nological upgrading and diversification. Section 3 then describes the
methodology applied in this study. In Section 4, we address the ex-
periences of the suppliers interviewed in order to understand the factors
that allowed them to integrate into more knowledge-intensives stages of
the value chain. Specifically, we will first describe the governance
patterns along the mining value chain and analyze how interactions
between mining firms and suppliers affect innovation efforts by local
contractors. Second, we will explore the nature of the learning trajec-
tories of the suppliers in our sample, with emphasis on the factors that
enhanced these firms’ learning curves, as well as the role of the in-
stitutional setting in this process. Finally, Section 5 will summarize the
main results of our research and derive some policy implications.
2. Background
2.1. NRIs and technological upgrading in developing countries
Economists have developed many different theories to assess the
determinants of technological upgrading in developing countries.
Although this concept has various interpretations, recent studies argue
that it should be understood as the development of technological in-
novations that produce increases in value added (Morrison et al., 2008).
Technological upgrading can be achieved through different strategies.
These may be linked to the value of products (product upgrading) or the
efficiency of production processes (process upgrading), as well as to
more complex strategies oriented to developing new functions in the
sector's value chain (functional upgrading) or applying competences
acquired in a particular function to move into new chains (inter-chain
upgrading).
A first approach to understanding innovation patterns in developing
countries focuses on the importance of international inter-firm linkages
in enhancing knowledge transmission and technological efforts. This
literature builds on the idea that the nature of the relationships between
actors in the global value chain may take different shapes, which in turn
have important implications on production patterns and upgrading
opportunities (Humphrey and Schmitz, 2000). The most common
theory of governance patterns in global value chains was developed by
Gereffi et al. (2005), and considers three key factors: (i) complexity of
transactions, (ii) ability to codify transactions, and (iii) capabilities at
the supply base. Different combinations of these variables result in a
classification of value chains that range from low to high levels of ex-
plicit coordination and power asymmetry. The main types of chains
identified by these authors are:
• Markets: Low asset specificity and information complexity. Little
explicit coordination needed, which reduces switching costs.
• Modular value chains: Higher product complexity, but interactions
remain simple due to codified information. Asset specificity and
switching costs remain low.
• Relational value chains: Higher asset specificity, tacitness of in-
formation, and supplier capabilities lead to complex interactions.
Development of mutual dependence and high switching costs.
• Captive value chains: due to low capabilities, suppliers become
transactionally dependent on larger buyers. Complexity of in-
formation and asset specificity require monitoring by lead firms.
• Hierarchy: lack of suppliers with enough capabilities to handle
product specifications and tacit knowledge creates the need for
vertical integration between stages of the value chain.
O. Molina
For relatively small firms in developing countries, integrating into
global value chains is particularly important because it allows them to
access global markets and new sources of knowledge (Giuliani et al.,
2005). According to the GVC literature, these firms’ possibilities for
technological upgrading are strongly influenced by the chain leaders’
strategies. Humphrey and Schmitz (2002) note that due to the differ-
ences in size and capabilities that characterize firm linkages in devel-
oping countries, highly asymmetrical relationships are likely to emerge
along the value chain. Furthermore, weak organizations turn relation-
ships with external sources like transnational corporations or research
centers in essential means for these firms to access the codified
knowledge that is necessary for upgrading (Giuliani et al., 2005). Value
chain theory predicts that these governance patterns may favor incre-
mental product and process upgrading among suppliers, though more
technologically complex solutions are typically hindered in such con-
texts (Humphrey and Schmitz, 2002).
However, some recent studies have stressed the importance of a
firm's own characteristics in the process of technological upgrading
(Morrison et al., 2008; Pietrobelli and Rabellotti, 2011). Based on the
Technological Capabilities and Innovation Systems strands of literature,
these authors make the point that the transmission of knowledge that
occurs along value chains must be complemented by an effective
learning process at the firm level in order for successful upgrading to be
achieved. According to this view, learning is an evolutionary process
where innovative capabilities can only be developed on top of other
skills, such as engineering and design capabilities. Therefore, techno-
logical upgrading must not be treated merely as an exogenous con-
sequence of global value chain dynamics, but rather as an endogenous
process that depends on the firm's previous capabilities and the in-
stitutional setting where it is located. In order to understand upgrading
patterns in developing countries, both internal and external forces must
be analyzed taking into account their dynamic nature and mutual de-
pendence.
Regarding NRIs, an emerging strand of literature has departed from
the “natural resource course” tradition and argues that these industries
can in fact be a platform for the development of dynamic linkages and
transmission of knowledge across different sectors of the economy
(Pérez, 2010; Andersen, 2012; Morris et al., 2012a; Marin et al., 2015).
As noted by Crespi et al. (2016), certain characteristics of NRIs such as
local specificity and a growing trend to outsource key services generate
a demand for technological solutions that could be satisfied by local
suppliers. Furthermore, markets are increasingly valuing adaptation
and differentiation, as well as the service components of products
(Pérez, 2010). In this regard, Marin et al. (2015) refer to a new window
of opportunity for NRIs in developing countries, where new conditions and
challenges in NRIs may allow local firms to pursue an active partici-
pation in knowledge-intensive activities along the global value chain.
The existing literature on the mining industry argues that mining
companies hold a competitive advantage on global value chains due to
production know-how. These companies set standards and performance
parameters for the rest of the value chain participants, and typically
rely on large multinational suppliers for technological solutions (Farole
and Winkler, 2013). However, recent decades have seen a surge in
technological linkages with local mining suppliers in developing
countries (Urzúa, 2012). Though evidence on these experiences remains
scarce, a growing body of studies is assessing the factors that allow local
mining suppliers to engage in knowledge-intensive activities, as well as
the nature and scope of their innovation efforts.2 Their findings suggest
that recent trends in the sector increasingly provide opportunities for
knowledge-intensive local solutions, but these remain constrained by a
lack of support from the government, local organizations, and major
2 5
Some examples include Bravo-Ortega and Muñoz (2015) and Meller and Gana (2015)
in Chile, Figuereido and Piana (2016) in Brazil, as well as a group of case studies in Africa
compiled in Morris et al. (2012b).
3
Resources Policy xxx (xxxx) xxx–xxx
industry stake-holders. These works show that functional relationships
between mining companies and local suppliers can be mutually bene-
ficial, and argue for stronger policy efforts to foster these linkages.
2.2. New opportunities in the Peruvian mining sector
Peru is well known for its mineral wealth, which makes it one of the
world's biggest producers of base and precious metals. Mining has been
one of its main economic activities since the 1950s, but factors such as
nationalization policies, macroeconomic instability, and internal con-
flicts limited private investment in the sector during most of the past
century (Glave and Kuramoto, 2007). However, the economic reforms
undertaken during the 1990s allowed the country to integrate into
global markets and encouraged important capital flows (Bury, 2005).
The General Mining Law (1992) was a vital step towards the estab-
lishment of a friendlier environment for investments in the sector, as it
provided greater incentives and legal security. As a result, new projects
were undertaken, and others were expanded and modernized (Glave
and Kuramoto, 2007). This transformation led to a surge in mining
activity, which strengthened and reinforced the sector's position as one
of the country's main drivers for economic growth.
Nowadays, Peru ranks among the leading global producers of sev-
eral different minerals.3 Although the country's production volumes
represent only a small percentage of the world's top producers,4 its
diverse mineral supply has become one of its main competitive ad-
vantages against other countries in the region (see Appendix A). A clear
example of the importance of the mining sector at the local level is the
fact that its contribution to domestic production averaged 13.18% be-
tween 2005 and 2015. Likewise, mining exports represented an average
of 58.15% of total Peruvian exports during the same period (see
Appendix B). Regarding employment, mining and contractor companies
generated more than 195,000 jobs in 2015, which accounted for 1.15%
of the economically active population. Additionally, indirect employ-
ment generated by the industry is estimated to be around 1.75 million
(Ministerio de Energía y Minas, 2016).
The increasing participation of international enterprises since the
1990s had little impact on innovation among local suppliers in the
Peruvian mining industry, which remained stagnant. According to
Kuramoto (2001), high technological development in the industry and
low capabilities among local suppliers limited their possibilities to solve
the most complex needs of the mining companies. As a result, this au-
thor noted that the demands for cutting edge technology from the most
important mining companies were captured by experimented multi-
nationals during this period. However, there is an increasing body of
literature that argues that there is a new window of opportunity for
technological upgrading among local suppliers in NRIs (see Section
2.1). In the rest of this section, we analyze the main changes in the
global and Peruvian mining context and the new opportunities for in-
novation that they provide.
2.2.1. Changes in the volume and requirements of demand
According to recent estimates, Peru is well endowed with resources
to meet a growing global demand, since only a small percentage of
Peru's mineral reserves is currently being exploited.5 However, con-
sidering that the best locations are the first to be taken, an expansion in
mining activity would inevitably imply a shift to less competitive sites.
This leads to three main challenges that mining companies in Peru will
increasingly have to face:
3
In 2014, the country was among the world's top 6 producers of copper, silver, zinc,
lead, gold, tin, and molybdenum.
4
As an example, Peru's copper production only accounts for 23% of Chile's, the world's
top producer (USGS, 2015).
While mining concessions comprised 20.2% of national territory in 2013, only 1.23%
was occupied by mining operations in the extraction or production phase (Grupo
Propuesta Ciudadana, 2014).
O. Molina
● Complexity of mineral deposits: Due to the depletion of clean
deposits and the increasing demand for minerals, “dirty mineral”
deposits are becoming increasingly important. Additionally, ore
grades of Peruvian mines have reduced over time and will continue
to do so.6 As the current methods of extraction of minerals are
limited in this context, new strategies to extract these minerals are
required.
● Peruvian specific geographic characteristics: Due to a number of
specific geographic characteristics of Peru´s mines, common mining
machinery and traditional mining methods are not as effective as they
are in other countries. Most of Peru's mineral deposits are located in the
rugged Andean highlands, which comprise 31.8% of the national ter-
ritory. In fact, most of the mines are located at altitudes where common
mining equipment usually underperforms. Narrow veins in under-
ground mining are also a challenge for Peruvian mining production,
since traditional machinery is unable to handle this type of settings.
● Management of water: Due to the scarcity of fresh water and con-
flicts with local communities, mines in southern Peru are increasingly
using seawater, which needs to be transported to sites generally lo-
cated at high altitudes (GWI, 2011). The high costs of transportation
from the coastline result in seawater being considerably more ex-
pensive in Peru than in other mining countries (Bitran, 2014).
Overall, the challenges imposed by the decrease of ore grades, im-
purities in deposits, geographic characteristics, and water manage-
ment open a window of opportunities to local suppliers. Standardized
mining methods are not viable in these difficult conditions and large
multinational suppliers are generally unable to provide solutions to
the complicated Peruvian conditions. In this regard, local suppliers
can take advantage of their knowledge of local problems and tech-
nological difficulties to develop machinery and systems that will allow
mining companies to improve their current methods and operate in
locations that were previously inaccessible or economically unviable.
2.2.2. Lower mineral prices
The increase in demand for metals and minerals in the early 2000s
quickly translated into increased prices and mining profitability, en-
couraging the industry to expand production of certain major com-
modities by 50% or more, particularly over the last decade (Lala et al.,
2015). However, during the last few years, the global mining industry
has been facing lower mineral prices and higher external uncertainty
(EY, 2014), in a context of rising production costs (partly due to the
factors described in Section 2.2.1).
This combination of factors has led to a reduction of as much as 28%
in global mining productivity, compared to a decade ago (Lala et al.,
2015). Peru's mining industry has been no exception to this trend: be-
tween 2005 and 2014, workforce productivity in the sector also de-
creased by 28% (Ministerio de Energía y Minas, 2015). As a result, there
is a growing interest across the industry in raising productivity through
cost reductions or more effective production technologies (Lala et al.,
2015). This need for more efficiency creates a new window of oppor-
tunities for suppliers who could offer innovative solutions for the
mining industry's emerging needs.
2.2.3. Social conflicts and environmental issues
Regarding the national context, social conflicts have been increasing
in the mining sector in recent years7 (Triscritti, 2013). This trend is
motivated by local concerns about livelihood security, environmental
degradation, and by the perception that well-being has not increased in
6
In general, projections of average copper grades from 2012 to 2025 estimate that
Peruvian grades will decrease on average by 19% -close to the world average, which is
estimated to fall 21%- (McKinseyandCompany, 2013).
7
Due to social protests, important mining projects worth US$ 21.5 billion were delayed
between 2010 and 2014 in Peru (Palomino et al., 2015).
4
Resources Policy xxx (xxxx) xxx–xxx
proportion to the profits of mining companies (Bebbington and Bury,
2009). Moreover, the limited institutional capacity of the sub-national
authorities, who lack the human resources and experience, has resulted
in a poor management of transfers (Aragon and Rud, 2013). Although
changes in legislation through the last decade have increased the par-
ticipation of indigenous communities in decision-making, most of them
still consider that their rights are not properly secured. Therefore, in
recent years the government has taken action to protect the environ-
ment and the interest of the communities. This political process has
brought a significant increase in the number of environmental regula-
tions in Peru8 (EY, 2014).
In this context of adjustment to increasing social conflicts and en-
vironmental and social regulation, local suppliers can find new oppor-
tunities to offer innovative solutions to mining companies. Firms that
take advantage of these new opportunities and commit themselves to
the development of unique knowledge assets oriented to reduce energy
and water consumption and environmental damage would have an
opportunity to enter the market. As technological progress regarding
environmental impact needs to be implemented at various stages of
production, this opportunity involves all actors in the mining value
chain.
3. Methodology
In order to report on recent innovation trends among suppliers in
the Peruvian mining sector, we use a case study approach. Data for this
paper was collected through semi-structured interviews to relevant
actors of the mining sector: mining suppliers, mining firms and key
informants. In Appendix C, we provide details of all the actors that we
interviewed for this study.
Our fieldwork followed a sequential design. First, we performed
interviews to representatives from mining firms and key informants in
the sector, in order to identify the local suppliers that have succeeded in
introducing innovative solutions to the emerging needs of the mining
companies. Since our goal was that our sample of suppliers included the
most innovative local firms in the Peruvian mining industry, it was
essential that the first round of interviews could provide us with as
complete a picture as possible. Therefore, our sample of key informants
included both national and foreign industry experts, which came from
the academia, civil society, government and the private sector.
Regarding the selection of the mining companies that we inter-
viewed, we took into consideration the following factors: (i) amount of
foreign/Peruvian capital, (ii) length of time operating, and (iii) com-
pany size. We believe that choosing firms with different combinations
of these three variables provided us with a highly representative9 per-
spective on the range of mining companies operating in Peru (see
Appendix D for a detailed characterization of the mining firms in our
sample).
The information gathered in the first stage enabled us to select our
final sample of innovative suppliers for the second round of interviews.
Specifically, we chose to focus on the six suppliers that were mentioned
the most as innovative firms during the interviews, as well as the two
main educational and research centers in the sector. We considered
firms with a minimum level of sales in order to exclude very small
enterprises.10 Provided that our samples of mining companies and key
8
As a result, Peru has gone from not having any kind of environmental regulation in
the 1990s to turning down 20% of the proposed mining projects every year due to their
noncompliance with social and environmental obligations.
9
Considering that different minerals will require different technologies and production
functions it may seem contradictory to study mines treating different varieties of mi-
nerals. However, it is important to note that the degree of specificity required from
technologies in the first stages of the mining value chain depends mostly on operational
characteristics rather than type of mineral.
10
As we will discuss in Section 4, our interviews revealed that local firms require a
certain level of experience and scale to be able to engage in important technological
efforts and gain presence in the international market.
O. Molina Resources Policy xxx (xxxx) xxx–xxx

Table 1
Peruvian mining suppliers interviewed.
Source: own elaboration from interviews (data refers to 2014 levels).

Firm Year of foundation The firm is a…. Foreign Capitala N° Employees Turn- over (USD million) Stage in the value Chain

Bisa 1977 Subsidiary of mining 68% 350 35 Engineering and Construction

company Buenaventura
Exsa 1956 Part of Grupo Breca (business National capital 800 220 Explosives
conglomerate)
Ferreyros 1922 Independent firm 35.79% 3600 1902 Equipment Dealer and
Complementary Services
Fima 1969 Independent firm 33.1% 1250 85 Engineering and Equipment
Manufacture
Resemin 1989 Independent firm National capital 400 27.34b Equipment Manufacture
Tumi Raise Boring 1982 Independent firm 65% 210 34 Equipment Manufacture
UTEC 2012 Private University nonprofit 40 0.1 Human Capital / General
Investigation
TECSUP 1984 Private Technical Institute nonprofit 15 0.095 Human Capital / Metallurgical
Investigation

a
Approximately.
b
The whole group has companies in Zambia, DR Congo, India, Mexico and Argentina. The global turnover of the group for 2014 was US$ 71.47.

informants was representative of the local mining industry, we believe
that the selected suppliers capture the range of local mining contractors
that have been able to achieve technological upgrading in Peru.
In order to identify the factors that allowed our selected suppliers to
achieve technological innovations, we applied two complementary
strategies. First, we applied a detailed questionnaire to gather in-
formation about the firms’ general characteristics and trajectories.
Additionally, we conducted extensive interviews with at least one re-
presentative from each supplier in the sample to learn about their de-
velopment strategies, as well as their perceived opportunities and ob-
stacles in the current context. The findings from these two exercises are
the main source that we use for the analysis and discussion in Section 4.
Table 1 summarizes the main characteristics of the firms that
compose our sample of innovative local suppliers in Peru. As is shown
in the second column, all but one of the chosen firms were founded
before the 90's. Our interviews also revealed that the most innovative
suppliers in the Peruvian mining sector provide products or services for
mineral extraction and mine planning and construction. Thus, con-
sidering that a broad sample of mining companies and key informants
was covered, we can infer that the innovation process in the Peruvian
mining sector generally favors incumbent firms that operate in the first
stages of the value chain.11
Although our final sample includes suppliers operating in different
stages of the mining value chain, we do not intend for it to be re-
presentative of the whole Peruvian mining sector. Instead, we aim to
cover the stages of the value chain where innovation has occurred.
Listed below we provide a brief review of the local suppliers chosen for
the study, which describes their main characteristics and indicates why
they are considered to be innovative by mining companies and key
informants in the sector.
● Bisa: A company founded in 1977 by the Buenaventura mining
holding to provide consultancy, engineering, project management,
and construction services for its mining projects. Since 2003, it
began to provide its services to other companies and extended to the
infrastructure and industry sectors. In recent years, the company has
undertaken many operational improvements, which allowed it to
integrate its services and achieve higher quality. This firm now
provides various services to customers from nine different countries.
services using explosives and electrode welding in mining and
manufacturing. This company, which started operations in 1956,
currently has three industrial plants in Peru and holdings in
Panama, Colombia, and Brazil. It has recently succeeded in devel-
oping the Quantex technology, which significantly reduces the cost
and environmental impact of rock fragmentation in mining.
● Ferreyros: The official Caterpillar dealer in Peru since 1942. It
specializes in the import, sale, and rental of capital goods, and sa-
tisfies more than 50% of the local demand for machines. Ferreyros
has recently made successful efforts to differentiate itself from the
competition by offering complementary services such as consulting,
technical support and real-time monitoring, which have allowed it
to expand its operations to three other countries in Central America.
For instance, it has been the first Caterpillar distributor worldwide
to have an electrical control room for mining shovels.12
● Fima: Established in 1969 to provide engineering and installation
solutions for the mining industry, although it has extended to var-
ious production sectors. Fima also manufactures and assembles final
equipment for mineral processing for the local and international
markets, with its mining spools13 standing out thanks to their highly
specialized design and manufacture. In recent years, this firm has
specialized in providing high-quality and customized after-sale op-
eration and maintenance services.
● Resemin: Founded in 1989 as a supplier of spare parts, it has be-
come a specialist in the design and manufacture of jumbo drilling
equipment for underground mining and civil works tunnels. This
company experienced growing success when it began to implement
considerable innovations in their machines. In 2014, they developed
the Muki, a novel drilling machine that allowed for the mechan-
ization of drilling in extremely narrow veins. In recent years it has
become the world's third largest producer of jumbos for under-
ground mining, with a 2.5% share of the world market and ap-
proximately 60% share of the local Peruvian market.

● Exsa: Owned by Grupo Breca (an important business conglomerate

in Peru), it offers rock fragmentation and integrated blasting
11
Fima might be considered an exception to this rule, since the firm also provides
equipment for mineral processing.
12
Mining shovels are bucket-equipped machines used for digging and loading earth or
fragmented rock, as well as for mineral extraction.
13
A mining spool is a cylindrical device that works as a reel for different types of cable.
Since it is commonly used for underground mining, safety and resistance are fundamental
features of this type of equipment. Its size, design and material are highly dependent on
each mining project's specific characteristics.

5
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● Tumi Raise Boring: Originally a contractor of raise boring equip-
ment,14 this firm was founded in the US in 1982 and moved to Peru
in 1998. In 2001, it began to manufacture its own machines and
started to introduce important innovations in their design. They
developed the SBM 400 SR, a machine that reduced digging time
and costs significantly. With this new technology, the firm has
specialized in the production of customized equipment for digging
and related services in underground mining. It now exports its
machines to 22 countries.
In addition to these six mining suppliers, we included two educa-
tional and research centers in our sample in order to understand the
nature of the Peruvian mining sector's linkages with local organi-
zations dedicated to research and human capital formation.
● UTEC: The University of Engineering and Technology (UTEC, its
Spanish acronym) is the new undertaking of a group of mining
companies —among which Hochschild stands out— to train people
in carriers required by mining and related to engineering and in-
novation. In addition to providing highly trained personnel to
mining companies, UTEC is dedicated to providing specialized re-
search in mining.
● TECSUP: A private Technical Institute for Higher Education founded
in 1984 by a group of mining companies, including Hochschild.
Since its establishment, it has dedicated to training young people in
careers related to the implementation of technology in the operation
and maintenance of industrial activities. Additionally, it provides
consulting, research, and application of technology services to the
private sector.
4. Findings and discussion
In this section, we report on evidence collected through our field-
work in order to explore how the dynamics in this industry and the
development of technological capabilities influenced innovation efforts
among local mining suppliers. We divide our analysis in two parts. First,
we report on the GVC governance patterns that we identified in the
Peruvian mining sector and how they relate to the upgrading strategies
of local mining contractors. Second, we analyze the nature of these
firms’ learning processes and technological efforts, with emphasis on
the development of capabilities at the firm level and the role of the
institutions surrounding them.
Nevertheless, it is important to take into account that external and
internal factors influence each other in a dynamic fashion (Pietrobelli
and Rabellotti, 2011). For example, suppliers’ skills and absorptive
capacity are important determinants of the strategies chosen by chain
leaders. Likewise, these strategies have important implications on the
transmission of knowledge to suppliers, thus influencing their devel-
opment of technological capabilities. Therefore, the factors analyzed in
this section must not be understood as isolated determinants of tech-
nological upgrading, but rather as part of an endogenous process where
innovation patterns among local suppliers are constantly being altered
through their interaction.
4.1. Relationships in the GVC as drivers of innovation
As we already discussed in Section 2.1, innovation patterns among
local suppliers integrated in global value chains tend to be highly de-
pendent on external incentives posed by the most important players in
the market (Gereffi et al., 2005). In this sub-section, we will first ana-
lyze the governance patterns in the MGVC, with particular focus on how
the nature of the knowledge required in the industry and the local firms’
14
Raise borers are machines used to excavate a hole between two different levels of an
underground mine without the use of explosives.
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capabilities shape the market leaders’ behavior, thus influencing the
relationships between clients and contractors. Then, Section 4.1.2 will
describe the upgrading strategies that we identified among the in-
novative suppliers in our sample, analyzing how these are related to the
patterns of governance in the Peruvian mining value chain and their
implications on the direction of innovation efforts.
4.1.1. Patterns of interaction in the Peruvian mining value chain
In the Peruvian mining sector, large multinational companies
govern the value chain. In fact, 81% of total copper production in 2015
was carried out by five large firms (Antamina, Southern Copper
Corporation, Cerro Verde, Antapaccay, and Chinalco). Although the
production of gold and silver is shared among more companies, a small
number of companies comprises more than 50% of the total produc-
tion.15 As we discussed in Section 2.1, large mining companies are fa-
cing strong incentives to increase the level of outsourcing in general,
and near-sourcing in particular, in non-core activities such as research,
exploration, development, and technical assistance services (Urzúa,
2012). In such a context, local mining suppliers in developing countries
have gained market share in recent years, partly due to leverage
economies of scale and expertise provided by their domestic mining
interests (Bamber et al., 2016). This is also true in Peru, where con-
tractors now group approximately 68% of the labor force working in
the mining sector (Ministerio de Energía y Minas, 2016).
In spite of the growing demand for complex products and services
by mining firms in Peru, evidence suggests that most technological
services and brand new equipment and machinery are still imported
from abroad (OECD, 2011). In this regard, a study of the mining cluster
of Yanacocha conducted more than a decade ago identified that this
important mining company limited its relationships with local suppliers
to low-scale commercial partnerships, due to their technological lim-
itations (Kuramoto, 2000). According to our research, this trend gen-
eralizes to the Peruvian mining sector and has not changed sub-
stantially in recent years. The mining companies we interviewed agreed
that most local suppliers have yet to reach the capabilities required to
handle the complexity of the mining companies’ demands.
Moreover, there are no formal channels through which new sup-
pliers can gain access to mining companies, aside from open tenders.
Instead, our interviews revealed that reputation is key in the mining
industry and past experiences working with mining companies are
highly valued. As a result, emerging suppliers stand at a big dis-
advantage against more experimented firms. Only recently have a few
mining companies acted on this issue. Antamina, for example, in-
troduced a program to improve its formal channels of communication
with potential suppliers, called “Development of Suppliers of
Excelence”. Through the transmission of its technical problems to po-
tential local contractors, this firm has significantly reduced information
asymmetry. However, the scope of this program is limited, since it is
targeted to smaller local suppliers with low capabilities.
Despite these barriers for local suppliers, we were able to identify a
small group of firms that have reached the capabilities required to
engage in technological efforts and integrate into the global value
chain. A common trait among these suppliers is their incumbency in the
market, which puts them in a more favorable position to seize the de-
mands for local-specific solutions in the sector. Incumbency may be
beneficial in this context for many reasons. First, mining companies
tend to favor a one-contractor policy for their mining projects, in order
to seize economies of scale. This poses strong requirements in terms of
their suppliers’ capacity to handle large-scale demands, as well as
projects in different sites or even countries (Bamber et al., 2016).
15
In 2015, seven large firms produced 55% of Peruvian gold (Yanacocha, Barrick
Misquichilca, Consorcio Minero Horizonte, Buenaventura, Retamas, Gold Fields La Cima,
and La Arena), while seven companies accounted for 57% of Peruvian silver
(Buenaventura, Antamina, Ares, Volcan, Chungar, Cerro, and Chinalco) (Ministerio de
Energía y Minas, 2016).
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Second, mining companies are reluctant to apply new technologies that
have not been successfully tested, as this may increase searching costs
and the risk of failure. All of this imposes high entry costs for emerging
suppliers, especially smaller ones.
Still, our interviews revealed that innovative local suppliers find it
difficult to engage in functional relationships with important mining
firms, in spite of their more advanced technological skills. Most of the
firms in our sample agreed that this lack of opportunities might partly
be explained by a slight mistrust for local capabilities, which makes it
difficult for local suppliers to introduce their innovations in the global
market. Since most of the innovative Peruvian suppliers in our sample
are relatively new in the global value chain, they have yet to build a
strong global reputation for good quality in their products and services.
Furthermore, mining companies also require that contractors meet high
profile production standards in order to be eligible. This situation
makes it very difficult for local companies offering alternatives to the
standard suppliers in the MGVC to have their innovations valued in the
market and integrate into more knowledge-intensive stages of the value
chain.
A closer analysis of the relationships between our sample of in-
novative local suppliers and their clients reveals that these are mainly
asymmetrical, since local contractors are smaller and less developed
than mining companies. Following the classification of GVC governance
patterns introduced in Section 2.1, we consider the structure of the
mining supply chain in Peru to resemble a captive value chain.16 Local
suppliers face strong competition in terms of price and reputation from
both local and international suppliers, and have a lot more to gain from
their transactions with mining firms. Furthermore, they must typically
follow the specifications of the mining companies, assume important
transaction-specific investments and take full responsibility for the
performance of their products and services. Our interviewees men-
tioned that contracts tend to last only a few years in this sector, after
which renovation could be subject to the result of open tenders or the
administration's preferences. Given the transactional nature of these
interactions, channels for the transmission of knowledge are scarce.
Instead, suppliers must rely on their previous capabilities to satisfy their
clients’ demands.
However, we have learnt that the increasing complexity of the
products and services provided by the innovative suppliers in our
sample has recently led to relationships that are characterized by a
higher degree of asset specificity, which requires more exchange of
information between the contracting firms. Projects in the more
knowledge-intensive stages of the value chain are technologically de-
manding and require important investments from both parties.
Therefore, these suppliers’ interactions with mining companies are
becoming tighter and longer-lasting: once a contract has started,
switching costs increase substantially. Still, relationships remain rela-
tively asymmetric. Local suppliers still have to comply with their cli-
ent's requirements, or they face the risk of their contracts being inter-
rupted. Furthermore, they are strongly dependent on the success of
their businesses with mining firms, while these usually have a wide
variety of potential contractors that they can turn to if something goes
wrong. These dynamics turn reputation and commitment in key de-
terminants when mining companies choose the suppliers they will hire
to handle their more technologically complex needs.
It is important to note that the trajectory of Bisa differs significantly
from those of the other firms in the sample, since this firm was created
as a subsidiary of the mining holding Buenaventura, and offered its
services exclusively to this group's mining projects for more than two
decades. This is a typical case of a hierarchical value chain, where an
important mining company integrated backwards in order to access
customized technical support in a context of low supplier capabilities.
16
This finding is in line with the predictions from the GVC theory for developing
countries, as discussed in Section 2.1.
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However, since 2003 the firm started to interact and offer its consulting
services to other mining firms, which meant a new phase for Bisa,
characterized by relationships like the kind that the other firms in our
sample experience. Still, this firm's ties with a large conglomerate had
important implications on the nature and success of their innovation
efforts (see Section 4.2.1).
4.1.2. Inter-firm linkages and upgrading strategies
Pietrobelli and Rabellotti (2011) argue that the dominant position
of value chain leaders typically leads to innovations that are mainly
driven by these firms’ needs and demands, instead of by local suppliers’
own initiatives. This is particularly true in developing countries, since
suppliers are typically smaller and less autonomous in such contexts. In
fact, all the innovations achieved by the firms we have studied were
directed at satisfying their clients’ needs. However, we have identified
that the suppliers in our sample followed different strategies to in-
tegrate into the more knowledge-intensive stages of the value chain. In
this sub-section, we will analyze these trajectories and their implica-
tions on the nature and scope of the resulting innovations.
First, we have identified that Tumi, Resemin and Exsa adopted a
strategy characterized by the local specificity of their technological
efforts. Since these firms are providers of equipment or consumables for
mining projects, they face strong incentives to continuously pursue
improvements in their products in order to remain competitive in the
market and meet the emerging demands from their customers.
However, local firms do not have the capabilities, scale or reputation to
compete with large multinational suppliers. Therefore, the firms in this
group identified a niche where specific market characteristics limit big
players’ interest to participate. These market niches might be related to
the country's geographic characteristics or other local-specific factors,
such as regulations. According to our interviews, the suppliers that
followed this path took advantage of their local-specific knowledge to
introduce highly innovative solutions to an unattended need in the
market.
Resemin is a good example of this process. This firm used to be a
traditional supplier of drilling machines in the local market, until the
mining company Glencore requested the design and production of a
drilling jumbo that could work in extremely narrow veins for a mining
project in Peru. Resemin took advantage of its experience in the
Peruvian setting and its relationships with local mining companies
(which allowed the firm to test its products in the settings where they
were intended to work) in order to develop the smallest jumbo in the
global market, a machine that significantly increased productivity and
security through the mechanization of a complicated component of
underground mining. Since no determinant exchange of knowledge
occurred through this interaction, the success of its efforts was a con-
sequence of Resemin's technological skills. This experience led Glencore
to request six more drilling jumbos for a project in Zambia with similar
requirements, thus triggering a stage of internationalization and tech-
nological development for Resemin (e.g., they learnt to integrate with
diesel transmission during this period). Now, this firm is globally re-
cognized as a specialist in drilling machines for narrow veins.
Another company that had a similar experience is Tumi. This sup-
plier focused on developing a more productive solution for the digging
of slot raises, a very specialized segment in underground mining that
was very relevant in the Peruvian context. In order to develop this
product successfully, the firm took advantage of its geographical
proximity to underground mines, which provided it with more specific
knowledge of their characteristics. As a result, it created a novel raise
boring machine that employed a more efficient and environmentally-
friendly power system for its functioning and reduced dead time over
safety standards, thus increasing digging speed significantly relative to
the current international standards (the machine is currently in the
process of being patented). In order to introduce its product in the
market, Tumi offered it for testing at low prices in local mines, and
obtained successful results. With this new technology, this supplier has
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been able to engage with new clients in the global market. It now
specializes in the manufacture of machines with the features and pro-
ductive capacity that each mining project requires, which has allowed
the firm to develop a reputation for quality and efficiency in under-
ground mining.
While Resemin and Tumi specialized in solving problems that were
specific of Peru's geography, Exsa is a supplier that took advantage of a
different type of niche. Specifically, this firm identified an issue that
needed to be solved by a locally based firm. In particular, its interac-
tions with mining companies allowed Exsa to learn that higher effi-
ciency and environmental security in rock fragmentation were required
for underground mining operations, and external solutions were hardly
available due to strict international regulations on the trade of ex-
plosives. This led the firm to engage in radical technological efforts (see
Section 4.2.1) and take advantage of its knowledge of Peruvian mines to
develop the Quantex technology, a novel blasting method that allows
for easier and more customized operation, generates savings of up to
20% in the total cost of rock fragmentation, and significantly reduces
environmental risks. This alternative product has successfully been
tested by national and international mining companies, and is already
being used by roughly 40% of the local market. Furthermore, trade
restrictions have induced Exsa to expand its operations through sub-
sidiaries in other countries in the region, a process that is currently in
motion.
These examples show that it is possible for local suppliers to achieve
product upgrading by solving an unattended need in the market, even
when interactive learning with clients is scarce. In fact, the most novel
innovations in our sample occurred among the firms in this group.
Resemin, Tumi and Exsa all took advantage of their experience in the
local market, proximity to the mines, and testing facilities to develop
solutions to problems that were specific of the Peruvian context. These
efforts, in turn, allowed them to build the capabilities required to en-
gage in new and more knowledge-intensive relationships with im-
portant mining companies in the local and international markets.
However, it should be noted that although these firms’ innovations are
highly valued in the market, they are focused on very specialized seg-
ments of the value chain where larger and more skilled suppliers are
less likely to compete. Although the scope of these innovations is still
limited, all three firms are taking advantage of their newly developed
technological skills to expand their participation in global markets and
continue to pursue the technological upgrading of their products.
On the other hand, we have found that suppliers like Fima, Bisa and
Ferreyros followed a different strategy to integrate into the more
knowledge-intensive stages of the value chain. Instead of seeking highly
innovative product upgrading through their positioning in a market
niche, our interviews revealed that suppliers in this group have taken
advantage of their proximity to the mining projects to offer high-quality
and specialized services at more competitive prices. Among these firms,
our interviews revealed that the need for longer relationships and
higher asset specificity led to the development of multiple commu-
nication channels with their clients, which in turn allowed them to
coordinate their activities closely and be constantly aware of their re-
quirements.17 In fact, their activities even require them to have a large
number of workers stationed at the mines, who work jointly with the
mining companies on a daily basis. Naturally, this type of relationship
demands constant and direct communication between the contractor
and its clients, which in turn allows for a fluid exchange of information
and the provision of more efficient and effective services.
Through our interviews, we have identified that a common trait
among these suppliers is that they have all benefitted, although to
different extents, from relationships with larger multinational suppliers
17
Ferreyros is a good example of this type of relationship, since its services require the
installation of a workshop in the mines and the firm provides the human assets for its
functioning.
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in the MGVC that operate through partnerships with local firms.
However, it is important to note that the innovations achieved by these
firms have a rather limited scope, as they tend to be new to the firm or
the local market, rather than the world. Since these companies handle
the most technologically complex activities in their market segment and
provide solutions to their partners directly, local supplier's efforts have
been focused on the provision of more efficient and customized com-
plementary and after-sale services.18 Therefore, these experiences sug-
gest that no real incentives for radical innovations are present in this
model. Instead, their technological improvements display a rather in-
cremental nature.
Ferreyros, for example, has been the official Caterpillar distributor
in Peru since 1942. The global importance of this company in the
equipment sector has allowed this local supplier to gain a strong posi-
tioning in the Peruvian market, with over 20,000 machines operating in
the country by 2014. Still, stronger competition pushed Ferreyros to
engage in important technological efforts to improve the quality of its
complementary services (i.e., monitoring and reparation), given that
design and manufacture are carried out by its partner. In recent years,
the firm has invested in improving its monitoring and reparation sys-
tems, earning multiple distinctions for its innovative initiatives in the
Caterpillar network (e.g., it developed a center for the operation of
mining shovels that is unique among Caterpillar distributors). This al-
lowed it to increase the quality and efficiency of its services through
process upgrading, thus gaining global recognition and strengthening
its position both in Peru and in the other countries where it operates.
A similar case is the experience of Fima, which partnered with
Metso (a multinational company specialized in mining equipment) soon
after its creation in 1969. Our interview with this firm revealed that it
benefitted from its partner's reputation to gain access to global markets,
as most of its contracts with international mining firms were acquired
through Metso. This allowed Fima to engage in technological efforts to
developed strong skills for customized product design, particularly in
the case of mining spools. Additionally, they have improved their post-
sales services (such as operation and maintenance), thus com-
plementing product with process upgrading. As a result, this firm
gained an international reputation for the quality and adaptability of its
services, which has allowed it to sell under its own brand to both local
and international clients.
Finally, we found that Bisa also followed a similar upgrading
strategy in the engineering and construction stage of the value chain.
This supplier had only provided technical support for Buenaventura
since its foundation, but an initiative by Fluor (a global EPC com-
pany19) to work jointly with a local supplier in the mining project
Yanacocha led to an alliance between these two firms. As our interview
revealed, Bisa provided its experience of the local context and needs,
while Fluor provided highly specialized technological capabilities. Al-
though this alliance was not permanent, the cooperation and trans-
mission of knowledge between the two firms triggered a learning pro-
cess in Bisa, which allowed it to integrate and professionalize its
services and develop a methodology of work based on international
standards (thus achieving significant process upgrading20). During this
period, Bisa also took advantage of its knowledge of the Peruvian
context to complement its services with the provision of high-quality
social and environmental studies that satisfy the country's increasingly
18
However, the knowledge acquired through its partnership with Metso did allow
Fima to engage in inter-chain upgrading: the firm has expanded its products and services
to many other economic sectors where it is not necessarily linked to a major supplier. For
example, Fima has made major technological contributions to the provision of equipment
for the processing of fish flour, and ti now sells its products to many Peruvian and in-
ternational fisheries. Unlike the situation in its mining activities, technological upgrading
in the fishing sector drove the firm to acquire patents to protect its innovations.
19
EPC stands for engineering, procurement and construction services.
20
During this period, Bisa also achieved inter-chain upgrading, since it took advantage
of its newly acquired capabilities to expand into other industrial and infrastructure sec-
tors.
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complex regulations (e.g., Environmental Impact Assessments, mine
closure plans, social studies, among others). In this process, the firm
also acknowledges the reputation gained by having worked alongside
with Fluor, which allowed it to expand the scope of its markets. How-
ever, and similar to the cases of Ferreyros and Fima, its efforts were
mainly focused on increasing the value of its services through pro-
gressive technological improvements, rather than achieving local or
global innovations.
4.2. Determinants of innovation at the firm and local levels
So far, we have analyzed how the governance patterns along the
global value chain can pose incentives for different upgrading strate-
gies, with important implications on the nature and scope of innovation
efforts among local suppliers. However, in Section 2.1we argued that
the GVC framework is not enough to explain the determinants of in-
novation by local suppliers, since technological efforts are an en-
dogenous process that also depends on a firm's capabilities (Morrison
et al., 2008; Pietrobelli and Rabellotti, 2011). In this section, we will
review the factors that allowed the firms in our sample to accumulate
enough technological skills in order to take advantage of the opportu-
nities to integrate into more knowledge-intensive stages of the value
chain. Afterwards, we will also assess the role of the institutional setting
in which these firms are located in fostering (or hindering) their in-
novation efforts.
4.2.1. The process of learning and capability building
We already mentioned in Section 4.1.1 that mining companies re-
quire a high degree of technological capabilities from their contractors,
due to the complexity of the knowledge managed in these sectors. This
is supported by the fact that all of the innovative firms we have iden-
tified were founded before the 90 s, which indicates that incumbency is
a strong determinant of successful upgrading. However, we have not
analyzed the technological trajectories of these suppliers, since we as-
sumed that they already had the skills required to integrate into the
more knowledge-intensive stages of the value chain.
In this Section, we will focus on the nature of their learning pro-
cesses, from the perspective of the firm's internal development. From
the interviews conducted, we have identified that all the suppliers ex-
perienced two clear stages of development before being able to engage
in successful innovation efforts. First, they went through a long period
of skill development and accumulation of experience as standard pro-
viders of products or services in the local value chain. Then, after they
reached a certain point in their learning curves, they began to make
explicit internal efforts to seek technological upgrading. We will now
analyze each of these stages in detail.
4.2.1.1. Experience in the market. In our fieldwork, we identified that
most firms in our sample started as providers of standardized products
and services. Tumi, for instance, used to be an equipment contractor
before manufacturing its own machines, while Resemin dedicated to
the distribution of spare parts for many years. Similarly, Exsa was a
standard producer of explosives for decades, but in recent years it
expanded into the provision rock fragmentation services. In these cases,
reverse engineering and the adaptation of the designs and production
techniques of their competitors allowed these suppliers to become
manufacturers of final equipment, thus developing new skills and
integrating into more knowledge-intensive stages of the value chain.
In fact, Resemin actually failed in its first effort to build its own drilling
machine, but took advantage of the experience to identify the main
challenges it faced in terms of its technological capabilities. For these
firms, long learning periods were crucial to progressively increase the
technological complexity of their activities. As we already described in
Section 4.1.2, they have recently reached a point in their learning
curves that allows them to successfully introduce innovative products
to the market.
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Time in the market also allowed the suppliers in our sample to es-
tablish contacts with important players in the industry and build a re-
putation for commitment and good quality in their products and ser-
vices. As we have already explained, this allowed for easier access into
the mines, which contributed to their development of local-specific
knowledge and increased the possibilities for product testing. The ac-
cumulation of social capital by these suppliers also facilitated the in-
troduction of their innovations to the market, since local mining com-
panies already relied on their technological capabilities. For example,
Tumi has benefitted from becoming familiar among mining firms in
terms of searching costs, since potential clients now approach the firm
directly when they require a highly specialized raise boring machine. In
a similar fashion, Resemin relied on its reputation as a skilled manu-
facturer in the local market to handle the technological requirements of
important mining companies like Glencore when they appeared.
Finally, we have found that support from other companies in the
value chain was key for the development of technological capabilities
among some local suppliers in our sample. This relates to the case of
Bisa, which benefitted from constant transmissions of technology and
human capital from Buenaventura since its foundation. This firm gained
valuable experience on the specific characteristics of Peruvian mines
through its participation in Buenaventura's projects, and also relied on
this company's reputation to access important contracting opportu-
nities. In fact, Bisa's dependence on Buenaventura was crucial for its
partnership with Fluor, since this holding was a major shareholder of
the Yanacocha project. On the other hand, Fima and Ferreyros both
benefitted from important transmissions of knowledge from their global
partners. Regarding the former, its relationship with Metso allowed this
firm to access advanced mining equipment since from the beginning,
thus facilitating its learning process. In the case of Ferreyros, we learnt
that maintaining a close relationship with Caterpillar for such a long
time has enabled this local supplier to achieve high levels of internal
capabilities through multiple mechanisms, such as collaboration be-
tween workers of both companies in certain tasks (e.g., assembly of
machines), and direct transmission of complex technologies (e.g., ad-
vanced software).
As these examples have shown, experience in the market contributes
to the process of skill accumulation through mechanisms such as the
accumulation of technological skills, the acquisition of social capital,
and the development of local-specific knowledge. Additionally, some
firms in our sample benefitted from transmissions of knowledge from
external sources, mainly multinational partners. This period as standard
and smaller suppliers was crucial for the firms in our sample to reach a
point in their learning curves where they could engage in technological
efforts to upgrade their products and services.
4.2.1.2. Internal efforts. Through our interviews, we have learnt that
after accumulating experience in the market and technological skills,
the suppliers in our sample engaged in explicit internal efforts to
enhance their technological capabilities in recent years. In this regard,
the management literature predicts that a firm's organizational
structure can deeply affect the nature and outcomes of its innovation
efforts. According to Argyres and Silverman (2004), higher transaction
costs between the different areas of a firm increase the specificity of its
innovations and reduce their technological complexity and impact. In
contrast, centralizing technological efforts in one area may increase a
firm's ability to engage in large-scale upgrading initiatives. Our
fieldwork revealed that most of the firms interviewed did not have a
fully developed R & D department or an accounting system that
quantified their R & D expenditures (they had to make special efforts
to provide us with this information). However, we identified that
organizational restructuring processes conducted by a few firms in our
sample were determinant for the success of their upgrading efforts.
Exsa is a clear example of a firm that conducted an organizational
restructuring process in order to focus the company's innovative ac-
tivities in one area. In 2013, the firm created the office of Innovation
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Management, which centralized all of the firm's technological efforts. In
our interview, we learnt that this allowed for the definition of common
R & D goals at the company level, which in turn led to a significant
increase in R & D investment in the following years. Another firm that
followed a roughly similar strategy is Bisa, which took advantage of its
first contract with Yanacocha to generate synergies between its dif-
ferent areas and develop a joint and professional methodology. In ad-
dition to this process, the firm also created a new area to manage
Engineering Projects (2005), which contributed to centralize the efforts
to upgrade their services. These examples show that restructuring
processes may adapt to a firms’ specific innovation paths. For Exsa,
centralizing R & D was determinant to achieve highly innovative pro-
duct upgrading. For Bisa, on the other hand, articulating its services
was an effective strategy for process upgrading.
A second type of internal efforts that we identified in our sample is
related to cultural reforms inside the firm. In fact, most of the suppliers
that we studied agree that technological progress has taken a central
role in the mining sector, thus increasing the pressure for change in the
organizational culture among local suppliers. Exsa also stands out in
this matter, since this firm has been making important efforts to in-
stitutionalize a customer-oriented vision that allows them to gather the
information required to focus their innovations on the needs of their
clients. For instance, this firm generated new and more direct channels
of communication with current and potential clients (such as periodical
meetings and events), in order to align its innovation objectives with
the mining companies’ most urgent needs. In fact, this process allowed
Exsa to identify two main needs in the explosives segment of the mining
value chain: (i) urgency to reduce costs and (ii) environmental con-
cerns. This experience triggered the technological efforts that allowed
the firm to develop the Quantex technology, an innovative solution for
rock blasting that satisfied these demands.
Finally, our fieldwork revealed that most of the suppliers that
achieved technological upgrading supported their innovation efforts
with significant investments in ICT and human capital formation. For
instance, in 2003 Bisa made important investments in the acquisition of
specialized software, thanks to the financial support of the
Buenaventura Holding. Fima is another supplier that reinvested a high
percentage of its utilities in the automation of its systems and the hiring
of highly qualified personnel during the last decade. On the other hand,
some suppliers made important investments in training their labor
forces and incentivizing an innovation-oriented work culture. Exsa, for
example, took advantage of Grupo Breca's contacts to organize visits
and workshops in association with prestigious research institutions
(e.g., Singularity University, MIT and UTEC) for its workers to learn
about past innovation experiences. In turn, Ferreryros opened an in-
ternal training center with advanced technologies (e.g., a mining shovel
simulator that is unique in the world) and developed incentives to
foster innovative ideas among its workers.
Overall, these experiences show that internal technological efforts
require a high degree of investment (mainly on systems and human
capital), which in turn might partly explain why most innovative sup-
pliers in Peru were incumbents with an established and considerable
local market participation. Furthermore, the examples analyzed also
provide evidence that economic ties to larger corporations play an
important role in this process. Indeed, support by the Buenaventura
holding and Grupo Breca were essential for Bisa's and Exsa's innovation
efforts, both in terms of financial resources and sources of knowledge.
4.2.2. The role of the local context and institutions
In the previous section we discussed the firm-level factors that al-
lowed local suppliers to achieve technological upgrading in the context
of a global value chain. However, local determinants of innovation are
not only limited to a firm's internal capabilities and efforts, but also to
the context where it is located. In this section we will assess the role in
the process of capability building of four fundamental key aspects of a
firm's institutional environment: (i) macroeconomic context and
10
Resources Policy xxx (xxxx) xxx–xxx
policies in Peru, (ii) quality and availability of human capital, (iii)
capabilities and involvement of technology organizations, and (iv) local
networks and coordination systems.
4.2.2.1. Macroeconomic context and policies in Peru. In the current
context where investment in mining is shrinking due to the fall in
mineral prices, the risk of investing in innovation becomes even greater.
Innovation involves a significant risk for the company, especially since
technologies are changing at a faster pace. Considering that a period of
low demand considerably increases the cost of innovation efforts,
decreasing demand might potentially deter the process of knowledge
accumulation among the local suppliers in our sample. Accordingly,
some of the firms interviewed indicated that uncertainty and low return
expectations have been important barriers to technological upgrading
in the latest years. Fima, for example, was forced to shut down one of its
four plants due to low demand. Bisa, on the other hand, used to have a
laboratory for metallurgical research, but had to suspend the project
because it became too expensive due to lower mining investment. On
the upside, most of the firms in our sample reported increasing exports
and turnover, despite the sector's recent performance.
Still, governmental support for innovation remains low. In fact, Peru
only invested 0.12% of its GDP in R & D in 2015, well below the Latin
American and OECD averages (0.67% and 2.38%, respectively) (OECD,
2015a, 2015b). This might be partly explained by the fact that until
2015 there were no tax credits for R & D in Peru. In our interviews,
some of the firms indicated that they lacked formal incentives to
quantify their R & D costs explicitly, which in turn limited their possi-
bilities of engaging in an explicit innovation strategy. However, the
recent approval of tax reductions for companies that conduct innova-
tion projects through their R & D departments or through national
technological services suppliers automatically creates incentives for
companies to keep track of these expenses. According to most economic
literature, fiscal incentives have a stimulating effect on innovation ef-
forts, although this effect has been proved to be very heterogeneous
between firms and countries (Hall and Van Reenen, 2000). Further-
more, other studies on innovation in NRI in developing countries have
found that governmental R & D policies play a key role in enhancing the
technological efforts of local firms (see Marin and Stubrin, 2015, for an
example in the Argentinian seed industry). It remains to be seen whe-
ther these policies will have the desired impact on local firms’ tech-
nological efforts.
4.2.2.2. Quality and availability of human capital. A second dimension
through which local institutions can influence a firm's capabilities is the
generation of human capital. In Peru, the rapid growth of the mining
sector driven by the investment flows in the early 1990s brought a
significant increase in the demand for skilled labor, a need that was not
covered at the local level. Given the shortage and deficiency in the
sector, local mining companies decided to solve this problem by
supporting the creation of education and research centers, first
creating TECSUP and more recently UTEC. The former is focused on
providing workers with technical abilities and specific knowledge for
the industry, while the latter intends to fill the gap for highly qualified
engineers with management skills. In our interviews, most suppliers
stated that they maintain ties with institutes like TECSUP and a few
others (e.g., Fima also mentioned SENATI) for the recruiting of
technical workers. Some suppliers even mentioned that they
collaborate with TECSUP for firm-specific training. Ferreyros, for
example, once hired this institute to conduct a two-year program to
train future workers of the firm on the use of a new Caterpillar system.
In the case of UTEC, these relationships are still scarce due to the short
time that has passed since this university's creation (it has yet to
produce enough graduates).
However, almost all of the suppliers we interviewed mentioned that
the quality of the labor force in Peru is not enough for their technolo-
gical needs, which constitutes an external barrier for their innovation
O. Molina
efforts. For instance, Ferreyros considered that aside from TECSUP,
other institutes seldom provide workers with the mechanical skills re-
quired for the mining sector. Due to this gap in the local setting, this
firm has adopted (with the support of Caterpillar) a high scale program
to form its workers “in-house”, through a career line that consists on
several phases of specialized training. A similar case is the experience of
Fima, which mentioned TECSUP as an important source for recruiting
but also highlighted the need for further training programs inside the
company, in order for the workers to achieve the minimum set of skills
necessary for its activities. Regarding highly qualified workers (e.g.,
engineers), this firm also mentioned that it often needs to recruit for-
eign employees due to the scarce supply in the local market.
4.2.2.3. Capabilities and involvement of research organizations. Pietrobelli
and Rabellotti (2011) note that research institutions are essential for
innovation among local suppliers in developing countries, as they typically
provide the “public goods” required for technological efforts at the firm
level. According to these authors, these organizations simplify the
dissemination of complex knowledge and contribute to easier
collaboration among local value chain actors. Moreover, universities and
research centers face different incentives than other key industry actors,
which makes them less likely to appropriate knowledge created in R & D
alliances (Bercovitz and Feldman, 2007). Despite the possibility of
accessing complex knowledge through foreign organizations, in many
cases local-specific solutions are necessary.
In Peru, our interviews revealed that a few organizations conduct
research activities related to the mining industry. An example of these
efforts is the case of TECSUP, which is currently addressing the pro-
blems related to deposits containing high levels of arsenic. Because of
its specific nature, this problem demands a solution by a local agent.
Researchers at TECSUP have already developed a new technology to
address this issue, but it is still too expensive for mining companies to
adopt (Corcuera, 2015). On the other hand, our interview with UTEC
revealed that this university intends to create a center for the assess-
ment of local niches in the market (e.g., high altitude mining and the
problems related to narrow veins), as well as joint research initiatives
with the cooperation of mining companies and suppliers. However,
these examples show that external sources of scientific research are still
in the early stages of development and still struggle to establish strong
linkages with either mining companies or suppliers.
Accordingly, our interviews with mining suppliers revealed that
research centers in Peru still play a weak role in fostering innovation in
the mining sector when compared to other countries of the region.
Although roughly one third of the firms analyzed have worked together
at some point with universities to develop new products (e.g., Exsa's
alliance with UTEC), this process is not continuous and its impact re-
mains limited. According to the suppliers interviewed, this is mainly a
result of the low capabilities of research centers and the weak links
among different actors in the industry. To compensate for this gap in
the local mining sector, some local suppliers have managed to maintain
innovation processes within the company, not requiring support from
research centers (e.g., Tumi and Bisa), while others rely mostly on the
R & D activities of their foreign partners, such as Ferreyros and Fima.
Nevertheless, most firms in our sample believe that in the medium term
they will need to create stronger partnerships with research centers to
increase their technological capabilities.
4.2.2.4. Local networks and coordination systems. Finally, an important
characteristic that we identified in our fieldwork is the lack of
organizations that can play a coordinative role between mining
suppliers (or between mining companies and suppliers) in the
Peruvian mining sector. Economic literature has shown that industrial
clusters allow for efficient information flows that improve firm
performance and foster technological upgrading (Giuliani et al.,
2005). However, our research revealed that local mining suppliers in
Peru operate mostly in an isolated environment where cooperation
11
Resources Policy xxx (xxxx) xxx–xxx
among firms is difficult. As Bamber et al. (2016) note, this lack of
collaboration in the local mining sector limits the potential to fully
understand the needs of the sector and develop a medium to long-term
common strategy. Furthermore, external support could help local
suppliers to access the mining companies’ technological demands,
especially in a context where almost no explicit channels are
established. In this regard, key industry stake-holders such as the
government and large corporations could potentially intervene in
these situations, thereby reducing transaction costs for local mining
suppliers and facilitating the diffusion of knowledge.
A useful example is the case of the Chilean non-profit corporation
“Fundación Chile”, which shows the potential benefits of external in-
termediation in the sector. This initiative was created jointly by the
government and private sector agents to foster the development of
technological capabilities among local suppliers in the mining industry
and other economic sectors, through the development of firm networks
and specific support programs (Atienza et al., 2016). Particularly, it has
been successful in strengthening the ties between mining suppliers,
allowing for larger flows of knowledge and the establishment of
common industry goals. Following the model of similar organizations in
developed countries such as Australia, Fundación Chile is promoting a
“Program for the development of world-class suppliers”, which con-
nects mining companies with specific technological needs to local
providers of potential solutions. This scheme benefits both parties, since
the resulting innovations may be commercialized by the suppliers after
a short period. The program has already fostered many cases of suc-
cessful technological upgrading, and it is currently making efforts to
expand its scope (Meller and Gana, 2015).
As our interviews revealed, some mining companies in Peru are
already acting on this issue. A good example is Antamina's program
“Development of Suppliers of Excelence”, which was already mentioned
in Section 4.1.1. This initiative allowed a considerable number of
suppliers to engage in commercial relationships with Antamina and
other mines. Although capabilities in these firms were still relatively
low, they were able to develop solutions for certain needs of the mining
industry that did not require high technological complexity.
However, most initiatives of this kind seem to be oriented to solving
the social tensions that may harm the mining companies’ operations,
instead of generating potential sources of technological innovations. As
pointed out in Section 2.2, the mining industry in Peru is currently
characterized by growing social conflicts that complicate mining in-
vestment. In this regard, some of the mining firms interviewed have
developed programs that seek to train locals so that they can form their
own businesses and provide products and services to the mines directly.
An example of how relationships between mining companies and their
suppliers are driving value creation locally is the Anglo American
mining company's “Progress” program, which trains local entrepreneurs
in setting up and running businesses that can supply basic and stan-
dardized services to the mines. The mining company Yanacocha also
promotes the development of nearby communities through the hiring of
local operators whenever it is possible. Nevertheless, since these efforts
are usually aimed at reducing social conflict and supporting commu-
nities living around the mines, the support given to local suppliers is
seldom in complex sectors that involve higher technical and scientific
requirements.
5. Concluding remarks
In this paper, we studied the extent to which local suppliers are
taking advantage of the opportunities for linkages in knowledge-in-
tensive activities that have arisen in the Peruvian mining sector.
Through the analysis of the technological trajectories of eight local
firms (six mining suppliers that achieved technological upgrading and
two educational and research centers), we gathered new evidence on
the factors that influence local learning and integration into the higher
value-added stages of the mining value chain. Given the low
O. Molina
capabilities and strong external dependence typically found among
suppliers in resource-rich developing countries, we paid special atten-
tion to the nature of these firms’ learning processes, as well as their
interaction with global market dynamics in determining the opportu-
nities for innovation efforts and the scope of their results.
Our fieldwork revealed that innovation by local mining suppliers in
Peru remains limited, since important international companies still
undertake the most complex outsourcing activities. However, recent
trends in the global mining industry (e.g., higher operation costs, in-
creasing outsourcing and near-sourcing, strict social and environmental
regulations, among other factors) are generating new opportunities for
local suppliers to integrate into the more knowledge-intensive activities
in the value chain. In this regard, we found that a small group of in-
cumbent firms has taken advantage of this context to engage in tech-
nological efforts and expand their markets in recent years. These firms
benefitted from their experience and contacts in the local market, since
mining companies typically value reputation in the global value chain
and expect a high degree of technological capabilities from their con-
tractors. Still, we found that these firms followed different strategies to
integrate into the more knowledge intensive stages of the value chain,
which directly affected the direction and scope of their innovation ef-
forts.
On the one hand, our interviews revealed that some suppliers (i.e.,
Tumi, Resemin and Exsa) have managed to achieve product upgrading
by providing a solution to the specific needs of mining companies op-
erating in Peru. In order to achieve this, they took advantage of their
local-specific knowledge, as well as their contacts in the market and
proximity to the mines. The resulting innovations had a high degree of
novelty and significantly increased the value of their products, thus
allowing these suppliers to position themselves in international mar-
kets. On the other hand, we learnt that firms like Bisa, Fima and
Ferreyros experienced a different type of trajectory. Instead of focusing
on product upgrading, these firms focused their technological efforts on
improving the quality of their complementary services and their ability
to adapt to each project's specific characteristics, thus achieving process
upgrading. Furthermore, all three of these suppliers have benefitted,
although to different extents, from working jointly with larger global
mining suppliers that operate through partnerships with local providers
of specialized services.
These experiences provide evidence that technological upgrading
may be achieved by local suppliers in Peru. However, it appears that
while firms specializing in providing competitive complementary ser-
vices tend to achieve incremental technological improvements, radical
innovations are more likely to occur among suppliers focusing on a
specific market niche. Still, it is important to note that all the firms in
our sample are very new in knowledge-intensive activities, where the
scope of their innovations remains limited. These suppliers have yet to
reach the most advanced stages of their learning curves, where the
potential for positive spillovers into the economy is even larger. In fact,
our interviews revealed that most of them are still in the process of
developing an innovation strategy that allows them to centralize R & D
activities and budgets in one area. Therefore, it is important to provide
appropriate support and incentives for these efforts to continue.
As we mentioned at the beginning of this paper, a growing focus is
being placed on the role of the local institutional setting as determinant
of innovation among local firms. In this regard, our interviews have
revealed that support by external organizations remains weak in the
Peruvian context. For instance, government expenditure in R & D is low,
and only recently have fiscal incentives for R & D activities in the pri-
vate sector been approved. Furthermore, scientific and educational
12
Resources Policy xxx (xxxx) xxx–xxx
centers are scarce and their quality is limited. Since these organizations
provide public goods that are essential for technological efforts,
Peruvian suppliers’ capabilities are constrained by a lack of external
sources of local-specific research and human capital. Therefore, both
the government and private sector should intervene to strengthen these
organizations’ capabilities, as well as their linkages with local firms in
the sector. Although mining companies have already acted upon this
issue by supporting the creation of UTEC and providing funds for its
research programs, it is still too soon to assess whether this institution
will be able to fill this gap.
Another important limitation to the technological efforts by local
suppliers is the lack of organizations that provide coordination channels
between them. Our interviews revealed that mining suppliers in Peru
mostly operate in isolation, which prevents them from taking advantage
of potential linkages with other firms or external organizations. This
situation stands in contrast with other similar countries, where policy
schemes to support innovation are more advanced. A clear example is
the case of Fundación Chile, which has facilitated larger flows of
knowledge between suppliers and easier access to the mining compa-
nies’ technological needs. In this regard, both the government and
mining companies should acknowledge the potential benefits of fos-
tering coordination in the Peruvian mining industry. Although some
mining companies are already seeking to generate local linkages
through targeted programs, these initiatives have a very limited scope.
Since they typically target low-skilled suppliers as a way of handling
social tensions, they provide no platforms for technological develop-
ments at a larger scale.
Overall, the aforementioned weaknesses in the institutional context
may have an important role in explaining why innovation is still scarce
among Peruvian mining suppliers. Furthermore, this lack of support
hinders the possibilities for technological development among emer-
gent suppliers that do not have access to external sources of knowledge,
such as multinational companies or research centers. The current con-
text in the mining industry poses some additional challenges for
Peruvian suppliers seeking technological upgrading, since international
prices are falling and mining investment faces grater uncertainty.
Nevertheless, this new context also offers some opportunities for local
suppliers. Stricter environmental and social regulations require in-
novative solutions, while the need for higher productivity in more
complex geographical settings is increasing. In such a setting, we be-
lieve that stronger support from the government, the private sector and
local organizations will be essential for both incumbent and emerging
suppliers to achieve further technological upgrading.
Acknowledgements
The author kindly acknowledges financial support provided by the
Inter-American Development Bank. The author would like to thank J.
Olivari, C. Pietrobelli, P. Figueiredo, J. Katz, A. Marin, L. Strubin, and
participants of the Seminar at Fundación Chile, as well as two anon-
ymous referees, for their helpful comments. A. Aron and D. Santa María
provided excellent research assistance.
Funding
This work was supported by the Inter-American Development Bank.
The opinions expressed in this paper are those of the author and do not
necessarily reflect the views of the Inter-American Development Bank,
its Board of Directors or the countries they represent.
O. Molina Resources Policy xxx (xxxx) xxx–xxx

Appendix A

See Fig. A1.

Fig. A 1. Peru´s natural resources reserves 2015 (% of world reserves). Source: (USGS, 2015).

Appendix B

See Table B1.

Table B1
Mining production and exports (2005–2015).
Source: MINEM and BCRP (2016)

Year Mining GDP Total GDP Mining Mining Total Mining

GDP / Exports Exports Exports /
US$ MM US$ MM GDP US$ MM US$ MM Total
Exports

2005 13,102 83,022 15.78% 2967 5263 56.37%

2006 13,473 90,091 14.96% 4506 7287 61.83%
2007 14,662 102,138 14.36% 5572 8976 62.07%
2008 16,928 119,086 14.21% 6178 10,587 58.35%
2009 16,637 117,138 14.20% 5443 8994 60.51%
2010 17,920 135,117 13.26% 7676 12,651 60.67%
2011 18,561 148,019 12.54% 10,009 16,864 59.35%
2012 19,876 163,361 12.17% 10,404 17,959 57.93%
2013 20,383 169,081 12.06% 8811 15,874 55.50%
2014 19,209 164,579 11.67% 7234 13,920 51.97%
2015 18,688 151,294 12.35% 5905 10,732 55.02%

Appendix C

See Table C1.

Table C1
Interviewees.

Name Firm/Organization Position

A. Mining companies
Enrique Alania Antamina Logistics Manager
Raúl Ponce de León El Brocal Logistics Manager
Victor Gobitz / Henry Aragón Milpo CEO / Head of Investor Relations
Raúl Jacob Southern Copper Corporation CFO
Ricardo Sáenz Yanacocha Director of Corporate Social Responsability
Luis Marchese Anglo American CEO
A. Industry experts
Aldo Brigneti Anglo American (Mining company – Private Sector) Senior Environmental Manager – Michiquillay Project
Carlos Casas Center for Mning and Sustainability Studies - CEMS Executive Director
(Academia)
Juana Kuramoto GRADE (Academia) / CONCYTEC (Government) Researcher Associate / Director of Plans and Programs
Ricardo Labo Rio Tinto (Mining company – Private Sector) Former principal Advisor for Latin American Global External Affairs
Wilfredo Vivanco / Walter Sanchez MINEM (Government) Director of Mining promotion / assistant director of mining
promotion
Angel Murillo National Society of Mining, Oil and Energy – SNMPE (Civil Assistant director of the mining sector
Society)
(continued on next page)

13
O. Molina Resources Policy xxx (xxxx) xxx–xxx

Table C1 (continued)

Name Firm/Organization Position

Penny Bamber CGGG, Duke University (Academia) Research Associate

A. Local suppliers
Juan Vélez Bisa Engineering Manager
Ernesto Velit FIMA CEO
James Valenzuela Resemin CEO
Guillermo Escobedo TECSUP Project Manager
Marc Blattner / Carlos Dellepiane Tumi General Manager / Sub General Manager
Ignacio Montero UTEC Director of Innovation
Gustavo Gómez Sánchez / Tommy Muhvic Exsa CEO / Marketing and Innovation Manager
José Miguel Salazar Ferreycorp (owner of Ferreyros) Corporate Manager of Communications and Image

Appendix D

See Table D1.

Table D1
Mining companies in the sample.
Source: MINEM (2014)

Mining Company Products Region % of mining Incomea (US$ MM) Company Size Foreign capital Length of operation
GDPa

Antamina Copper, Silver, Lead, Ancash 16.8 2504 Very large 100% (foreign) 1996 (intermediate
Molybdenum length of time)
Southern Copper Copper, Molybdenum Moquegua 13.8 2482 Very large 100% (foreign) 1960 (long time)
Corporation
Yanacocha Gold, Silver Cajamarca 4.1 1210 Large 51.34% (equally 21 years (intermediate
divided) length of time)
El Brocal Silver Sulfide, Lead, Pasco 1.9 223 Medium sized 0% (domestic) 1956 (long time)
Zinc, Copper
AngloAmerican Copper Moquegua – Project in development (US$ Very large 100% (foreign) Pre extraction (short
5000 −6000 MM CAPEX) time)
Milpo Zinc, Lead, Copper Junín 6 104 Medium sized 60% (foreign) 1949 (long time)

a
Data refers to 2014 levels.

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