International ConferenceEmerging Oil, Gas and Mining

countries  

Peru as a mining, gas and oil country:

New tendencies and old mistakes

Rodolfo BejaranoMay 14, 2014

Peru in world rankings of mining production

Mining in Peru

Exports: 61% Mining 12% Oil and Gas

Mining in Peru

Investment in mining (US$ millions)

Mining in Peru

Map of Mining Units

2016 - 2030 Operation Extension Exploration

Socio-enviromental Conflicts

Mining in Peru

Mining Oil and Gas Other

The paradox of resource wealth vs. development

Poverty in mining regions

Human Development Index

Regions in Peru

Mining in Peru

Growth of the extractive sector (mining) driven by foreign investment and high price cycle from 2004 onwards. Rising prices explain between 70% to 80% growth in the value of mining production.

A set of tax benefits and exemptions protected by legal stability contracts to favored companies in the appropriation of income: debate on the windfall tax, results Voluntary Contribution Miner (2006). In 2011 the Special Tax and Special Assessment miners are given.

The companies have been the main winners with incomes that allowed the extraordinary high prices. The mining profitability (net income / sales) 30% in 2013.

Revenues from mining activities are very volatile due to international crises: affecting mining and petroleum Canon.

Extractive revenues

Contribution of mining and hydrocarbons to tax revenues 2001- 2013

Extractive revenues

Canon: 50% of income tax is transferred to areas of operation

Extractive revenues

The mining canon in 2014 has been reduced to 50% compared to 2012. This occurs in the absence of stabilizing mechanisms/compensation are generating complaints from authorities and social protest.

Falling revenues affects canon regions differentiated manner. La Libertad, Arequipa, Cajamarca, Ancash, Moquegua and Tacna would be the most affected regions.

Ministry of Economy answer: compensation (290 million) + offer loans (up to 500 million) by 2013.

By 2014: reduction of canon + re-centralization budget. The budget of the national government increased by 15% and local governments will be reduced.

Extractive revenues

Canon transferred to subnational governments (S/. Millions)

Extractive revenues

The current distribution scheme that favors the provinces and regions is no longer sustainable due to inequity: intra-regional and inter-regional.

Redistribution of canon is necessary but insufficient for the little weight that canon represents in total investment budget (20%). We must discuss the distribution of the total budget.

Extractive revenues

Redistribution and use must be discussed considering: Improving equity in budget allocation. Stabilization of expenditure in medium term

(stabilization funds, savings funds) Improved allocation and quality of spending. Public participation in defining use of resources. Transparency in incomes and expenditures. Promote and development alternatives and sustainable

productive activities .

Extractive revenues

Thanks