Peru’s large miners are getting increasingly worried lawmakers may tamper with rules around mineral rights as congress prepares to discuss a proposed law favouring small-scale operators.
Peru, the world’s No. 3 copper producer and South America’s top gold exporter, grants concessions that allow mining giants such as BHP Group, Glencore and Anglo American to explore huge swaths of territory for decades before starting production.
The concessions are a cornerstone of the country’s mining industry, and potential changes could jolt Peru’s economy and discourage global investment. However, the rise of illegal mining as well as years of production delays have prompted some lawmakers to call for giving more and shorter-term concessions to smaller operators that can start production immediately.
The concessions were a key topic in private conversations at last week’s Perumin conference. One of the few open mentions came from Peruvian President Dina Boluarte, who said at the closing ceremony that her government had made proposals to congress, including “changes to the concessions regime.” She didn’t elaborate.
Peru’s congress is discussing bills to update the legal framework for small-scale miners in a way that will encourage their formalization. Some of those bills include provisions to revoke concessions deemed to be idle or underutilized. It is unclear if congress will pass any of those bills, but regardless, the issue is likely to spill over to presidential and legislative elections next year.
Ivan Arenas, who consults mining companies on how to navigate social conflicts, said illegal miners are behind the push and are “making up lies to try to legitimize taking over third parties’ concessions that aren’t theirs. It feels like their message is starting to stick.”
Peru’s mining ministry declined to comment.
Mining executives voiced similar concerns during private conversation on the sidelines of the conference, which drew 60 000 people to Arequipa.
“It takes about 40 years to start production at a mine in Peru,” said Carlos Gallardo, the general manager at the Peruvian Institute of Economics. “So to consider cutting down concession time periods to 10 years or so is nonsense that will ultimately disincentivise large-scale formal mining investment.”
Many said red tape makes it all but impossible to expedite the construction of mines. In fact, cumbersome permitting was the reason the Peruvian Institute of Mining Engineers recently commissioned the Peruvian Institute of Economics, an industry-funded think tank known as IPE, to produce a study on the importance of maintaining the concessions.
The study, co-authored by Gallardo, concluded proposals to revoke concessions over claims they have been unused for too long “ignore the reality of the sector” and just how long it takes to bring a mine online in Peru.
IPE estimates illegal gold mining will account for $12-billion in exports in 2025. It also estimates that about $7-billion in future copper projects are stalled because concessions have been invaded by illegal miners. Those include Southern Copper’s Michiquillay and Los Chancas projects, as well as First Quantum’s Haquira copper project.
With so many issues complicating the concessions process, Jose Farfan, legal adviser for Anplaben, a trade association that represents processing plants that buy ore from artisanal producers, said the conversation might be moot.
“There is no consensus right now in congress,” Farfan said. “It is a taboo subject.”