Peruvian miners reject proposal to raise taxes because they say they risk US$50 billion in investments

RIO DE JANEIRO, BRAZIL – The union that brings together the largest mining companies in Peru today rejected the Government’s proposal to raise the tax burden on the sector by at least three percentage points and said that they risk more than US$50 billion in the future investments in the world’s second-largest copper producer.

The Minister of Economy, Pedro Francke, said on Sunday that according to a report by the International Monetary Fund, which advises Peru on tax matters, the mining tax level is 41.7% on average, lower than other countries such as Chile and Canada, and that is why they are seeking to raise it to finance mainly health and education programs.

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The National Society of Mining, Petroleum, and Energy stated that this proposal “irremediably erodes” the competitiveness of mining, the engine of the Andean country’s economy.

“We consider that there is ample evidence that the tax burden on mining currently approaches 50% of profits and is higher than that existing in Chile (40.7%), Canada (35.5%) and Australia (44.3%), mining countries with which Peru competes directly,” it said in a statement.

For this, the mining union referred to studies on the Economic Commission for Latin America and the Caribbean (ECLAC) and other local private reports.

The Government of leftist President Pedro Castillo is seeking the opposition-dominated Congress grants him before the end of the year powers to legislate on tax reform, mainly in the mining sector, currently benefited by the high international prices of metals.

The mining society said that Peru’s Ministry of Economy has been making “a particular interpretation” of the IMF’s preliminary report, which has not yet been publicly released pending the body’s authorization.

“A bad redesign of the tax scheme will discourage investments in expansions of already operating mines and new mining projects. Future investments of more than US$50 billion are put at risk”, stated the mining union.

Since President Castillo took office at the end of July with the promise of providing more significant benefits to marginalized communities, the sector has faced a wave of protests amid claims of environmental and social concerns.

The Las Bambas copper mine, one of the largest in the country and controlled by China’s MMG Ltd, has warned that it would suspend production this week in the face of a road blockade amid a protest by residents of the Andean province of Chumbivilcas.