Learn About How To Complete The Legal Mining Due Diligence In Peru Correctly
Peru’s mining industry is the biggest and the most important driver of the country’s economy. The sector accounts for over 50% of the country’s foreign exchange, 11% of the GDP, 20% of the tax revenue and the most significant attraction to foreign investment. Peru’s mining sector is also essential in the global scale because it is one of the leading global mining producers. Currently, it is the third-largest producer of zinc and copper. It is a force to reckon with when considering global producers for silver, gold and other minerals. According to research conducted by BMI Research, the mining industry is expected to record a steady growth of 9.1% annually till 2021. It is a magnet for foreign investors in the mining industry and also the need for legal mining due diligence in Peru.
Reasons For Growth In The Mining Sector
- Strong government policies which support mining for development
- Good tax and the legal regime which is attractive to foreign investors
- The country has various natural and mineral resources
- The exploitation of less than 10% of the territory
How To Start A Legal Mining Company In Peru
The mining industry in Peru has enormous potential. It has attracted a massive number of foreign investors. Therefore, it is imperative to adhere to several due diligence processes before making the ultimate decision to invest in the mining industry.
Peruvian Mining Laws
While doing legal mining due diligence in Peru, you have to take into consideration the country’s mining laws. It is essential to know that the law recognises a mining concession as permission by the holder. It is to carry out mineral exploration or exploitation operations. They should do it within a solid indefinite depth. With this definition, the law treats mining and processing as the same thing as per the concession system. But, you have to remember that within the scope of the law, mineral rights and surface rights are different. There are other laws which ought to be looked into the Peruvian mining industry. These include regulations on transportation, processing, and the entire work concession.
Mining Entities In Peru
Different entities are in charge of dishing out concession titles based on the size and the nature of mining activity. Therefore. the knowledge of these entities is essential when doing mining due diligence in Peru. Below is a list of the different types of entities as well as the corresponding volumes of the mining activities and:
- DREM – Regional Directorate of Energy and Mines: this is responsible for artisanal and small scale mining projects.
- INGEMENT – Mineral Procession Operations: this is the entity responsible for medium to large scale mining operations in the country.
- MINEM – Ministry of Energy and Mines: this entity acts through the General Directorate of Mining, and it is responsible for medium and large scale mining operations.
How To Obtain A Peruvian Mining Permit
The process of getting a mining permit in Peru is in the Peruvian Mining Act. Whether or not the PPM is private or public, the company to be considered for a mining permit must have the following characteristics:
- An individual, legal entity composed of individuals, group of individuals, mining cooperatives or cooperative federations habitually engaged directly in mineral exploitation and mineral processing activities;
- Hold, under any title, a maximum of 2000 hectares, including mineral claims, petitions and concessions; and,
- Have under any title, and a maximum installed production and processing capacity of 350 metric tons per day, MTD.
The process may have two exceptions. First, the maximum production or processing capacity is 1, 200 tons per day for non-metallic mining and mining for building materials. Second, the maximum production/processing limit set to 3,000 cubic meters per day for all metal placer deposits.
To Be Given A Mining Concession, There Are Four Steps To Follow:
1. Quantification of PPM
2. Determination of the coordinates of the area under concession
3. Completion of the Mining Concession Application
4. Granting the Concession Title
After receiving permission, take note that the concession title does not give authorisation to the holder to start mining operations immediately. It implies that after securing the permit, the holder must then get the certificate of the mining operation. So, it is after the holder complies with all the legal obligations will they be able to get the certificate and begin operations.
We believe that Peru will continue to dominate as a leading mining investment destination; the prospects of doing business in Peru are good. Don’t hesitate to get in touch with us at [email protected] if you want to know more about the mining opportunities currently available in Peru. We can help you to understand how you can complete legal mining due diligence in Peru.