Peru: Mining Laws and Regulations 2021
ICLG - Mining Laws and Regulations - Peru covers common issues in mining laws and regulations – including the acquisition of rights, ownership requirements and restrictions, processing, transfer and encumbrance, environmental aspects, native title and land rights – in 15 jurisdictions.
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Chapter Content Free Access
1. Relevant Authorities and Legislation
2. Recent Political Developments
3. Mechanics of Acquisition of Rights
4. Foreign Ownership and Indigenous Ownership Requirements and Restrictions
5. Processing, Refining, Beneficiation and Export
6. Transfer and Encumbrance
7. Dealing in Rights by Means of Transferring Subdivisions, Ceding Undivided Shares and Mining of Mixed Minerals
8. Rights to Use Surface of Land
9. Environmental
10. Native Title and Land Rights
11. Health and Safety
12. Administrative Aspects
13. Constitutional Law
14. Taxes and Royalties
15. Regional and Local Rules and Laws
16. Cancellation, Abandonment and Relinquishment
1.1 What regulates mining law?
The Republic of Peru is a unitary state under the civil law system. The Natural Resources chapter of the Peruvian Constitution states that mineral resources are property of the Nation and the Peruvian State is sovereign in their administration. The government may establish by law the conditions for granting mining activities rights and titles to individuals and legal entities.
Based on this, the Single Revised Text of the General Mining Law, approved by Supreme Decree 014-92-EM (General Mining Law), contains the main provisions regarding the execution and development of mining activities in Peru, such as the procedure to obtain a secure and clear mining title as well as the conditions of tenure.
1.2 Which Government body/ies administer the mining industry?
The mining industry is divided into four segments according to production and processing capacity. The jurisdiction of mining activities comprises, for the medium- and large-scale segments of the industry, a system administered by central government, and for the small-scale and artisanal segments, systems administered by each region. Therefore, the mining industry is regulated by both central government and regional governments.
Furthermore, several authorities, including the Ministry of Energy and Mines, the Water National Authority, among others, grant licences and permits that allow the performance of mining activities.
1.3 Describe any other sources of law affecting the mining industry.
In addition to the General Mining Law, the principal laws affecting the mining industry are:
the Foreign Investment Promotion Law, Legislative Decree 662;
the Framework Law for the Growth of Private Investment, Legislative Decree 757;
the Regulations for the General Mining Law, Supreme Decree 03-94-EM;
the Regulations for Mining Procedures, approved by Supreme Decree 018-92-EM;
the Regulations on Mining Safety and Occupational Health, approved by Supreme Decree 024-2016-EM;
the Regulations on Environmental Protection for Mining-Metallurgic Activities, approved by Supreme Decree 040-2014-EM;
the Environmental Regulations for Mining Exploration Activities, approved by Supreme Decree 042-2017-EM;
the Mine Closure Law, Law 28090;
the Regulations on Mine Closure, approved by Supreme Decree 033-2005-EM;
the Regulations on Citizen Participation for Mining Activities, approved by Supreme Decree 028-2008-EM; and
the Right to Prior Consultation to Indigenous and Tribal Peoples Law, recognised in Convention 169 of the International Labour Organization (ILO), Law 29785 and its Regulations, approved by Supreme Decree 001-2012-MC.
2.1 Are there any recent political developments affecting the mining industry?
Encouragement of new explorations and the reduction of procedures and processes (permitting) are two of the main goals for the next few years. In fact, the government is working to increase the attractiveness of the mining sector through, among others, a regulatory review.
In September 2019, a high-level commission was created, aimed at improving mining activities, comprised by technocrats from the private sector and civil society.
2.2 Are there any specific steps the mining industry is taking in light of these developments?
In June 2020, the final report of the high-level commission was released. Based on this document, regulatory improvements are being promoted and work is underway to update and identify necessary changes in current legislation, with a regulatory impact analysis and a participatory regulatory process.
Many of the aforementioned improvements will entail the simplification of procedures in order to make it easier to obtain permits without losing their effectiveness. Furthermore, as part of this regulatory optimisation, it will strengthen confidence between communities, government and private companies, reducing the asymmetry of information.
3.1 What rights are required to conduct reconnaissance?
The performance of geological surveys and prospecting activities does not require any special governmental authorisation other than compliance with general environmental and civil laws related to surface land access and respect for priority rights.
3.2 What rights are required to conduct exploration?
Exploration – as well as exploitation – activities can only be performed by individuals or legal entities that have obtained a mining concession. Concessions are classified as metallic and non-metallic, according to the class of mineral substance, and are granted for an indefinite term subject to the: (a) achievement of a minimum annual level of production or investment (from the 10th year since being granted); and (b) payment of an annual fee (please refer to question 3.3 below).
The mining concession does not grant its holder rights over surface land. Therefore, concessionaires are required to acquire said surface rights directly from the State or from private parties in order to execute their activities.
3.3 What rights are required to conduct mining?
The following mining rights are required to conduct mining activities:
Mining Right
Mining concession
Performance exploration and exploitation activities of metallic or non-metallic minerals in a determined area (with a minimum extension of 100 hectares and a maximum of 1,000 hectares).
Processing concession
Performance of physical and/or chemical procedures required for extraction, concentration, smelting and/or refining.
General works concession
Auxiliary activities or complementary services, such as ventilation, drainage, lifting, or extraction for two or more mining concessions granted to different concessionaires.
Mineral transport concession
Required for massive and continuous transportation of minerals via unconventional methods, such as conveyor belts, pipelines, or aerial tramways.
As indicated above, general obligations applicable to mining concessionaires include the payment of an annual licence fee by 30 June of each year of US$3 per hectare, in order to keep the mining concession in good standing, as well as to attain a minimum level of production or the payment of a penalty fee if applicable. Failure to pay the licence fees or penalty for two consecutive years will result in the forfeiture of the concession.
Regarding the attainment of a minimum level of production, it is equivalent to one tax unit (approximately US$1,250) per year per hectare granted for metallic minerals, and 10% of one tax unit (US$125) per year per hectare for non-metallic minerals. The minimum production must be attained no later than the 10th year following the year in which the title to the mining concession was granted. Failure to attain production will trigger an obligation to pay a penalty equivalent to 2% of minimum production, until the year in which the minimum level of production is attained. If production is not attained until the 15th year after the year in which the title to the mining concession was granted, there is an obligation to pay a penalty equivalent to 5% of minimum production, until the year in which minimum production is attained; if production is not attained until the 20th year, there is an obligation to pay a penalty equivalent to 10% of minimum production, until the year in which minimum production is attained. The penalty would be avoided if the investments made are equivalent to 10 times the penalty amount.
Finally, if production is not attained until the 30th year after the year in which the title to the mining concession was granted, the mining concession will be terminated.
3.4 Are different procedures applicable to different minerals and on different types of land?
No, the same procedure is applicable to metallic and non-metallic mining concessions.
Furthermore, mining concessions may not be granted in: (i) urban areas, unless expressly authorised by law; and (ii) Protected Natural Areas or their buffer zones, unless authorised by the competent authority (the Peruvian Service for Natural Protected Areas).
3.5 Are different procedures applicable to natural oil and gas?
Yes, different procedures and legislation are applicable to oil and gas.
4.1 What types of entity can own reconnaissance, exploration and mining rights?
The Peruvian Constitution guarantees equal treatment of foreign and national investors, as well as free ownership of foreign currency. In that sense, mining concessions are granted to individuals or legal entities, whether national or foreign, without any distinction or privilege.
However, the only exception is established by the article 71° of the Peruvian Constitution, which bans foreigners from acquiring mines and other assets, whether individually or in partnership, directly or indirectly, within 50 kilometres from the border, under penalty of losing the right acquired illegally. Notwithstanding the abovementioned, through a Supreme Decree approved by the Council of Ministers of State, this prohibition may be withdrawn provided that the investment is considered to be of public need (such as in the case of mining activities).
4.2 Can the entity owning the rights be a foreign entity or owned (directly or indirectly) by a foreign entity and are there special rules for foreign applicants?
Any foreign-owned entity, whether direct or indirect, is entitled to request and hold mining concessions, and there are no special rules for foreign applicants. However, the only restriction is the acquisition of assets within 50 kilometres from the border (please refer to question 4.1 above).
4.3 Are there any change of control restrictions applicable?
As of the date of this submission, change of control restrictions are not applicable to the mining industry.
However, on November 19, 2019, a new merger control regime was enacted in Peru by means of an Urgency Decree. This regime will come into effect in March 2021. It must be taken into consideration that the regime will only be applicable to the merger or acquisition of two or more companies, the creation of a joint venture or the acquisition of operative or productive assets, given that the acts subject to the merger control are those that meet the following two thresholds: (i) the combined gross sales of the companies involved in the concentration are equal to or greater than 118,000 Peruvian Tax Units (approximately US$150 million); and (ii) the gross sales of at least two companies involved in the concentration are equal to or greater than 18,000 Peruvian Tax Units (approximately US$23 million).
4.4 Are there requirements for ownership by indigenous persons or entities?
There are no specific requirements for ownership of mining rights by indigenous persons, groups or entities.
4.5 Does the State have free carry rights or options to acquire shareholdings?
The State does not have free carry rights or options to acquire shareholdings in mining companies or other entities that conduct mining in Peru.
In fact, pursuant to the Constitution, the Peruvian economic model is based on a free market economy and the subsidiary role of the State. Authorised solely by an express law of Congress, the State would only engage in economic activities, directly or indirectly, for reasons of high public interest or manifest national convenience.
In that regard, neither the government nor state agencies are entitled to participate in mining projects, as they benefit from the established taxes and mining obligations that the holders of the mining concessions must fulfil. Also, there are no local listing requirements established for the project company in order to carry out mining activities.
5.1 Are there special regulatory provisions relating to processing, refining and further beneficiation of mined minerals?
As mentioned above (please refer to question 3.3), in order to process, refine and carry out further beneficiation of mined minerals, it is necessary to obtain a processing concession.
According to the General Mining Law, the processing concession grants its holder the right to extract or concentrate the valuable part of an aggregate of rootless minerals and/or to melt, purify or refine metals, by means of a set of physical, chemical and/or physicochemical processes.
5.2 Are there restrictions on the export of minerals and levies payable in respect thereof?
There are no restrictions on buying, selling or exporting minerals. In addition, pursuant to the General Mining Law, the commercialisation of minerals across the country and abroad is free and does not require the granting of a concession or any governmental authorisation. Domestic and foreign companies are subject to the same rules on commercial matters associated with minerals.
6.1 Are there restrictions on the transfer of rights to conduct reconnaissance, exploration and mining?
No governmental authorisation is required to transfer mining concessions. Furthermore, with respect to a change of control of the mining holder or its parent, it is not required to obtain government consent before this occurs.
However, the only exception is established by the Peruvian Constitution, which bans foreign nationals from acquiring mining concessions, whether individually or in partnership, directly or indirectly, within 50 kilometres of an international border (please refer to question 4.1 above).
6.2 Are the rights to conduct reconnaissance, exploration and mining capable of being mortgaged or otherwise secured to raise finance?
Pursuant to the General Mining Law, a mining concession can be used as security to guarantee an obligation, on its own or with a third party, through a mining mortgage agreement, which constitutes a lien over the concessions during the term of such agreement to secure financing for the holder or as security for a creditor to whom the holder owes a debt. The mortgage agreement must be registered in the public registry in order to ensure its legality, validity and enforceability.
It should be noted that the mining mortgage does not originate from the dispossession of the concession. The debtor or guarantor mortgage at all times remains in possession of the mortgaged concessions, as there is a possibility of judicial enforcement of the guarantee (taking possession of the creditor against the mortgaged mining concession for breach of the obligation of the debtor). The mortgage covers the principal debt, interest accrued, insurance premiums paid by the creditor and court costs.
The mortgage extends to all parts of the mortgaged property, their accessories, and the amount of insurance compensation and expropriation, unless otherwise agreed. Unless otherwise provided, a mining mortgage also affects buildings, facilities and other articles intended for the mining concession.
7.1 Are rights to conduct reconnaissance, exploration and mining capable of being subdivided?
The area of the mining concession may be divided into grids of no less than 100 hectares. To that effect, the application filed by the holder of the concession shall be sufficient. If the mining concession is mortgaged or encumbered, the authorisation and consent of the creditor or holder of any such creditor rights is required.
7.2 Are rights to conduct reconnaissance, exploration and mining capable of being held in undivided shares?
A mining concession may not be held by multiple parties or holders. According to the General Mining Law, a limited liability mining company shall be mandatorily incorporated when, due to a claim, succession, transfer or any other right, two or more entities become holders of a mining concession, unless the parties decide to establish a company under the General Corporations Law.
The limited liability mining company is a legal entity governed by private law, and through the act of its incorporation, it becomes the sole holder of the concession that gave rise thereto.
7.3 Is the holder of rights to explore for or mine a primary mineral entitled to explore or mine for secondary minerals?
In Peru, a holder of a mining concession is entitled to explore for or mine any mineral granted (metallic or non-metallic, depending on the kind of concession).
7.4 Is the holder of a right to conduct reconnaissance, exploration and mining entitled to exercise rights also over residue deposits on the land concerned?
No, the mining concession does not grant rights over the surface lands within its boundaries.
Furthermore, it is necessary to obtain an authorisation to exploit residue deposits qualified as environmental liabilities in order to guarantee the reclamation of the area.
7.5 Are there any special rules relating to offshore exploration and mining?
There are no special rules relating to offshore exploration and mining, except the extent of the concession, which can be up to 10,000 hectares.
8.1 Does the holder of a right to conduct reconnaissance, exploration or mining automatically own the right to use the surface of land?
The mining concession does not grant its holder rights over surface land. Therefore, rights over said land must be obtained by acquiring property through a transfer agreement or by executing an easement agreement whereby the concessionaire is granted the right to enter, explore and exploit the concession located under the surface rights, or through any other agreement that grants the right to use the surface land for mining activities.
8.2 What obligations does the holder of a reconnaissance right, exploration right or mining right have vis-à-vis the landowner or lawful occupier?
Given that the holder of a mining concession does not have rights over land, the landowner's property or rights of an occupier must be respected.
8.3 What rights of expropriation exist?
Expropriation is limited to events of national security, or in case of public interest and necessity, as specifically declared by law. Its only beneficiary may be the State. It is not applicable to the mining industry.
9.1 What environmental authorisations are required in order to conduct reconnaissance, exploration and mining operations?
The performance of geological surveys and prospecting activities does not require authorisation.
However, regarding exploration activities, the holder is required to seek the following authorisations from the Ministry of Energy and Mines:
Environmental Authorisation
Environmental Technical Sheet
A maximum of 20 drilling platforms; or
a maximum affected area of 10 hectares (includes platforms, trenches, auxiliary instalments and access points).
Environmental Impact Statement
A maximum of 40 drilling platforms;
a maximum affected area of 10 hectares (includes platforms, trenches, auxiliary instalments and access points); or
the execution of tunnels that jointly comprise a maximum of 100 metres in length.
Semi-Detailed Environmental Impact Assessment
A maximum of 700 drilling platforms;
an affected area of more than 10 hectares (includes platforms, trenches, auxiliary instalments and access points); or
the execution of tunnels that jointly comprise more than 100 metres in length.
To conduct mining exploitation and processing activities, a Detailed Environmental Impact Assessment must be filed before the national environmental agency (SENACE) for its approval.
Please note that after the approval of the environmental authorisation, the mining authority authorises the commencement of mining activities (exploration, exploitation and/or processing).
9.2 What provisions need to be made for storage of tailings and other waste products and for the closure of mines?
The environmental provisions to be made for storage of tailings are part of the Detailed Environmental Impact Assessment. On the other hand, technical provisions are approved by the mining authority as part of the authorisation to start mining activities and operate the processing plant.
Also, the mining holder must file a Mine Closure Plan at least one year after the mining project's Detailed Environmental Impact Assessment is approved. The plan conforms to technical and legal actions aimed at developing measures to be taken to rehabilitate the area used or disturbed by mining activities in order to achieve an ecosystem that is healthy and suitable for the development of life and preservation of the landscape. Guarantees must be provided on behalf of the authority for covering the costs of rehabilitation measures for the periods of final closure and post-closure. For this purpose, the authority accepts bonds, performance bonds, trusts, pledges and mortgages.
9.3 What are the closure obligations of the holder of a reconnaissance right, exploration right or mining right?
For the exploration activities, the mine closure plan is part of the corresponding environmental authorisation (please refer to question 9.1 above).
As a general rule, the rehabilitation measures must be developed once the activities are complete in each facility of the exploration project (i.e.: platforms, trenches, auxiliary instalments and access points) and it is not necessary put in place guarantees.
Regarding exploitation and processing activities, please refer to question 9.2 above.
9.4 Are there any zoning or planning requirements applicable to the exercise of a reconnaissance, exploration or mining right?
It is not permitted to carry out geological surveys and prospecting activities in urban zones, archaeological areas or other restricted areas, unless authorised by the competent authority. Furthermore, mining concessions (allowing exploration and exploitation) may not be granted in: (i) urban areas, unless expressly authorised by law; and (ii) Protected Natural Areas or their buffer zones, unless authorised by the competent authority.
10.1 Does the holding of native title or other statutory surface use rights have an impact upon reconnaissance, exploration or mining operations?
The Right to Prior Consultation has been part of our legal system since 1995, upon the signing of ILO Convention 169, but its internal implementation was completed in 2011.
As to mining activities, the consultation shall be related to the measures which enable or authorise the starting of the exploration, exploitation, and mining processing activities (not the mining concession) within the geographical area where indigenous peoples live. In case of a negative response from native communities, such event does not cancel or terminate the mining rights and does not mean that the mining authority would deny the approval of the authorisation.
11.1 What legislation governs health and safety in mining?
Law 29,783, the Occupational Safety and Health at Work Law and its regulation approved by Supreme Decree 005-2012-TR, are the general regulations on Health and Safety matters applicable to all industries. The mining industry has a specific regulation in the Mining Occupational Health and Safety Regulation, approved by Supreme Decree 024-2016-EM. Health and safety regulations are administered and supervised by the National Superintendence of Labour Inspection – SUNAFIL (workers) and OSINERGMIN (mining facilities).
11.2 Are there obligations imposed upon owners, employers, managers and employees in relation to health and safety?
Health and safety regulations in mining impose general and specific obligations on all stakeholders. In fact, employers are responsible for the management of health and safety at work and for implementing all the necessary activities and training in connection with this management, including training programmes and their follow-up. Employers must, inter alia, permanently undertake activities to improve existing levels of protection, ensure that staff undergo medical examinations before, during and at the end of a working relationship, train workers, establish internal health and safety regulations to be distributed to all workers, and establish a chart of risks present at the workplace for display where it is clearly visible.
11.3 Are there any unique requirements affecting the mining industry in light of the coronavirus (COVID-19) pandemic?
There are no specific requirements for the mining industry. However, as part of the measures adopted by the government to protect the health and safety of workers, employers have an obligation to manage the continuation of work in a way that best protects the health of their workers. Furthermore, they develop an action plan for the surveillance, containment and care of new COVID-19 cases in workplaces, such as mining operations. This plan includes measures such as screening for symptoms of COVID-19, testing, and contact tracing to detect infected workers earlier and exclude them from the workplace, thus preventing disease transmission and subsequent outbreaks.
12.1 Is there a central titles registration office?
In Peru, the Instituto Geológico Minero y Metalúrgico (INGEMMET) has a database which includes the mining rights cadastre with all mining titles, and is available online (geocatmin.ingemmet.gob.pe). Although the database includes geological, geochemical and geophysical surveys, geological risk assessments, geodynamic studies, satellite images, etc., all of the information that the INGEMMET makes available should be used for reference purposes only.
12.2 Is there a system of appeals against administrative decisions in terms of the relevant mining legislation?
As a general rule, all administrative decisions are to be subject to a dual administrative instance. A decision from a first instance may be appealed for review by the second administrative instance which is of a higher level. Also, a decision of the second administrative instance may be challenged in a judicial process before Peruvian courts and tribunals.
In relation to mining activities, most of the decisions of the first administrative instance are reviewed by the Mining Council, an administrative court.
13.1 Is there a constitution which has an impact upon rights to conduct reconnaissance, exploration and mining?
The Natural Resources chapter of the Peruvian Constitution provides that mineral resources are property of the Nation and the Peruvian State is sovereign in their administration. The government establishes by law the conditions for granting exploration and exploitation rights and titles to individuals and legal entities.
13.2 Are there any State investment treaties which are applicable?
In recent years, Peru has executed more than 30 Free Trade Agreements with countries from the Americas, Asia and Europe, which investment chapters establish, among others, protection against non-commercial risks, such as governmental measures and interference that may affect, without cause or reason, the property of the investor. Likewise, said chapters have provided compensatory measures in case of expropriations or measures tantamount to expropriation (regulatory expropriation or takings), as well as conflict resolution mechanisms between the State and the investor.
14.1 Are there any special rules applicable to taxation of exploration and mining entities?
The acquisition value of the concessions (price-paid or claim expenses) will be amortised as from the fiscal year when the minimum production must be accomplished, within a term to be determined by the mining holder, based on the probable life of the deposit, calculating and taking into consideration the proven and probable reserves and the minimum level of production according to law.
Prospecting and exploration expenses, until the date when minimum production must be accomplished, can be considered, at the discretion of the mining holder, as part of the acquisition value of the concession in order to receive the treatment mentioned above, or can be deducted in the fiscal year in which they are incurred.
Exploration expenses at the minimum production stage may be fully deducted in the fiscal year or amortised as from that fiscal year at the rate of an annual percentage based on the probable life of the mine, at the mine holder's own discretion.
Development and preparation expenses that allow for the exploitation of a deposit for more than one fiscal year may be fully deducted in the fiscal year when they are incurred or amortised in that fiscal year and in the following years, up to two additional years at most, at the holder's own discretion.
14.2 Are there royalties payable to the State over and above any taxes?
In addition to the taxes applicable to any other economic activity in Peru, mining producers are subject to a mining royalty and contributions to regulatory agencies.
Mining title holders are required to pay a mining royalty to the Peruvian government for the exploitation of metallic and non-metallic resources. The amount of the royalty is payable on a quarterly basis and applies on income with marginal rates ranging between 1% and 12%. The minimum amount payable for the mining royalty cannot be less than 1% of the revenue generated from the sales of the calendar quarter.
The aforementioned payment will be deductible as an expense for income tax purposes in the fiscal year in which such payments are made.
On the other hand, since 2014, mining title holders are required to pay a contribution to the regulatory agencies in charge of supervising mining activities: OEFA (environment); and OSINERGMIN (health and safety). The amount of the contribution is payable on a monthly basis and is calculated on the basis of monthly sales at rates of 0.11% for each one.
15.1 Are there any local provincial or municipal laws that need to be taken account of by a mining company over and above National Legislation?
According to Peruvian legislation, local authorities do not have powers to rule mining activities. Furthermore, it should be noted that local provincial and municipal rules cannot go against the Constitution, and laws are required to be issued subject to the national legal framework.
15.2 Are there any regional rules, protocols, policies or laws relating to several countries in the particular region that need to be taken account of by an exploration or mining company?
Pursuant to the Peruvian Constitution, international treaties and conventions to which Peru is a party apply as domestic legislation (please see questions 10.1 and 13.2).
16.1 Are there any provisions in mining laws entitling the holder of a right to abandon it either totally or partially?
Mining holders are entitled to abandon mining concessions either totally or partially. If it is partially, the withheld area must not be shorter than a 100-hectare grid.
16.2 Are there obligations upon the holder of an exploration right or a mining right to relinquish a part thereof after a certain period of time?
Mining concessions are granted for an indefinite term, as long as all legal obligations to maintain such rights are met (please refer to question 3.3 above).
16.3 Are there any entitlements in the law for the State to cancel an exploration or mining right on the basis of failure to comply with conditions?
Failure to pay the licence fees or penalty for two consecutive years will result in the cancellation of the mining concession. Also, if the minimum production is not attained until the 30th year after the year in which the title to the mining concession was granted, the mining concession will be cancelled.
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Xennia Forno
Rubio Leguía Normand
Miguel Ángel Soto
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