Relevant Authorities and Legislation
1.1 What regulates mining law?
According to the Constitution and national legislation, renewable and non-renewable natural resources (including minerals) are heritage of the nation. They are exploited through the concession system (i.e., mineral rights). The products of the mining activities obtained in the manner prescribed by law are the domain of the holders of these rights.
The general legal framework for mining activities is provided by the General Mining Law and its corresponding regulations. Peru also has an extensive environmental regulatory framework, which includes specific regulations for exploration, exploitation, processing, transportation, and storage of minerals, as well as other related activities. Equally relevant is the regulatory framework for occupational health and safety, which also has specific regulations applicable to this sector.
1.2 Which Government body/ies administer the mining industry?
There are several governmental bodies involved in the administration of mining activities.
The Geological, Mining, and Metallurgical Institute (INGEMMET) has a role in granting mining rights.
The Ministry of Energy and Mines (MINEM) is the main entity that regulates mining activities. This Ministry is responsible for issuing authorisations for exploration, exploitation, and Processing (beneficiation) activities for medium and large-scale projects. Also, to date, this entity is responsible for the evaluation and approval of environmental management instruments for exploration activities. On the other hand, in the case of exploitation and processing (beneficiation) activities, the entity in charge of the evaluation and approval of environmental instruments is the National Service of Environmental Certification for Sustainable Investments (SENACE).
Regarding the supervision of mining activities, the main entities are the Environmental Assessment and Enforcement Agency (OEFA), for environmental matters; the Supervisory Agency for Investment in Energy and Mining (OSINERGMIN), for infrastructure safety; and the National Superintendence of Labor Inspection (SUNAFIL) for occupational health and safety.
Regional Governments handle authorisations and supervision for artisanal and small mining producers (ASM).
1.3 Describe any other sources of law affecting the mining industry.
Other sources of law relevant to the mining industry include, among others:
2. Recent Political Developments
2.1 Are there any recent political developments affecting the mining industry?
In early 2023, Peru’s political climate remained highly volatile and polarised, marked by significant fragmentation across the political landscape. Pedro Castillo, who started his term in 2021, was impeached in December 2022, paving the way for Dina Boluarte, his vice president, to assume the presidency. Boluarte’s administration faces a challenging situation characterised by a low level of popularity and a high rejection rate among the public. As per the most recent IPSS poll dated June 2023, Boluarte’s disapproval rate was 77%. Despite this continuous political uncertainty, the government manages to maintain its position with the support of several key stakeholders.
The year started with several protests which resulted in road closures or damage to public and private property, including mining facilities. While further demonstrations against the government have been scheduled for July, the current forecast suggests that these protests may not amass extensive backing and are unlikely to inflict any significant damage.
2.2 Are there any specific steps the mining industry is taking in light of these developments?
The mining industry is currently closely monitoring the situation. Experts and specialists believe that with the support of major state institutions and growing confidence from the private sector, the government has a good chance of completing its term until 2026. This positive outlook contributes to an improved business climate, attracting investment and fostering economic growth in the country.
3. Mechanics of Acquisition of Rights
3.1 What rights are required to conduct reconnaissance?
The General Mining Law establishes that reconnaissance activities do not require mining rights. Nonetheless, in order to carry out these activities it is necessary to obtain authorisation from the landowner to access their property and the consent of the title holder of the mining concession, if it is under the name of a third party.
3.2 What rights are required to conduct exploration?
The mining concession granted by the INGEMMET, grants its holder the right to explore and exploit mineral resources. However, other environmental and operating permits are required to carry out exploration activities.
3.3 What rights are required to conduct mining?
To carry out mining (i.e., exploitation) activities, it is required to have the corresponding mining concession (mentioned in question 3.2), as well as the environmental certification (i.e., the approval of the environmental management instrument) and the corresponding operational permit (i.e., the exploitation authorisation). Depending on the scope of the operation, other permits may be required (such as water rights, archaeological permits, chemical substances registries, forestry permits, etc.).
3.4 Are different procedures applicable to different minerals and on different types of land?
The mining concession procedure is unique for both metallic and non-metallic concessions. Depending on the location of the area to be requested, INGEMMET may request opinions from other entities as part of the mining concession granting procedure.
3.5 Are different procedures applicable to natural oil and gas?
Yes, there are indeed special procedures and regulations applicable to natural oil and gas.
4. Foreign Ownership and Indigenous Ownership Requirements and Restrictions
4.1 What types of entity can own reconnaissance, exploration and mining rights?
As mentioned in question 3.1, reconnaissance activities do not require mining rights, but they do require authorisation from the landowner and authorisation from the mining concession holder (if it belongs to a third party).
Exploration and mining (exploitation) rights can be held by Peruvian citizens or foreign individuals, as well as different types of legal entities. Peruvian and foreign companies are eligible to own mining rights. The foregoing is notwithstanding the provisions of section 4.2.
According to the law, some public officials, such as the President of the Republic, members of the Legislative Branch, and Ministers of State, among others, are forbidden to carry out mining activities during the exercise of their functions.
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?
Yes, the entity owning the mining rights can be a foreign entity (registered in Peru and with taxpayer number) or owned (directly or indirectly) by a foreign entity. However, there are special rules and requirements for foreign applicants when their petition for mining concessions is located within 50 km of the border.
In such cases, prior authorisation must be obtained as per article 71 of the Constitution. This authorisation refers to a specific decree issued by the government, which declares the public need and expressly authorises the foreign person or entity to acquire the requested concessions.
4.3 Are there any change of control restrictions applicable?
As a general rule, there are no restrictions applicable to the change of control. However, in the case of merging and acquisitions of companies, the approval of the National Institute for the Defense of Free Competition and the Protection of Intellectual Property (INDECOPI) in cases that exceeds certain thresholds, is required in order to prevent any negative effects on market control.
On the other hand, the change of control in some companies may need to be notified to regulatory authorities, for their information.
4.4 Are there requirements for ownership by indigenous persons or entities?
Based on the legal framework that protects collective rights, indigenous communities have priority over the use of natural resources located on their lands with the exception of rights already granted to third parties. However, indigenous communities are subject to the same regulations and requirements as other mining holders in obtaining mining rights within their territories.
4.5 Does the State have free carry rights or options to acquire shareholdings?
No. The ownership and investment in mining projects in Peru are governed by private entities, and the State’s involvement is limited to regulatory oversight and collection of applicable taxes.
5. Processing, Refining, Beneficiation and Export
5.1 Are there special regulatory provisions relating to processing, refining and further beneficiation of mined minerals?
Yes, there are special regulatory provisions for beneficiation, which includes mechanical preparation, metallurgy, and refining. The General Mining Law establishes the need to obtain a beneficiation concession, among other permits, for the construction and operation of the processing facilities. There are also specific regulations related to environmental protection, occupational health and safety that apply to these activities.
5.2 Are there restrictions on the export of minerals and levies payable in respect thereof?
No. The General Mining Law allows free domestic and international trade of mineral products, not requiring a concession or any kind of permit. However, gold trading has exceptions, being subject to numerous regulations to prevent money laundering and illegal mining. There is a Special Registry of Gold Traders and Processors. Exporting minerals falls under the general tax regime, viewing goods exportation as operations not liable to general sales tax.
6. Transfer and Encumbrance
6.1 Are there restrictions on the transfer of rights to conduct reconnaissance, exploration and mining?
No. This allows mining rights to be transferred, assigned, and mortgaged, among other things, without prior authorisation from the Government. The General Mining Law requires the contracts on mining rights be registered in the Public Registry (SUNARP) to be effective against the Government and third parties. This is applicable to the mining concession, required to conduct exploration and mining. As explained in question 3.1, no mining rights are required to conduct reconnaissance activities.
6.2 Are the rights to conduct reconnaissance, exploration and mining capable of being mortgaged or otherwise secured to raise finance?
Mining rights (for exploration and exploitation) may be mortgaged or pledged to secure financial obligations. In the case of mortgages, they must be registered in SUNARP to be valid, and in order to be effective against the state and third parties.
7. Dealing in Rights by Means of Transferring Subdivisions, Ceding Undivided Shares and Mining of Mixed Minerals
7.1 Are rights to conduct reconnaissance, exploration and mining capable of being subdivided?
Mining rights can be divided following an administrative procedure before INGEMMET or before the Regional Government in the case of ASM. The division of mining rights must be in squares of at least 100 hectares according to the current system. Also, the mining right needs to be registered in SUNARP and be up to date with the annual good standing and penalty fees.
7.2 Are rights to conduct reconnaissance, exploration and mining capable of being held in undivided shares?
The General Mining Law contemplates that there may be two or more holders of the same mining right, but requires the incorporation of a legal corporation when this occurs, following a procedure before INGEMMET or before the Regional Government for ASM.
7.3 Is the holder of rights to explore for or mine a primary mineral entitled to explore or mine for secondary minerals?
Mining rights are classified according to their substance as metallic mining concessions or non-metallic mining concessions. The mining right entitles its holder to explore or exploit all existing minerals in the area if they are minerals of the correspondent substance (metallic or non-metallic). In addition, holders of metallic mining concessions may exploit non-metallic minerals if they are required for construction activities related to the project.
7.4 Is the holder of a right to conduct reconnaissance, exploration and mining entitled also to exercise rights over residue deposits on the land concerned?
No. The mining concession only grants rights in respect of exploration or mining activities. This does not include rights over residue deposits. In case the mining owner wishes to take advantage of these components, such activity must be foreseen in the corresponding environmental instrument (in the case of environmental liabilities, the reuse of such facilities must also be requested).
7.5 Are there any special rules relating to offshore exploration and mining?
The General Mining Law contemplates the possibility of applying for offshore mining rights. Unlike mining rights on land that can only have an extension of up to 1,000 hectares, offshore mining rights can have an extension up to 10,000 hectares.
8. Rights to Use Surface of Land
8.1 Does the holder of a right to conduct reconnaissance, exploration or mining automatically own the right to use the surface of land?
No. The mining right does not entitle its holder to use or occupy the surface of that land. Surface rights can be obtained through several titles such as purchase, lease, usufruct, or cession, among others.
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?
The holder of the concession will be obligated to the surface landowner according to the obligations contained in the contract under which the surface right was granted, as well as those established by law (e.g., the closure of the project components).
8.3 What rights of expropriation exist?
The 1993 Constitution indicates that this attribute has been repealed, since its article 70 limited the causes of expropriation only to those of national security or public necessity, declared by law, and mining is of public utility. In this sense, expropriation would not apply.
9. Environmental and Social
9.1 What environmental authorisations are required in order to conduct reconnaissance, exploration and mining operations?
For mining exploration activities, depending on the scope of the project, the mining titleholder must obtain the approval of an Environmental Technical Sheet, an Environmental Impact Statement, or a Semi-Detailed Environmental Impact Study.
For construction and mining exploitation activities, the titleholder must obtain the approval of a Detailed Environmental Impact Study. Additionally, for mining activities, and in certain cases of mining exploration, the titleholder must obtain approval for a Detailed Mine Closure Plan.
Additional authorisations may be necessary based on the scope of the mining project, such as:
9.2 What provisions need to be made for storage of tailings and other waste products and for the closure of mines?
The law provides several measures for storage of tailings and other wastes products. It is also important to mention that the environmental certification of the titleholder could include additional complementary measures for these kinds of facilities. Compliance with all these measures is overseen by OEFA and OSINERGMIN.
9.3 What liabilities does a mining company face in the event that mining activities result in ground water or other contamination affecting third parties?
OEFA and the National Water Authority are responsible for the supervision and surveillance of water resources matters in Peru under the parameters that the law entitles each one. Depending on the infraction, the consequences of contamination could result in fines, suspension of activities, inclusion in the infraction registry, cancellation of permits and imposition of complementary measures. In some cases, environmental contamination could also result in civil or criminal liability.
9.4 What are the closure obligations of the holder of a reconnaissance right, exploration right or mining right?
Special regulations ensure the timely closure and post-closure of mines to minimise environmental impacts. The Ministry of Energy and Mines approves closure plans as part of the EIA or as a separate permit before initiating mining activities. Mining closure plans must be periodically updated and must provide a financial guarantee, among other obligations (for exploration, only in certain cases).
9.5 Are there any social responsibility requirements (such as to invest in local infrastructure and communities) under applicable law or regulation?
The environmental legislation requires that the Environmental Impact Assessment include a Social Management Plan to address social impacts and foster a harmonious relationship with the local community near the mining project. The plan includes strategies, projects, and measures, with targets and compliance indicators proposed by the mining owner, approved by MINEM or SENACE and supervised by OEFA.
9.6 Are there any zoning or planning requirements applicable to the exercise of a reconnaissance, exploration or mining right?
In addition to the mining concession required for exploration and mining activities, the mining owner must obtain operating permits. These permits establish the plan of operations and delimit the areas of mining activity (e.g., number and location of exploration platforms, pit extension, dumps and mining facilities, among others).
10. Native Title and Land Rights
10.1 Does the holding of native title or other statutory surface use rights have an impact upon reconnaissance, exploration or mining operations?
Peru’s government has ratified the International Labor Organization Convention No. 169, incorporating its principles into the Prior Consultation Law and its regulation. This requires that indigenous communities be consulted before the initiation of new projects within their territories. This kind of consultation takes place before obtaining the authorisation to explore or exploit mining resources and before the obtention of the beneficiation concession for processing activities. However, a negative response from the indigenous communities does not terminate mining rights or invalidate the mining project.
The challenge lies in accurately identifying the indigenous communities. Most mining projects now include a preliminary step of validation before mining authorisations are granted.
11. Health and Safety
11.1 What legislation governs health and safety in mining?
The mining sector has specific occupational health and safety regulations. In addition, these regulations, which in some cases establish industry-specific standards, are complemented by the general legal framework, which are set forth in the Occupational Safety and Health Law and its regulations.
11.2 Are there obligations imposed upon owners, employers, managers and employees in relation to health and safety?
The legislation requests that the mining operation implement a framework of internal policies, standards, and procedures to ensure comprehensive risk management of physical, chemical, biological, ergonomic, and psychosocial agents; and foster a safety-conscious culture. Workers are also required to be trained and be subject to several medical exams.
A mining operation with 20 or more workers must establish an Occupational Health and Safety Committee, comprising representatives of the employer and the workers, and have an Internal Occupational Safety Regulation. If the mining operation has less than 20 workers, they must appoint an Occupational Safety and Health Supervisor, elected by the workers.
The mining operation must permanently identify hazards, risks and implement control measures. Supervisors must carry out daily internal inspections at the beginning of each shift. Additionally, within the first three months of each year, an external audit must be carried out and its report must be informed to OSINERGMIN and SUNAFIL (and in some cases, to the Regional Government).
OSINERGMIN (for mining infrastructure) and SUNAFIL are the governmental bodies that supervise compliance with these regulations.
12. Administrative Aspects
12.1 Is there a central titles registration office?
INGEMMET, tasked with granting mining rights, consolidates all mining concessions in Peru and functions as an official registry. These rights are subsequently registered in SUNARP, which oversees titles related to real estate, mining, and businesses. INGEMMET also has the authority to issue certificates validating mining rights, but they cannot be opposed against third parties.
12.2 Is there a system of appeals against administrative decisions in terms of the relevant mining legislation?
The administrative branch of the government, which encompasses decisions related to mining activities, operates under a system of administrative appeals, ultimately overseen by the judiciary. The administered party can challenge administrative rulings by appealing to the higher authority within the same administrative body. If the revised decision remains unsatisfactory, the administered party is entitled to request a process of judicial review for a change in the ruling to the Judicial Branch. This secondary step requires the completion of the administrative appeal process.
13. Constitutional Law
13.1 Is there a constitution which has an impact upon rights to conduct reconnaissance, exploration and mining?
The Constitution of Peru establishes that natural resources belong to the Nation, and therefore the State is sovereign in their use. Under the General Mining Law, mineral resources are exploited by the concessions system. The titleholder of a mining concession is obligated to invest in the production of mineral substances.
13.2 Are there any State investment treaties which are applicable?
Peru has entered onto more than 30 bilateral investment treaties with several countries as well as many other treaties with investment provisions.
According to the Constitution, the State may establish guarantees and provide assurances by means of legal contracts, and these cannot be modified legislatively. The General Mining Law regulates this prerogative, establishing that holders of mining activities with certain ranges of operation level, will enjoy tax stability that will be guaranteed by means of a contract signed with the State.
14. Taxes and Royalties
14.1 Are there any special rules applicable to taxation of exploration and mining entities?
Mining activities are subject to the standard corporate tax on their annual taxable income, which is the net amount after deducting all business-related costs and expenses. The general tax rate stands at 29.5%.
Mining companies have the option to enter into tax stability agreements with the government for periods of 10, 12, or 15 years. These agreements increase the corporate income tax rate by two percentage points, resulting in a fixed rate. Therefore, any taxes introduced after the execution date of the agreement will not be applicable.
Expenses related to exploration and development incurred by mining titleholders are deductible under certain conditions:
14.2 Are there royalties payable to the State over and above any taxes?
Aside from corporate income tax, mining companies are subject to the following:
15. Regional and Local Rules and Laws
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?
There are no regulations issued by regional and municipal governments that are above the Constitution and national mining regulations. Nonetheless, Regional Governments handle all mining matters, authorisations, and supervision for ASM.
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?
Peru has signed and ratified, among others, the following international treaties:
16. Cancellation, Abandonment and Relinquishment
16.1 Are there any provisions in mining laws entitling the holder of a right to abandon it either totally or partially?
The General Mining Law allows the holder to relinquish its mining right, totally or partially, by following a procedure before INGEMMET, or the Regional Government in the case of small mining producers or artisanal mining producers. Likewise, as is explained below in question 16.3, the holder of the mining concession could let the concession lapse, in the event of failure to comply with certain obligations (i.e., annual fee and minimum production).
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?
According to the General Mining Law, mining rights are irrevocable, as long as the holder complies with the obligations to maintain its validity. Therefore, there is no obligation for the holder to abandon or relinquish the mining right within a certain period.
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?
The General Mining Law requires the holder of a mining right to pay an annual fee and to reach the minimum production of the mining right as required by Law within a certain period of time (or otherwise pay a penalty). Failure to comply with any of these obligations in two consecutive years or not, determines the lapse of the mining right (extinction).
17. Mining Finance: Granting and Perfecting Security
17.1 In relation to the financing of mines, is it possible to give asset security by means of a general security agreement or is an agreement required in relation to each type of asset? Briefly, what is the procedure?
Asset security can be granted through a general security agreement, provided the formalities for each type of asset are met. However, typically, separate agreements are used for different assets. These asset securities are created by means of the execution between the obligor and the lender (or security agent) of a private agreement and a public deed before a public notary. Regarding the type of security, they might need the agreement to be registered in SUNARP for its validity and in order to be effective against the state and third parties.
17.2 Can security be taken over real property (land), plant, machinery and equipment (whether underground or overground)? Briefly, what is the procedure?
Yes. Common security forms include pledges over movable assets like shares, machinery, and inventory; mortgages over immovable assets like mining concessions and real estate; and security trusts over cash flows and assets. A “production unit mortgage” can be constituted over both movable and immovable assets if they belong to the same production unit. Additionally, a trust can include both types of assets, but it is usual to separate cash flow trusts from asset trusts. The trust agreement must be executed by the obligor(s), the trustee and the beneficiary(ies), and registered in SUNARP.
The Mortgages and pledges agreement must be executed by the obligor and the lender (or security agent) by a public deed before a public notary and then registered in SUNARP. While the registration of a mortgage agreement in SUNARP is needed for validity purposes and enforcement against the state and third parties, the registration of a pledge agreement is only needed for enforcement of the pledge against third parties.
17.3 Can security be taken over receivables where the chargor is free to collect the receivables in the absence of a default and the debtors are not notified of the security? Briefly, what is the procedure?
Yes. Security over receivables can be taken in the form of a pledge or a cash flow trust. See question 17.2 for the validity and enforceability requirements.
A conditional assignment of rights agreement is a contract between an obligor and a lender (or security agent), where the lender receives assigned receivables if a specified condition occurs. This agreement does not require a public deed or registration for validity, though these steps guarantee its enforceability against third parties. For enforceability, assigned debtors must be informed of the conditional assignment.
17.4 Can security be taken over cash deposited in bank accounts? Briefly, what is the procedure?
Yes. Security over cash deposits can be taken in the form of a pledge or a trust. See question 17.2 for the validity and enforceability requirements. Additionally, for enforceability purposes, the financial institution in which the cash deposit is held must be notified of the pledge or the trust.
17.5 Can security be taken over shares in companies incorporated in your jurisdiction? Are the shares in certificated form? Briefly, what is the procedure?
Yes. Security over shares can be taken in the form of a pledge or an asset trust. See question 17.2 for the validity and enforceability requirements. Additionally, the perfection of the pledge is achieved once registered in the share ledger of the company issuing the pledged shares. Shares are in certificated form and are usually transferred in custody with the lender (the security agent).
17.6 What are the notarisation, registration, stamp duty and other fees (whether related to property value or otherwise) in relation to security over different types of assets (in particular, shares, real estate, receivables and chattels)?
Notary fees for executing the security document as a public deed can vary based on the notary and are usually calculated using the secured amount. Registration fees to register the security document in public registries only depend on the total secured amount.
For 2023, the registration fees are as follows:
The enforcement of the security includes (i) fees of the common representative (i.e., a third party appointed by the parties to the pledge for enforcement purposes), and (ii) costs of court proceedings in the case of a mortgage.
There is no stamp duty in respect of the constitution of security interests in Peru.
17.7 Do the filing, notifications or registration requirements in relation to security over different types of assets involve a significant amount of time or expense?
See question 17.6 regarding applicable fees. In terms of timing, the public registrar must verify compliance with registration requirements within seven business days post-filing the security agreement. This duration may be extended if the registrar raises observations, which must all be addressed before registration can be completed.
17.8 Are any regulatory or similar consents required with respect to the creation of security over real property (land), plant, machinery and equipment at a mining operation?
A mining concession agreement typically provides for certain specific regulatory consents that the concessionaire or mining company is required to obtain; such as for the creation of a security interest over certain project rights, or the approval of, or favourable opinion on, the permitted creditors and permitted secured indebtedness by the contracting authority or regulator. If a public-private partnership project or agreement is subject to the competence of the Private Investment Promotion Agency (PROINVERSION), the latter is required to review the documents which regulate the permitted guaranteed indebtedness or financial closing.
The Constitution prohibits foreign entities from acquiring or possessing mining rights within 50 kilometres of the national borders, by any means whatsoever (including the enforcement of collateral). A breach of said prohibition may result in the loss of the right thus acquired to the benefit of the State.