The government’s commission studying principles for sustainable mining development was finally published a few days ago.
The government first established the Commission for Sustainable Mining Development back in September 2019, tasking it with proposing “regulatory and management measures, as well as public policy, for the development of sustainable mining activities”. The commission presented its report to the government in February, but it has only now been made public.
As with the previous reports that suggested reforms to the judicial and political systems, it is expected that the government will turn these proposals into legislative initiatives and present them to Congress.
The report is organized around five issues:
- social environment, citizenship and territory;
- environmental management;
- regulatory improvement;
- fiscal contributions and mining rent management; and
- informal and illegal mining.
The commission assumes as its premise that Peru has natural comparative advantages and that mining development is essential for the country’s economy. This second premise is debateable. The report states that its objective is “to ensure the sector´s competitiveness through improvements in its regulation and procedures, which allow to guarantee social development, closing of gaps and the generation of opportunities.” But it also recognises that “in order to realise its full potential, mining has to not only improve the sector´s competitiveness but also [ensure] that the wealth it generates translates into better opportunities for the development of the areas under its influence, for the regions in which it operates, and for the country at large”.
Its proposals are interesting. They include:
- a pilot project to validate a strategy whereby mining contributes to the sustainable development of a selected territory, encouraging productive diversification, reducing vulnerability to climate change and improving territorial governance;
- a national system to handle social conflict;
- a pilot project for a new strategy of early and collaborative environmental impact assessment, applicable to environmental impact assessment (EIAs) for large-scale projects;
- stronger powers for oversight bodies and improved EIA social requirements;
- simplification and a new format for regulations regarding licenses for exploration;
- stronger mechanisms to deal with tax avoidance;
- allocation and use of the mining canon with a view to closing social gaps in the poorest areas of the country; and
- new multisectoral policies to cover informal mining.
However, it fails to deal with a number of hotly debated issues, such as:
- Taxation, including special benefits, and reference to taxes on windfall profits.
- The question of territorial demarcation (ordenamiento territorial) as a prior step to conferring concessions (or not).
- Labour rights, given that most workers are hired through subcontractors and therefore lack the rights enjoyed by permanent workers.
- Participation by sub-national tiers of government on matters regarding concessions, EIAs, consultation and oversight.
The questions now are which of the proposals the executive will want to turn into legislative initiatives, how the Congress will address them, and whether the present Covid-19 context is a propitious one for their implementation.
The establishment of the commission arose in response to conflicts surrounding the Tía María and Las Bambas projects. The debate today is about the conditions in which mining will contribute to economic recovery and development post Covid-19, a context in which lower demand and prices (except in the case of gold) prevail. Contrary to some of the recommendations contained in the report, this is a context in which, much as after the end of the 2000-2014 commodity super cycle, companies may press for race-to-the-bottom policies, especially the weakening of environmental standards and procedures and in respect to prior consultation with indigenous communities.