POLITICAL CONDITIONS FOR MINING IN PERU

Mining opportunities in Peru have grown considerably as a result of political changes that began in 1990, when President Alberto Fujimori’s administration adopted a wide-ranging privatization program that opened the door to international investors.

By liberalizing Peru’s economy, the Fujimori administration eliminated competition from nationalized firms that controlled significant access to mineral deposits.

In addition, the administration implemented a floating exchange rate, eliminated price controls, direct subsidies and restrictions on remittances of profits, dividends and royalties.

The Fujimori administration also created tax stability contracts and a host of legal and financial protections for large foreign investors. Finally, a radical reformation of land tenure rights under the National Mining Cadastre Law guaranteed mining firms control of the necessary land resources to implement their operations.

In 2006, political developments in Peru have made the country even more attractive to North American companies. With the election of President Alan Garcia, who immediately signed a trade agreement with the United States, Peru has become much friendlier toward foreign mining companies.

In April of 2007, President Garcia, along with the Minister of Mines and its vice-minister appeared in Piura and publicly stated that the government will promote mining in Northern Peru and intends to help formalize all mining operations.

This business-oriented approach stands in stark contrast to other South American mining countries, such as Bolivia, Venezuela, and Ecuador, which have leftist-leaning governments that are far less accommodating to foreign investment.

An additional benefit of working in Peru is the country’s established history with prominent mineral exploration companies. Peru already has major companies such as Newmont, Barrick, Xstrata, Nilam Resources,Phelps Dodge, and Teck-Cominco operating within the country’s borders.