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Peruvian miners open to discussing modifications to tax stability agreements

6th August 2021

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LIMA – The president of the Peruvian industry chamber representing mining companies in the country said on Thursday the sector is open to discussing revisions to tax stability agreements with the new left-wing government, which is seeking to hike taxes.

"In reality, we can always discuss it, even more so when the authorities request it," said Raul Jacob, president of the National Society of Energy, Mines and Oil, as well as CFO of Southern Copper Corp

"But what we need to consider is that companies have made investments based on an agreement," he added, in an interview with Reuters.

Peru, the world's No. 2 copper producer, has signed as many as 25 tax stability agreements since the 1990s, data from the Mines and Energy Ministry shows. Six remain in place.

A new administration led by Pedro Castillo, an elementary school teacher, is seeking to increase taxes on miners to fund social programs.

The tax stability agreements are meant to buffer investors from political or economic upheaval and experts say they set the stage for investment in some of the country’s largest mines.

Leftwing lawmakers in neighboring Chile, the No. 1 copper producer, are also seeking to hike taxes on miners, while high metal prices have already boosted tax revenues.

Any revision to those agreements would hit Chinese mining firms hardest, including MMG and Aluminum Corp of China (Chinalco).

"There's always room (to talk), but we need to be conscious that what is at stake is the country's competitiveness," Jacob said.

"In the next five years there are planned projects for around $20 000-million...they should not go to other countries."

Edited by Reuters

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