Minister of Finance: Mining should contribute more to Peru’s development

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Minister of Finance, Luis Miguel Castilla, has stated that President Ollanta Humala wants mining companies to contribute more to Peru’s development than what they have done so far and so the formula for a windfall tax on mining is being developed.

"If you look at the rates of return on mining, due to the high prices of raw materials, they are fairly high levels," he noted.

According to an article in Andina mining exports amounted to $10.3 billion between January and May 2011, a 26.32% increase compared to the same period in 2010.

The minister said that the Ministry of Finance (MEF) and the Ministry of Energy and Mining (MEM) are in full discussions with mining companies on the implementation of the tax.

"We are working on a technical level, which would be the baseline against to think about an additional contribution (from mines) but it’s still too early to say what is the baseline," he told local radio RPP Noticias.

He said that they must first define what levels of taxation mining companies currently have, before defining the characteristics of the tax.

"The idea is to work and negotiate a consensus on the amounts of resources that the state may tax without breaking the competitiveness," he said.

Castilla stated that there is a portfolio of mining projects in excess of 40 billion dollars, which are ready to be run in the country, but employers are waiting for a definition of the windfall.

"This will be a new tax system that maximizes resources by state, but without compromising the future entry of major investment projects and respecting for contracts," he said.

Castilla noted that this is an important issue that requires a quick resolution but in a technical and balanced manner.

"Before assuming the leadership we were engaged in very cordial conversations with the National Society of Mining, Petroleum and Energy (SNMPE), we are in a technical phase of defining what are the different formulas to reach the goals that we face as a country" he said.

Castilla revealed that the proceeds would go to fund public works that do not receive mining royalties, in order to achieve a more active way of redistributing resources from the exploitation of natural resources.
 

 

Minister of Finance, Luis Miguel Castilla, has stated that President Ollanta Humala wants mining companies to contribute more to Peru’s development than what they have done so far and so the formula for a windfall tax on mining is being developed.

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