Logo Minería

Inicie sesión aquí


At the opening presentation held on January 30th for Mining Thursdays 2020 (Jueves Mineros 2020), Econ. Gonzalo Tamayo, partner of Macroconsult and former Minister of Energy and Mines, gave a talk entitled “Mining Industry Competitiveness Index,” in which he explained that in order to promote improvements in the sector that will yield results in the short term, it is a priority to address the issue of permits and regulation. 

On this occasion, Eng. Roberto Maldonado, second vice-president of the Peruvian Institute of Mining Engineers (IIMP) chaired the head table.

The Mining Competitiveness Index (MCI), is a joint product established by the IIMP and Macroconsult, with the participation of Marita Chappuis, a specialist in mining issues, Rafael Lengua, regarding legal aspects and procedures in different jurisdictions, and Fernando Castillo, who addressed the social aspect, among others.

The task was to incorporate those elements involved in a project until it eventually becomes a mine, and their relationship with the governments concerned and the social environment and infrastructure, always with objective data.

The Fraser Index is somewhat similar, and will probably be presented at PDAC 2020 next March; however, in that case it is elaborated based on surveys that reflect temporary perceptions, so it is possible that Peru will fall in this indicator, especially due to what happened to Tia Maria project and Las Bambas stoppage, given the impact of the latter.

We do not want to compare ourselves with this indicator, as we do not work with perceptions but with official statistics. When producing an index of this nature, we have to ask ourselves two questions: What kind of sources are used? and Is it replicable at a methodological level, is it auditable, can it be updated periodically and is it representative and does it place Peru among the most important mining countries?

In this sense, the nations that make up the Pacific Alliance were chosen: Chile, Colombia and Mexico, as well as Australia, Canada and South Africa, which have reserves and an important mining production on a global level. 

At this point, it is worth noting that due to their importance, the jurisdictions of British Columbia, in the case of Canada, and Queensland, in the case of Australia, were considered. 

One of the main issues taken into account for the MCI is related to the geological potential, which deals with how explorations are conducted and the relationship between production and reserves, and their exhaustion time.

Within this framework, we have a high geological potential due to our geography and, in a range of 1 to 10, we score 4.7 points, placing us ahead of Chile (3.9), Mexico (3.7), South Africa (3.3) and Colombia (1) and only behind Australia (10) and Canada (4.9).

The second aspect analyzed was the tax policy, not only the specific one applied to the mining sector, but also all those that have an impact on a project. Each country has different types of taxes and collection mechanisms. The idea was to compare the same project in different jurisdictions and see where it is more or less profitable.

In this context, the Quellaveco project was taken as a basis, a simple financial model was applied and the tax rates were differentiated in the whole tax scheme. It was found that they all have accelerated depreciation, however, they do not distribute profits.

Thus, the Internal Rate of Return in Peru was 14.5%, which is below South Africa (15.2%), Australia (15.3%), Chile (15.8%) and Canada (16.4%), and above Colombia (14.2%) and Mexico (13.7%).

With these results, it can be concluded that our country is in line with the standard in tax matters and ranks fifth in this aspect, so it is necessary to demystify that Peru's tax regime has exemptions that favor companies; in fact, Australia, Canada, Chile and South Africa give a more beneficial tax treatment.

Another issue that has been considered is infrastructure, which is fundamental to the projects since they involve transporting not only construction materials and inputs but also concentrates.

Among others, the distance of the mines to the nearest port and the altitude where the operation is located were analyzed, and it was found that Peruvian mines face a more adverse geography than their peers in other jurisdictions. The logistics solution weighs heavily in terms of project economics and involves greater or lesser risks of disruption for various reasons.

In addition, it was identified that the biggest challenge is in land transport infrastructure, where the use of railways has remained in time and, when it comes to roads, we are behind several nations, so the country is in last place. 

On the other hand, it is important to highlight the capacity and quality of the ports from which the concentrates are exported, which allows Peru to be in second place, only behind Chile. Matarani is one of the most modern ports in Latin America and one of the most important in the world, due to its copper cargo volume from a single point. 

Regarding energy, the current excess supply, which will gradually disappear, makes prices quite advantageous. However, this will not be the case in the next decade, so we must work on this advantage in order not to lose it. 

In general, in terms of Infrastructure, Peru is in the last place with 1 point, below: Mexico (3.1), Colombia (3.5), Chile (6.5), Australia (8.5), South Africa (9.5) and Canada (10).

In terms of institutions and regulation, legal teams are required in our country to launch the projects, with variable deadlines and the number of institutions participating in the process playing an important role. Permits for simple explorations have recently increased, taking two years. However, in Chile they take less than one year, without taking into account other jurisdictions where they are granted in less time. 

The number of institutions has also multiplied, but what complicates matters most in Peru is that the deadlines are not respected in practice; as a whole, through the proliferation of instruments and deadlines, plus non-compliance, we have remained behind.

For example, this is the case of Tía María project which, despite having the construction permit, cannot be built until at least the term of this government is over. This type of authorization does not exist in other countries, where once the environmental instrument is approved, the investor decides when to build and informs it to the government. 

Our conflict resolution mechanisms are not the best, and do not end where they should, that is, in the Judicial Branch; they have been de-institutionalized, and are resolved via roadblocks and dialogue tables, due to overall institutional weakness. 

For this index, Peru is also last with 1, far behind Chile (5.56), Colombia (6.2), Mexico (6.6), Canada (9.6), South Africa (9.9) and Australia (10). 

Finally, regarding Social Environment, it should be noted that most of the mining projects in our country are developed in extremely poor areas. In general, we only exceed South Africa in terms of per capita GDP and, in terms of rural population, only that nation has more inhabitants in the countryside.

Regarding the Human Development Index, we are above Colombia and South Africa, and we are tied with Mexico; while regarding the Rule of Law, we rank better than Colombia and Mexico.

Except for Chile, which has a conflict report similar to the Peruvian one, published by the Ombudsman's Office, there are no similar reports in other countries. However, there are misunderstandings about mining in Mexico and Canada, although they are limited in time due to the effect of the institutional framework on their resolution. 

In this aspect, Peru totals 1.4, the same as Mexico and ahead of Colombia (1). We are surpassed by South Africa (3.3), Chile (5.9), Canada (9.2) and Australia (10).

When we make a joint analysis of the five components, while starting well in the geological and tax aspects, we end up penultimate in terms of the other indicators, which means that we have significant geological potential, but we are not able to reach the level we should as mining producers.

Thus the Mining Competitiveness Index in 2019, places Australia in first place with 9.3, followed by: Canada (7.6), South Africa (5.5), Chile (5.1), Mexico (3.6), Peru (3) and Colombia (2.3).

This information allows us to infer that if Peru had Chile's infrastructure, it would improve one position; if the regulations were at the level of its southern neighbor, we would displace them from fourth place, and if we add institutional practices like Canada, we would be in a better position to take advantage of mining.

In this sense, as improving infrastructure is an issue that takes more time and, in reality, each project develops its own roads and accesses, in order to make a faster leap, it is a priority to address the issue of permits and regulation.  

This year, it is particularly important because it is a pre-election year. When one looks at the number of formal workers in mining, there are about 250,000 people, whose families have an average of four members, that is, there are one million Peruvians who benefit directly from mining activity, without taking into account the great number of informal mining workers.

When we see the results of the last elections, e.g. in my homeland Cusco, we are concerned, because many people believe in non-mining, even when mining represents 33% of the national electricity demand; in the south, 30% of diesel consumption; the average salary granted is almost three times the national average; it represents 62.2% of the export volume, 35.5% excluding foreign sales of iron, and 20% of the corporate income tax.

In this context, as opposed to the groups that believe in non-mining, the million people that benefit from it are in a position to find the ways to speak out in favor of the development of our mining potential.

Contributions through the exchange of ideas

ν The chairman commented that the MCI is one of the studies that the IIMP has promoted along with the one related to the micro and macroeconomic benefits of mining in Peru, among others. However, despite this effort, it is necessary to expand the spaces for communication.

ν Regarding whether the majority of Peruvians consider that we are a mining country, the speaker said that there is no single answer, but we must consider that when an 11-year-old boy was asked what is the coolest market product, he answered: Tesla, because these vehicles do not harm the environment.

This means that there is an internalization of this topic, but it contains a complication in the sense that oil is seen as a bad word, however, gas, which is something similar, is not seeing the same way. We must prevent mining from being seen in the future as a bad thing, and that has to do with education, developing campaigns not only about how minerals influence life, but also about how their production generates well-being for a million people, compared to those who believe that there should be no mining. We need to recover pride in mining, as is happening in Chile, where the average person admires and supports the position of mining.

At the Commission for Sustainable Mining Development, representatives of environmental NGOs, as well as government workers, have little information about the country's mining reality. On the other hand, environmental liabilities at the national level generate a bad image, which affects mining.

ν Regarding the competitiveness of human resources, it was not included in the MCI, since there was no way to compare it. Fraser does this and highlights the fact that Peru has a qualified workforce, which is also exported. Currently, mining is an important source of social mobilization, as people who study in public universities, due to their professional success, achieve a better life status with their families.

ν Technology will make mining change a lot, and universities are not realizing that. In terms of research and development of clusters, we have a long way to go. Arequipa has achieved this and has the conditions to be a major mining center, but Chile is ahead of us. In R&D, we have a long way to go; PERUMIN is one of the few places for academic exchange.

ν In the future, a regional index could be developed, to make a comparison not only between mining or non-mining areas, but internally within them at different times, as in the case of Cajamarca, which 10 years ago had more potential than Arequipa and now is totally the opposite.

ν It is fundamental to incorporate mining into long-term plans, but neither in Ceplan, which has the responsibility of being future-oriented, nor in the National Agreement, is there any significant reflection on the importance of mining for the country's development.

Artículos relacionados

En esta edición: minería es de interés nacional, Quellaveco y Las Bambas

Seguir leyendo

Recomendaciones de la comisión de desarrollo sostenible y visión del Rimay deben ser tomadas en cuenta por candidatos

Seguir leyendo

Ingrese sus datos aquí


Recuperar Contraseña


Recuperar Contraseña

Si tiene problemas para recuperar su contraseña contáctese con el Área de Servicio al Asociado al teléfono 313-4160 anexo 218 o al correo asociados@iimp.org.pe


Ha ocurrido un error al iniciar sesión

Si tiene problemas para recuperar su contraseña contáctese con el Área de Servicio al Asociado al teléfono 313-4160 anexo 218 o al correo asociados@iimp.org.pe


Ingrese sus datos y nos pondremos en
contacto para poder completar su compra


Ingrese sus datos y nos pondremos en
contacto para poder completar su compra