Mining rights and title in Peru

Mining rights and title

To what extent does the state control mining rights in your jurisdiction? Can those rights be granted to private parties and to what extent will they have title to minerals in the ground? Are there large areas where the mining rights are held privately or which belong to the owner of the surface rights? Is there a separate legal regime or process for third parties to obtain mining rights in those areas?

The Peruvian state is the owner of natural resources, which include minerals, therefore the Peruvian state owns the mining rights. Exploration, use and exploitation of mining rights can be granted to private parties, through the regime of mining concessions. Mining concessions have the nature of immovable goods.

Mining concessions constitute a different right from surface land over them. Owners of surface lands are not authorised to perform mining activities on them, unless they have a valid mining concession title granted by the INGEMMET.

What information and data are publicly available to private parties that wish to engage in exploration and other mining activities? Is there an agency which collects mineral assessment reports from private parties? Must private parties file mineral assessment reports? Does the agency or the government conduct geoscience surveys, which become part of the database? Is the database available online?

INGEMMET is the governmental entity that runs the mineral concessions cadastre providing complete public information regarding mining concessions. Information held by INGEMMET is public and available through its website.

Title holders of mining concessions shall submit a consolidated annual declaration to MINEM providing information regarding the activities performed. Information submitted is used to create statistics on mining activities on Peruvian territory.

What mining rights may private parties acquire? How are these acquired? What obligations does the rights holder have? If exploration or reconnaissance licences are granted, does such tenure give the holder an automatic or preferential right to acquire a mining licence? What are the requirements to convert to a mining licence?

Persons or entities are entitled to request mining rights. The General Mining Law establishes four different types of mining rights as follows:

• a mining concession grants rights to execute mining activities of exploration and exploitation - it has the nature of an immovable right;
• a beneficiation concession grants the right to perform physical, chemical and physical-chemical processes to concentrate minerals or to purify, smelt or refine metals;
• a general labour concession grants the right to perform auxiliary mining services or activities such as ventilation, drainage, lifting or extraction to mining activities; and
• a mineral transportation concession grants the right to provide massive and continuous transport of mineral products by unconventional methods.

Title holders of mining concessions shall pay validity fees to INGEMMET. The amount of such a fee depends on the condition of the titleholders (small, artisanal or general regime).

Small title holders are entities or persons holding concessions in an area of less than 2,000 hectares with no more than 350 metric tonnes of production per day and must pay a validity fee of US$1 per hectare; artisanal titleholders are entities or persons holding concessions in an area of less than 1,000 hectares with no more than 25 metric tonnes of production per day and must pay a validity fee of US$0.50 per hectare. The general regime applicable to titleholders for entities or persons who do not qualify as small or artisanal and the fees are US$3 per hectare. Validity fees must be paid annually to maintain mining concessions in force. The non-compliance of validity fee payment for two consecutive years results in the extinction of the mining concession.

The Mining Law obliges mining concessions holders to move into production. Holders shall reach a minimum annual production (MAP) established by the General Mining Law. Nowadays, there are two MAP regimes, depending on the date of the mining concession title. However, in 2017, the Peruvian government decided to regulate only one regime for all types of mining concession. In this context, according to Legislative Decree No. 1320, from 2019 holders of mining concessions will be required to reach a minimum annual production, equivalent to one tax unit (approximately US$1,250) per year per hectare. If the holder of a mining concession cannot reach the minimum annual production in the first quarter of the 11th year from the year in which the concession was granted, the holder will be required to pay a penalty equivalent to 2 per cent of the applicable minimum production per year per hectare until the 15th year. If the holder cannot reach the minimum annual production in the quarter of the 16th year from the grant year of the concession, the holder will be required to pay a penalty equivalent to 5 per cent of the applicable minimum production per year per hectare until the 20th year. If the holder cannot reach the minimum annual production in the first quarter of the 20th year from the grant year of the concession, the holder will be required to pay a penalty equivalent to 10 per cent of the applicable minimum production per year per hectare until the 30th year. Finally, if the holder cannot reach the minimum annual production during this period, the mining concessions will automatically expire. Holders of mining concessions that were granted before 2008 will be obliged to achieve MAP from 2019.

What is the regime for the renewal and transfer of mineral licences?

The mining concession must be maintained by paying validity fees and complying with the corresponding minimum production, when appropriate (see question 10).

Transfer of mining concessions can be done by private civil agreements regulated by terms freely agreed. The main principle that rules commercial transactions in Peru is ‘contractual freedom’; therefore, there are no limitations to the transfer of mining concessions.

On the other hand, regarding the transfer of authorisation to the environmental permits and commencement of mining operations (exploration and exploitation), it is considered as an inherent right to the mining concession. Therefore, once the mining concession is transferred, the permits and authorisation are transferred to the new titleholder. The new holder must communicate the transfer to MINEM. Notwithstanding the aforementioned, in order to simplify the permits transfer, the Peruvian government approved a law that regulates that in cases of a simple merger, split or reorganisation, all records, certificates, permits, licences and authorisations obtained or in process, will be automatically transferred to the (new) company that receives the patrimonial block. This provision shall not apply to permits whose special regulations prohibit their transfer, such as water permits and the registration of chemical inputs and taxable goods.

What is the typical duration of mining rights?

According to the General Mining Law the mining concession is irrevocable as long as the titleholder fulfils the legal obligations required to maintain it in force. However, the titleholder shall comply with all the obligations in order to maintain the mining concession valid (see question 10). The General Mining Law provides that mining concessions can be extinguished only by:

• expiration (as a consequence of a failure by a titleholder to pay the mining validity fee and/or penalties for two years (consecutive or not));
• abandonment (as a consequence of the breach of the mining procedure rules applicable to a mining claim);
• nullity (in case a mining concession was claimed by an individual or entities that have restrictions according to the mining law);
• resignation (in case the titleholder requests the extinction of the mining right); and
• cancellation (in case mining concession overlaps with priority rights or when the right is unassailable).

Is there any distinction in law or practice between the mining rights that may be acquired by domestic parties and those that may be acquired by foreign parties?

According to the Constitution, foreigners have exactly the same rights as Peruvians. The only exception is in the case of foreigners intending to acquire mining rights or properties located within 50km of the Peruvian border - in such a case, they will not be able to acquire properties or mining rights unless they previously receive express authorisation through a Supreme Decree.

How are mining rights protected? Are foreign arbitration awards in respect of domestic mining disputes freely enforceable in your jurisdiction?

According to the Constitution, Peru has an independent judicial system based on independence of powers. Notwithstanding, a party can freely elect to submit its controversies to local or international private arbitration.

The Peruvian state is party to the:

• the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958;
• the Inter-American Convention on International Commercial Arbitration 1975 (Panama Convention); and
• the Inter-American Convention on the Extraterritorial Effectiveness of Foreign Arbitral Judgements and Awards 1979 (Montevideo Convention).

The above conventions guarantee the recognition and enforcement of foreign arbitral awards in Peru.

What types of surface rights may mining rights holders request and acquire? How are these rights acquired? Can surface rights holders oppose these requests?

Titleholders of mining concessions can freely acquire surface lands located over its mining concessions.

In the case of surface lands owned by native communities, it will be necessary to obtain approval from the community through an agreement approving the transaction by a qualified majority of the community.

For the purchase of surface lands owned by the government, it is necessary to follow an acquisition process with the Peruvian state through the Superintendency of National Properties.

Does the government or do state agencies have the right to participate in mining projects? Is there a local listing requirement for the project company?

In accordance with the Constitution, the Peruvian state has a promotional role to develop private investments. In a subsidiary way, the Peruvian government, through a special law, can be entitled to perform business activities (including mining).

Are there provisions in law dealing with government expropriation of licences? What are the compensation provisions?

According to the Constitution, property rights are inalienable (Peruvian Civil Code mining rights have the same status as property). Private parties may be expropriated of their rights only in the case of an event of national security or public necessity duly declared by special law. In those specific cases, the Peruvian state must pay a fair appraised compensation for the expropriated property.

Are any areas designated as protected areas within your jurisdiction and which are off-limits or specially regulated?

Investors interested in developing mining activities in Peru must respect protected areas appointed by the Peruvian government. The treatment of protected areas has special regulation according to their nature.