Understanding Mining Royalties and State Activities
Mining Royalties: Understanding the Basics
The Canon is a percentage of the total revenue and income obtained by the State from the economic exploitation of natural resources carried out by private companies. This revenue is then distributed to regional and local governments located within the jurisdiction where these companies operate.
Sobrecanon
The Sobrecanon consists of an additional fee to the applicable percentage for monthly fees.
Objectives of Mining Royalties
The purpose of the Canon is to provide regional governments (regions) and local governments (provinces and districts) with financial resources to promote sustainable development. These funds are intended to be used for investments that improve the quality of life for residents.
Scope of Mining Royalties
To distribute these resources, the Canon considers the catchment area, which is the land area of local and regional governments in whose district the natural resources are exploited. If resources are found in different districts, the distribution is made in proportion to the sales value of each unit of production concentrated (in the case of mining royalties) and the production of each unit of production in other types of fees.
Distribution of Mining Royalties
- 10% of the total fee to local governments
- 25% of the total fee to district municipalities
- 40% of the total fee to the local government department or departments
- 25% of the total fee to the regional governments exploiting the natural resource
Types of Mining Royalties
- Mining Canon: Derived from the use of metallic and non-metallic mineral resources.
- Oil Canon: Derived from oil production.
- Gas Canon: Derived from the exploitation of natural gas and condensate (when the temperature and pressure of the extracted gas change, converting it into liquid).
- Hydropower Canon: Derived from the provision of electric power generation using water resources.
- Fishing Canon: Derived from the commercial extraction of larger-scale fisheries, natural hydrobiological resources in maritime waters, inland lakes, and rivers.
- Forest Canon: Derived from the use of forest products and wildlife.
Site Search Criteria
There are three criteria for regular research sites:
- Freedom does not require a license from the authority.
- Administrative approval is required.
- Joint, combining the two.
The Mining Concession and Minerals
A mining concession is a state act emanating from the competent authority to authorize exploration and exploitation. It is a discretionary administrative act, meaning the law permits the administrative authority to decide whether or not to work, how to act, and what content to give to their performance.
The mining concession is divisible, which means you can request material items fractionation.
State Activities in the Mining Sector
The state is entitled to exercise, without exception, all activities in the mining industry, but it is subject to the concession as a private entity.
INGEMMET, under responsibility, makes exceptions available to the public for valuable consideration.
PROINVERSION, or a person acting in agreement with the Regional Governments, may undertake the process of promoting investment in all or part of those areas.
PROINVERSION, or its substitute, may request the Ministry of Energy and Mines to extend the process of investment promotion to one hundred thousand (100,000) hectares.
State mining activities, except for marketing, shall be exercised by the mining company in Peru directly and/or through affiliates or subsidiaries.
Marketing and Mineral Reserve
The marketing of mineral products is free internally and externally, and its exercise does not require the granting of a concession.
Individuals Disqualified from Mining Activities
- President of the Republic
- Members of the Legislative and Judicial Power
- Ministers of State and their officials with this rank
- Comptroller General
- The Attorneys General of the Republic