Skip to main content
  • News
  • Events
  • Blog
  • Search

Natural Resource Governance Institute

  • Topics
    Beneficial ownership
    Economic diversification
    Mandatory payment disclosure
    Revenue sharing
    Civic space
    Energy transition
    Measurement of environmental and social impacts
    Sovereign wealth funds
    Commodity prices
    Global initiatives
    Measurement of governance
    State-owned enterprises
    Contract transparency and monitoring
    Legislation and regulation
    Open data
    Subnational governance
    Coronavirus
    Licensing and negotiation
    Revenue management
    Tax policy and revenue collection
    Corruption
  • Approach
    • Stakeholders
      • Civil society actors
      • Government officials
      • Journalists and media
      • Parliaments and political parties
      • Private sector
    • Natural Resource Charter
    • Regional knowledge hubs
  • Countries
    NRGI Priority Countries
    Colombia
    Guinea
    Myanmar
    Tanzania
    Dem. Rep. of Congo
    Mexico
    Nigeria
    Tunisia
    Ghana
    Mongolia
    Peru
    Uganda
    OTHER COUNTRIES
  • Learning
    • Training
      • Residential training courses
        • Advanced
        • Executive
        • Anglophone Africa
        • Francophone Africa
        • Asia-Pacific
        • Eurasia
        • Latin America
        • Middle East and North Africa
      • Online training courses
        • Massive open online course (MOOC)
        • Interactive course: Petronia
      • Trainers' modules
        • (empty)
    • Primers
    • Glossary
  • Analysis & Tools
    • Publications
    • Tools
    • Economic models
  • About Us
    • What we do
      • 2020-2025 Strategy
      • Country prioritization
    • NRGI impact
    • Board of Directors
    • Advisory Council
    • Leadership team
    • Experts and staff
    • Careers and opportunities
    • Contact us
    • Financials
    • Grant-making
    • Privacy policy
  • News
  • Events
  • Blog

You are here

  1. Home
  2. Blog

In Neighboring Chile and Peru, Mining Reforms Couldn't Be More Different

26 June 2014
Author
Alonso Hidalgo
Topics
Commodity prices, Global initiatives, Legislation and regulation, Measurement of environmental and social impacts
Countries
Peru, Chile
Stakeholders
Civil society actors, Government officials
Precepts
P1 P5 What are Natural Resource Charter precepts?
Social Sharing
This article also in:
Español

When it comes to mining policy, consensus is hard to find south of the Equator. Peru's government announced last week a package to speed up investment in the country after two quarters of poor economic performance. The package consists of a series of measures that would, among other things, limit environmental oversight and favor mining companies with 12 to 15 years of stabilization contracts.

Not surprisingly, the private sector has embraced the measures and demanded more, expressing confidence that congress will oblige. For the past three years, mining companies have advocated against the Ministry of Environment's sanctioning powers. The proposal plans to address those concerns. For starters, it weakens the Office of Evaluation and Environmental Control, which now may impose fines only as a last resort—and by 65 percent less than the current rates. Similarly, the ministry will no longer have the capacity to create land reserves or to establish air quality standards (functions reassigned to the Council of Ministers, with the express indication that their potential negative economic impact should be taken into account). Likewise, environmental officials are given extremely little time to provide opinion on environmental impact studies, which are approved by default if the deadline is missed.

Peru's president helped rescue miners in 2012. Now, the country’s mining industry is at a crossroads.
(Photo: Presidencia Perú / CC)

 

Chile faces similar challenges when it comes to mining investments. For example, the Chilean Environmental Evaluation Service reports that $10 billion in mining investments remain blocked following queries of indigenous communities appealing to the International Labour Organization Convention No. 169 on consultation rights.

However, the government's response could not be more different than that of its neighbor to the north, Peru. Indeed, Chilean president Michelle Bachelet has recently enacted changes that strengthen the Strategic Environmental Assessment Bill, giving it a leading role in public policy and regulatory plans, including land management. The administration has also announced that it wants to eliminate current stabilization arrangements with mining companies.

And many Chilean political leaders are up to that task. A group of influential political and business leaders and independent experts met with President Bachelet to propose mining sector reforms that push for fiscal decentralization in a country where royalties and taxes have long enriched the central government alone. It also suggests a rate hike for mining licenses to discourage speculation. Finally, it calls for Chile to adhere to the Extractive Industry Transparency Initiative to increase transparency and trust among stakeholders.

Ironically these initiatives, some of which could be perceived as negative for the private sector, did not stem from the progressive administration of President Bachelet, who only came to power a few weeks ago. On the contrary, the sector reform recommendations result from a cross-political effort between a highly respected private sector, civil society and government representatives over the past year. And the original proposal for the Strategic Environmental Assessment Bill was drafted by the conservative government of former president Sebastian Piñera.

In a broader perspective, the neighbors' divergent paths are a response to volatility in the global demand and price of minerals. While Chile plays catch-up with Peru in terms of fiscal decentralization, it is also pulling ahead in terms of strengthening its environmental institutions and eliminating tributary mechanisms that favor the mining industry. For its part, Peru is relaxing its environmental controls as a means to attract private investment, with potentially disastrous environmental consequences.

If their paths continue, they could one day find that a shared border is the only common ground between them.

Alonso Hidalgo is NRGI's information and communications assistant.

Related content

En un futuro bajo en carbono, una mejor gobernanza de los minerales podría impulsar el desarrollo

Alex Tilley, David Manley
27 September 2017

In a Low-Carbon Future, Better Mineral Governance Could Power Development

Alex Tilley, David Manley
27 September 2017

Who Really Benefited from the Commodities Supercycle in Latin America?

Carlos Monge
30 May 2017

Open Contracting for Oil, Gas and Mineral Rights: Shining a Light on Good Practice

26 June 2018

Passation de marchés ouverte pour les droits pétroliers, gaziers et miniers: gros plan sur les bonnes pratiques

28 June 2018

Recent Tweets

  • NRGInstitute
    NRGInstitute
    @NRGInstitute
    Follow @NRGInstitute
    🔎 Learn about natural resource governance, critical minerals in Andean countries and the #energytransition in our S… t.co/WyZQLFWy8P
    6 hours 50 min ago.
    Reply Retweet Favorite
  • NRGInstitute
    NRGInstitute
    @NRGInstitute
    Follow @NRGInstitute
    🖥️ Watch recordings of many of our past events - on everything from climate change and corruption to electric vehi… t.co/3gkMstrSnr
    21 hours 54 min ago.
    Reply Retweet Favorite
Helping people to realize the benefits of their countries’ endowments of oil, gas and minerals.
Follow on Facebook Follow on Twitter Subscribe to Updates
  • Topics
    Beneficial ownership
    Civic space
    Commodity prices
    Contract transparency and monitoring
    Coronavirus
    Corruption
    Economic diversification
    Energy transition
    Global initiatives
    Legislation and regulation
    Licensing and negotiation
    Mandatory payment disclosure
    Measurement of environmental and social impacts
    Measurement of governance
    Open data
    Revenue management
    Revenue sharing
    Sovereign wealth funds
    State-owned enterprises
    Subnational governance
    Tax policy and revenue collection
  • Approach
    • Stakeholders
    • Natural Resource Charter
    • Regional knowledge hubs
  • Priority
    Countries
    • Colombia
    • Dem. Rep. of Congo
    • Ghana
    • Guinea
    • Mexico
    • Mongolia
    • Myanmar
    • Nigeria
    • Peru
    • Tanzania
    • Tunisia
    • Uganda
  • Learning
    • Training
    • Primers
  • Analysis & Tools
    • Publications
    • Tools
    • Economic models
  • About Us
    • What we do
    • NRGI impact
    • Board of Directors
    • Advisory Council
    • Leadership team
    • Experts and staff
    • Careers and opportunities
    • Contact us
    • Financials
    • Grant-making
    • Privacy policy
  • News
  • Blog
  • Events
  • Search