LatinNews Daily Briefing - 30 August 2011

Significance: The royalty or ‘óbolo minero’ is 6.5 times that of former President Alan García (2006-2011) – and 39 mining companies have already agreed to pay under the new scheme. Going forward, the government will get between 1% and 7% of operating profits, instead of the 1% to 3% currently being paid on total sales. Contractual tax stability clauses will be honoured by the government. Currently, 40% of government revenue comes from mining and, according to the Chilean Centro de Estudios del Cobre y la Minería (Cesco), the new royalty will give the Peruvian state a greater revenue stream than its southern neighbour’s. What remains to be seen is if the Peruvian state can actually spend this extra cash efficiently.

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