Mark your dates for 03rd Global Gold Dore Forum on 01-02 Mar 2019 at Taj Vivanta Dwarka, New Delhi..., 3rd Asia Pacific Precious Metals Conference on 09-11 June 2019 at PARKROYAL on Beach Road, Singapore...
 You are here : Home > Expert Column
 
 

Highlights of the Indian delegation to Peru

The below is a summary of Peruvian gold mining sector, with emphasis on the small-scale and artisanal mining sector. The below is based on the facts collected from various government agencies as well as private conversation when a delegation from India visited Lima, Peru.

A 17-member delegation comprising refiners and dore importers from India visited Lima, Peru between 25 and 26 October 2018 and met officials at the Ministry of Foreign Trade and Tourism and Ministry of Energy and Mines, Government of Peru and also private sector players in the industry.

The purpose of the visit is to understand Peruvian regulations regarding gold dore exports, share information about the Indian regulations on gold dore imports and explore opportunities to import gold dore from Peru in a responsible and transparent manner.

Peru- fast growing, mining rich, high middle-income country

With a population of 30 million, Peru is one of the fastest growing economies amongst its peers in South America with an estimated GDP of USD 215 billon growing at over 2.5% per annum. Based on the per capita GDP of over USD 12,000, Peru is classified as High Middle-Income country. Through pragmatic policies, the government of Peruhas been able to contain inflation at 1.6%and unemployment levelat under 7%. Mining exports (mainly gold, copper, silver) account for over 55% of the overall exports. Corporate tax rate is about 30%, VAT is 18%. Royalty payment terms for mining sector vary based on several criteria. Import tariff on goods is relatively low with only three rate slabs - 0%, 6% and 11%. About 60% of imports come under 0% slab.

Well-organised gold mining sector

The mineral rich country has gold deposits almost everywhere (mostly hard rock, with a minor patch of alluvial gold in forest region). Besides, Peru is the second largest producer of silver; about 80% of which is obtained as secondary produce from about three or four copper mines.

Peru has a well-structured four-tier classification (large, medium, small and artisanal) of the gold mining industry based on a combination of criteria that include the acreage under concession, the quantity of ore mined out per day, number of workers involved in mining and so on. Government of Peru permits foreign direct investments into gold mining sector up to 100%. However, there are no special incentive or tax breaks on such investment.

Special programmes for formalisation of artisanal miners:

The government has embarked on a massive programme to formalise the artisanal sector in 2012. The first phase saw over 6000 miners getting formalised. A second phase of formalisation commenced in 2016 and is expected to be complete by 2019/20. All the projects of formalising the informal miners into formal ones are pursued under the programme “REINFO”. The ministry’s website provides details of all the 1263 miners who have signed up for formalisation programme. Enrollment to formalisation programme is contingent on obtaining certain clearances from concession owner, environmental agencies, archaeological clearance and so on. Those that do not sign up for formalisation are classified as “illegal miners” and dealing with these miners are not permitted.

The process followed by artisanal miners:

Large and medium scale miners have their own mines and processing plant to concentrate the ore (typically 3 – 4 gm/ton) to concentrate and then to dore. Many small-scale miners and artisanal miners use processing plant of others located within their province to obtain concentrate or / and in some cases gold dore. While private discussion suggests that selling ore itself is widely practised amongst some artisanal miners, while some convert ore to dore and sell it in major cities.

Government is sensitive to employment potential of the small and artisanal gold mining sector. However, being a signatory of Minamata Convention, government of Peru is determined to reduce the mercury poisoning in around mine site and is committed to environmental restoration.  

Peruvian gold production estimation:

Peru produces about 150 tons of gold every year. This is based on the officially declared exports from large, medium and small-scale mines. Gold production estimates of informal sector vary widely. An estimate from the government states that about 17 tons/year of gold is produced by miners who are waiting to be formalised.

India’s share in Peruvian gold dore exports:

India is estimated to buy about 35 tons of gold dore from Peruvian miners annually. There has been a steady growth in the exports of gold dore from Peru to India.

What could succeed in Peru?

Peru holds a very good promise for Indian gold refiners. Peru can be a very reliable source of supply of gold dore that is responsible and transparent. Working at multiple levels (government to government as well as business to business level) can help in streamlining the processes and improve compliance. India can be the best partner for Peru to support its initiative of formalising the artisanal gold mining sector. A comprehensive and collaborative approach is expected to yield positive results. Time is right for the Indian gold dore importers to come together and work out a plan of action with the Peruvian gold mining sector, with the support of the Indian embassy in Peru.

Useful Websites:

Ministry of Energy and Mines, Government of Peru - www.minem.gob.pe

Ministry of Foreign Trade and Tourism, Government of Peru – www.mincetur.gob.pe

End note:

On behalf of the delegation, the author would like to thank all the Peruvian government officials- vice Minister of Mines, Director General of Mines Formalisation, Director of Cooperation, Officials from Proinversion, Lima Chamber of Commerce, Mining Association and the Peru Embassy in India for their time, presence and insights. Likewise, thanks to all private sector participants from Peru for engaging with the Indian gold dore importers.

We also take the opportunity to express our sincere thanks to the Honourable Ambassador of India in Peru Mr. MandarapuSubbarayudu and Second Secretary and Commercial Representative Mr. Arup Kumar Saha for their continuous guidance and support.

 

Disclaimer: Views are personal and not the views of the publisher.