Problems relating to Trade and Investment on Peru

24. Indigested legislation, abrupt changes
Issue	Issue details	Requests	Reference

(1) Undefined details of Law of Prior Consultation

- While Indigenous People's "Law of Prior Consultation" was promulgated on 6 September 2011, its detailed implementing regulation remains undefined. While the Law is addressed exclusively to the registered indigenous people, it is interpreted by some as if the Law applies to unregistered indigenous people as well. As a result, the disputes have spread nationwide.

- It is requested that GOP:
-- expedites promulgation of detailed implementing regulation,
-- explanation of the system to general public, and
-- enlighten general public about the Law of Prior Consultation.

- Ley de Consulta Previa (Law of Prior Consultation)

(2) Legalisation Policy on Informal Mining Enterprises

- Due to the existence of Informal Mining Enterprises (Informal Mes) within the Firm's Mining Territory and GOP's legalisation effort of such Informal Mes, the legitimate mining activity gets stranded.
Supreme Decree DS006-2012-EM promulgated in March 2012 defines those operating in the "prohibited area for mining" as "Illegally Mining Enterprises" (Illegal Mes) (mineria illegal) and those operating in the authorised area but without requisite legislative procedures as "Informal Mes" (mineria informal). Legislative Decree No.1105 promulgated in April 2012 defines the procedures for formalisation (formalizacion), and further provides that the local government or Ministry of Energy and Mining will intercede between the Informal and Formal Mining Enterprises.
Nevertheless, in light of the following problems, a Firm wishes to submit that legalisation of Informal Mes, far from turning the mining industries into modern business, on the contrary, will retard their development into the modern industries. The legalisation of Informal Mes is unprecedented elsewhere in the world:
(1)These illegal or informal mining enterprises have been causing most of the environmental pollution by their mining business.
(2)Informal Mes interfere with the authorised activity alleging their "Vested Interest". For example, unless the formal enterprises accept legalisation of informal mining enterprises, which are landowners, it is obvious that they would refuse signing on the Land Registration required under Supreme Decree 020-2012-EM.
(3)Informal enterprises are unwilling to accept tax payment obligation by legalisation of their informal operation.
(4)At the back of Informal Mes there remains existence of illegal enterprises that purchase minerals from Informal Mes.
It is incumbent upon GOP to tighten the control as they do in the leading countries in mining industries in exclusion of Informal Mes and Illegal Mes that purchase products from informal Mes. This is the way it should always be.

- In legislative amendments, it is requested that GOP:
-- provides opportunities for exchange of information with enterprises including FFEs, then
-- let the details of the legislative amendments widely known,
-- provides the period for public hearings, and then
-- promulgates and enforce such amendments.
- It is requested that GOP tightens its clampdown on Informal Mes and Sale and Purchase of their Products.

- Supreme Decree DS006-2012-EM
- Decreto Legislativo No 1105, etc.

(3) Irrational Penalty System

- A Mining Enterprise is entitled to own without penalty the mine lot for 10-years after the filing date of application, provided, however, that penalty accrues for failure to expend into a mine exploration after the lapse of 10-years. Agreement of the local residents, which is prerequisite for mine exploration, however, is difficult to obtain, while the time lapses until the penalty alone accrues, while the Mining Enterprise is unable to expend into the mine exploration.

- It is requested that GOP reviews the penalty system concerning the exploration of mines in the mine lot.

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