Peru enacts new mining tax to raise $5.5 bn

Peru's new leftwing President Ollanta Humala has passed three new mining laws containing a tax hike aimed at raising $5.5 billion over the next five years to be used for social spending. The laws passed Wednesday fulfill a campaign pledge made by Humala before he assumed office two months ago to ensure that the country's poor share in its recent economic success. "This will allow the state to have more resources to be used primarily for infrastructure in the poorest areas of the country, in order to bring about social inclusion," Humala said at an official ceremony. The new legislation creates a new mining tax, modifies the law on mineral royalties and establishes a new legal framework for the industry. The powerful mining sector agreed to the measures in August and Congress passed the laws last week. Mining is central to the Peruvian economy, accounting for some 60 percent of exports. The National Mining Company (SNM) says private firms paid $646 million in royalties last year. The new laws will remain in effect for the next five years, coinciding with the presidential term of Humala, who had promised to raise taxes on mining profits because of the high price of precious metals. The Andean nation is one of the world's leading producers of precious metals, notably silver, copper, gold and tin. Peru has seen record economic growth during the last decade and growth of 8.5 percent in the past 12 months. But development has lagged behind the increasing wealth, and Humala was elected in part on promises to address economic inequality.