New royalty legislation will get the go ahead in Peru, but the percentage will be tied directly to commodity prices versus the original proposal, which called for royalties on company revenue.
The Peruvian congress approved a royalty levy of 1-3% on mining revenue, but some government officials believe this will discourage investment.
A week after the royalty was approved in congress, Southern Peru Copper and Barrick Gold, the world’s third-biggest gold producer, withdrew from the auction process of the Las Bambas copper deposit, situated in the country’s southern Andes. Without other serious bidders for the project, the government is thought to have lost roughly US$20 million on the final price of Las Bambas.
Southern Peru says it will review investment plans for its Los Chancas copper project, which may require as much as US$500 million in upgrades.
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