Peruvian 'misgovernment' drives away mining investors

For the third consecutive year, Peru has dropped in the index of the most attractive regions and countries for mining investments, revealed the 2021 Annual Survey of Mining Companies by the Fraser Institute of Canada. Experts attribute the fall in ranking to the country’s "misgovernment" and social conflicts.

The Andean country’s position in the index fell by 18 slots and now ranks 42nd out of 84 nations and cities in the investor attraction index. Last year, Peru fell eight positions. In 2020 it was ranked 34th, 24th in 2019, and 14th in 2018, reported La República.

The ranking evaluates the geological potential and public policy factors such as taxation and regulatory uncertainty that affect investment in mineral exploration in each country or city.

 Gonzalo Tamayo, former Minister of Energy and Mines, told La República that Peru's decline in the Fraser Institute's ranking this year is due to "misgovernment." In contrast, in the previous two years, it was the result of increased social conflict.

"This year, it is evident the lack of government that exists and the negative way in which the government treats mining. In previous years, we have had some setbacks derived from greater conflict or situations of difficulties in relations with native communities," he explained.

In the Political Perceptions Index (PPI), Peru decreased by almost 29 points and fell 27 positions to 69th—the largest contraction in that indicator in Latin America and the Caribbean. According to the Fraser Institute, "respondents raised important issues around environmental regulations (+49 points), regulatory duplication and inconsistencies (+40 points) and safety (+31 points)".

Another former mining official, Rómulo Mucho, described the drop in Peru's position in terms of interest for mining investments as "disastrous," as the country needs them "to generate employment and capital."

The former vice-minister and academic of the Universidad Nacional Mayor de San Marcos (UNMSM) agrees that Peru is losing competitiveness due to the weakness of its institutions and political instability, in addition to social conflicts and the lack of promotion of mining by the State.

"Peru has always had the best geological factor. What we don't have is the institutions or stability," he told La República. The expert believes that the government, which is in the hands of the leftist Pedro Castillo, should change its state policy and appoint the best specialists in the sector's institutions.

"The Executive has to appoint capable key officials, who occupy by merit the ministries, vice ministries, and general directorates," he said.

Nevertheless, mining investment in Peru continues to be considerable. Between January and November 2021, the country received a total of $4,453 million, according to the Ministry of Energy and Mines (Minem).