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Mining Vision 2030: Making It a Reality

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Mining Vision 2030: Making It a Reality MINING VISION 2030: MAKING IT A REALITY Cyprian Christian Niwa Dwitama Prakruti Joshi Eleanor Katz Alexander Rustler Eugenia Simo Garcia Sean Srichankij Zulpha Styer Mo Wang Faculty Advisor : Professor Jenik Radon School of International and Public Affairs Columbia Law School Spring 2019 Columbia University, Peru 2019 Capstone [page intentionally left blank] TABLE OF CONTENTS PAST SIPA CAPSTONE REPORTS ABBREVIATIONS DEFINITIONS METHODOLOGY EXECUTIVE SUMMARY LIST OF RECOMMENDATIONS MAIN REPORT INTRODUCTION: Mining Vision 2030 - Making it a reality ACTIVITY 1: GOOD GOVERNANCE INSPIRES ACTIVITY 2: ENVIRONMENTAL STEWARDSHIP IS KEY ACTIVITY 3: PERU’S MINING SECTOR COULD BE WORLD-CLASS ACTIVITY 4: PERU’S LEGAL FRAMEWORK FOR MINING ACTIVITY 5: ERADICATING ILLICIT & STRENGTHENING SMALL SCALE MINING ACTIVITY 6: CLUSTERS, LINKAGES, AND ECONOMIC DIVERSIFICATION: WORK TOGETHER, LIVE TOGETHER, PROSPER TOGETHER ACTIVITY 7: PLANNING FOR SUCCESS: PILOTING THE FUTURE SELECT BIBLIOGRAPHY ACKNOWLEDGMENTS TEAM BIOGRAPHIES OTHER REPORTS This Report is published by the School of International and Public Affairs (SIPA) at Columbia University as part of a series on natural resource management and development in Africa, Asia, and Latin America. Other publications include: Oil: Uganda’s Opportunity for Prosperity (2012) Politics and Economics of Rare Earths (2012) China, Natural Resources and the World: What Needs to be Disclosed (2013) Mozambique: Mobilizing Extractive Resources for Development (2013) Colombia: Extractives for Prosperity (2014) Tanzania: Harnessing Resource Wealth for Sustainable Development (2014) Mining in Peru (2015) The Peruvian Mining Sector: Exploring Issues Related to Social License, Corruption, and the Trans-Pacific Partnership Treaty (2016) Mining, Social License and Conflict Prevention (2017) SIPA, Securing Community Consent in Mining Areas in Peru (2018) i ABBREVIATIONS A.N.A. Autoridad Nacional del Agua (National Water Authority) A.P.R.A. American Popular Revolutionary Alliance B.I.T. Bilateral Investment Treaty C.D.A. Community Development Agreement D.C.M. Dirección de Concesiones Minera (Directorate of Mining Concessions) E.I.A. Environmental Impact Assessment EITI Extractive Industry Transparency Initiative F.P.I.C. Free, Prior, and Informed Consent F.T.A. Free Trade Agreement I.C.C.P.R. International Covenant on Civil and Political Rights I.C.E.S.C.R. International Covenant on Economic, Social and Cultural Rights ICSID International Centre for Settlement of Investment Disputes I.I.A. International Investment Agreement I.L.O. International Labour Organization Instituto Geológico Minero y Metalúrgico (Institute of Geology, Mines, and INGEMMET Metals) MINAM Ministerio del Ambiente (Ministry of the Environment) MINCUL Ministerio de Cultura (Ministry of Culture) MINEM Ministerio de Energía y Minas (Ministry of Energy and Mines) OECD Organization for Economic Co-operation and Development Organismo de Evaluación y Fiscalización Ambiental (Environmental O.E.F.A. Assessment and Inspection Agency) Oficina Nacional de Diálogo y Sostenibilidad (National Office of Dialogue and ONDS Sustainability) Organismo Supervisor de la Inversión en Energía y Minería (Supervising Body OSINERGMIN of Energy and Mines Investment) P.C.M. Presidencia del Consejo de Ministros (Presidency of the Council of Ministers) P.F.M Public Financial Management. POT Plan Nacional de Ordenamiento Territorial Sistema de Evaluación de Impacto Ambiental (Environmental Impact SEIA Assessment System) SENACE Servicio Nacional de Certificación Ambiental (National Environmental Certification Service) SDG(s) Sustainable Development Goal(s) S.M.B. Special Mining Burden S.M.T. Special Mining Tax ii U.N. United Nations UNDRIP United Nations Declaration on the Rights of Indigenous People iii DEFINITIONS SIPA, Mining in Peru, benefiting from Natural Resources and Preventing the Columbia Report Resource Curse, SIPA Capstone Report 2015. 2015 2016 Columbia SIPA, The Peruvian Mining Sector: Exploring Issues Related to Social License, Report Corruption, and the Trans-Pacific Partnership Treaty. SIPA Capstone Report 2016. SIPA, Mining, Social License and Conflict Prevention. SIPA Capstone Report 2017 Columbia 2017. Report 2018 Columbia SIPA, Community Partnership Agreement: Securing community consent in Report mining areas in Peru. SIPA Capstone Report 2018. Affected A community that is affected by a mining project, usually referencing the social, Community economic, environmental effects of a project. This definition is not narrowly tailored or limited to a specific geographic location, but rather refers to the proximate cause of specific acts or actions associated with the entire mining chain. The Canon Tax (Canon Minero). All resident companies, i.e. companies Canon Tax (or also incorporated in Peru, are subject to income tax, at a rate equal to 29.5%.1 As a Canon) general rule, 50% of the income tax paid by the mining company is remitted as canon minero by the central government to the regional and local authorities of the place where the mine is located.2 Community A collection or group of people, residences, agricultural areas, and commercial structures that comprise a historically recognized or newly established social structure, inclusive of both rural (comunidades campesinas) and indigenous communities. Community Agreement entered into between the mining company and local community for Development the purpose of creating and ensuring an amicable and good relationship Agreement between the stakeholders and specifying how the benefits of the mining project will be shared with local communities. A privately held partnership, corporation, or other legal entity constituted to Company conduct business, and for the purpose of this Report in the mining sector. Free, Prior and The right of accepting (agreeing to or rejecting) the implementation of a project Informed Consent that has more than an insignificant impact on the affected communities that is: (or also Consent) Free, i.e. given without coercion, intimidation, manipulation or corruption; Prior, i.e. sought before every significant stage of the project; and Informed, i.e. all parties share information, have ready and easy access to information in a form that is understandable, and have enough information, including on all impacts of the project on the parties, and capacity to make informed decisions. 1 Ernst & Young, Peru’s Mining & Metals Investment Guide. 2017/2018, 49 (2017). 2 See Art. 9, Ley de Canon (Ley No. 27507). iv The executive branch of the Republic of Peru, and all of its ministries, officers Government and authorized agents and representatives. Municipal government officials, agents, representatives, institutions and other Local Government entities. The Republic of Peru, comprehensive of its territory in its current extent and Peru political form. Regional Provincial, regional, or subnational government agents, representatives, Government institutions, and other entities. Columbia Report This 2019 Columbia Capstone Report. (or Report) The manifestation (whether violent or otherwise) of a protracted opposition Social Conflict between two or more parties in a defined society, usually stemming from rights, justice, agency, or political power. The concept of social acceptance and approval given by an affected community Social License to to a mining company, where the company has the requisite legitimacy, Operate credibility, and trust to begin and/or continue operations. A party that has an interest in and/or is affected by mining operations. For the purposes of this Report, there are three main stakeholders: the affected Stakeholder communities, the Central and all levels of government, and the mining companies. v METHODOLOGY This Report was crafted and developed through extensive literature review and desktop research, interviews in New York and Peru, and collective group discussion, all under the guidance of Professor Jenik Radon, Esq. from late January 2019 to May 2019. The seven graduate student authors from the School of International and Public Affairs (SIPA) of Columbia University, New York, studied large scale mineral and metal mining in Peru using economic, social and environmental frameworks, while the two LL.M. students from Columbia Law School (CLS) of Columbia University, New York, studied the governance and legal framework of mining and foreign investments in Peru. In March 2019, the Capstone team traveled to Peru for 10 days, where they conducted interviews with key stakeholders in Lima, San Marcos, Arequipa, and Huarmay, including surrounding towns with a strong mining presence. These sites were chosen based on research conducted by the team and recommendations from fieldwork partners. In-country fieldwork consisted of interviews, interactions with and travel to directly impacted communities. vi EXECUTIVE SUMMARY Peru relies heavily on its mining industry for economic growth. The importance of the mining industry for Peru’s economy cannot be overstated. It accounts for over 14% of the country’s GDP and approximately 60% of exports. 3 Its relative economic weight, compared to other economic sectors such as manufacturing has increased in recent years, increasing the country’s dependence on the extraction of mineral resources.4 Despite the sector’s importance, mining in Peru has caused social conflict and environmental despoliation. Unresolved questions around sustainable resource management, community consent, land rights, and corruption have thus far impeded the country’s progress
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