Canon minero

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Canon minero and conflicts in Peru
Javier Arellano Yanguas ( / October 2008
(This text is a summary of a forthcoming article. Not for citation)

1.- Introduction In recent years, world market prices for minerals and oil have increased considerably. Investment in extractive industries has also grown (UNCTAD, 2007, pp. 89-90). These trends have enlarged the role of theextractive sector in many developing economies and intensified academic and policy interest in the notion of the “resource curse” An increasing number of governments that possess natural resource wealth have begun to accept what I term the “new natural resources policy agenda” (NNRPA) to deal with the perceived problems of the “resource curse”. Decentralisation, popular participation andpublic-private partnership, complemented with the Extractive Industries Transparency Initiative (EITI), collectively constitute this “new natural resources policy agenda” (NNRPA) to deal with the resource course. I argue that the implementation of the NNRPA generates the conditions for a new historical form of the resource curse with two original and interrelated features: a) the deep involvement of newpolitical actors - sub-national governments, private mining companies and civil society; and b) the emergence of the sub-national level as the crucial space to understand the resource curse. The Peruvian case is a paradigmatic example of this new historical form of the resource curse. In the context of Peru’s weak central state, and weaker local governments, the implementation of the NNRPA has partiallyrelocated the resource curse to sub-national levels. Local governments, mining companies and a variety of local groups are locked into complex relationships that are difficult to negotiate, resulting in conflicts and poor quality public investment1. Mining bonanza makes these problems more acute. Like its predecessors, this curse is not inescapable, but solutions require new and morecontext-specific policies. 2.- Mining revenue-sharing mechanism: A key factor to understand political dynamics in Peruvian mining regions In 1976, after the discovery of important oil fields and pressure from regional movements, the central government decided to give 10 per cent of the value of oil production to the producing region. This type of transfer was baptised as “oil canon”. In 1992, the governmentcreated the “canon minero” that allocated 20 per cent of the income tax paid by mining companies to the territory in which the profits are generated. In 2004, some changes in the regulation created a concentration of revenue transfers at the locality and province where natural resources are extracted. Members of the Peruvian parliament elected in the mining regions lobbied for the two policychanges. Mining companies backed the move in a bid to demonstrate the benefits
By poor quality of public investment I mean short-term planning, lack of coordination between different levels, non-integration on national planning and non-alignment to economic diversification.


that mining can bring to local communities and to calm the growing social unrest associated with mining activities.Table 1.- Canon minero distribution
Canon minero distribution (since December 2004) Regional Government + 5% for public universities of the region. District municipality where the resource is extracted Municipalities of the province where the resource is extracted. Municipalities of the department where the resource is extracted
Source: (Grupo Propuesta Ciudadana, 2007)

25 % 10% 25% 40%

Whenthese new allocation rules were planned, transfers amounted to 451 millions of Nuevos Soles ($USD 125 million). The subsequent rise in mineral prices has increased transfers by twelve fold in three years, making effective revenue allocation difficult. These criteria for revenue distribution create inequality between regions. In 2007, more than 67 per cent of the total “canon transfer” was...
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