(Adds reaction from mining association, context on economic
reform package and slowing economy)
LIMA, June 19 Peru's President Ollanta Humala
proposed a new tax stability contract for mining companies that
would lock in taxation rates for 15 years on investments of at
least $500 million, legislation published on Thursday showed.
The measure is part of a package of reforms Humala is asking
Congress to pass urgently to boost private investment in the
Andean country as its economy slows on a drop in mining exports.
The legislation broadens existing tax stability contracts as
well to cover additional investments, such as mining expansions.
Humala's ruling party usually finds support from opposition
lawmakers in to push his economic proposals through Congress.
Global mining companies rolling out big projects in Peru in
the coming years, such as Southern Copper, MMG Ltd
and Newmont Mining, would likely benefit under
the new tax stability system, said Jose Miguel Morales, the
director of Peru's main mining association.
"It's a good legislative proposal that will promote
investments," Morales said, adding that more should also be done
to encourage local companies and smaller projects.
Other measures in the reform package unveiled by Humala's
government last week include redoubling efforts to reduce red
tape, improving transparency and relaxing environmental
The credit ratings agency Moody's Investors Service said
earlier this week that the reforms were "credit positive," as
they would put Peru on track to boost potential output without
Peru's economy, which expanded by more than 6 percent during
most of the past decade, grew by 4 percent in the first four
months of 2014 from the same period a year earlier.
The finance ministry and central bank, which initially
predicted an economic rebound early this year, have said they
now expect to see stronger growth in the second half of 2014.
Mining makes up about 15 percent of Peru's gross domestic
product and 60 percent of the Andean economy's total exports.
The global copper, gold and silver exporter has a mining
investment pipeline of more than $60 billion, according to data
from the energy and mines ministry.
(Reporting by Marco Aquino; Editing by James Dalgleish and G