Miners To Pay Peru $774 Mln To Avoid Royalty

Miners to pay Peru $774 mln to avoid royalty

LIMA, Peru, August 24 (Reuters)

Mining companies operating in Peru, the world's No. 3 copper producer, have agreed to make a $774 million extraordinary payment to help cut poverty in the Andean country and avoid new taxes, the government said on Thursday.

"We have developed a dialogue with private companies in the mining sector to obtain a voluntary payment .... This has allowed us to agree on a payment of 2.5 billion soles ($774 million)," Prime Minister Jorge del Castillo told Congress.

Del Castillo did not detail how the payment would be divided between mining companies but said it should be immediate.

President Alan Garcia urged mining companies to make the voluntary payment, instead of facing new royalties or a windfall tax to help meet his pledge to invest billions of dollars in infrastructure and to alleviate poverty.

Peru plays host to global miners such as BHP Billiton, Barrick Gold and Newmont Mining.

Many mining companies operating in the Andean nation have faced royalties since last year after the previous government sought to increase its share of the profits generated by record international metals prices.

Miners complain that higher taxes and royalties scare off investment that is needed to develop new mines.