Uruguay approves new mining law, opens reserves to foreign firms

Uruguay’s Congress passed Tuesday a new set of mining rules that regulate large-scale mining projects, imposing significant taxes as well as environmental standards, reports Mineria en Linea (in Spanish).

The house of representatives approved by a 52-30 vote the law that imposes a annual levy of 25% on corporate profits and another one of up to 38% percent on profits for all large mining projects, foreign or local.

The ruling also set stricter environmental standards, including new rules for mine closures as promised by President Jose Mujica last month.

Opponents to the freshly approved law had voiced their concern over the fact that regulation will open up Uruguay’s 2,500 million tonnes of underground iron ore deposits to foreign exploitation, threatening the development of the nation’s own mining industry.

However, analysts such as VIctor Bacchetta, from the Movement for a Sustainable Uruguay (Movus), think that even with foreign investment, the country doesn’t have what it takes to become a mining nation.

READ ALSO: Tiny Uruguay could become world’s eighth largest iron ore producer

“Uruguay is poor in mineral resources. It does not have the huge reserves of countries like Chile or Peru. [Swiss Zamin Ferrous, through its subsidiary Minera Aratirí] is proposing 12 years of extraction activities, according to what can be gathered from its Environmental and Social Impact Assessment, and after that it will all be over,” he told Argentina Independent.

“This makes the project even more absurd for Uruguay, because it is a country with a privileged ecosystem in terms of its fertile land and water resources, which are not found in the (Andes) mountains, where nothing else can be done,” he added.

Zamin Ferrous’s $3 billion Valentines project in the Aratirí region could become the largest private investment ever made in Uruguay, generating $1.4 billion in exports annually over the 20 years of its life cycle.

Image: Anti- large mining march in Uruguay. By Gonzalo G. Useta -Flickr