PARAGUAY – ENVIRONMENTAL OVERVIEW COMMENTARY

GENERAL

Paraguay, officially the Republic of Paraguay, is one of two countries in South America that is completely landlocked; the country is found in the centre of the continent surrounded by Argentina to the south, Bolivia to the north and Brazil to the east. It is divided by the Paraguay River into two similar sized regions: the oriental (Paraneña) to the southeast and the occidental (Chaco Boreal region) to the northwest. The Chaco, which is bounded to the east by the Paraguay and Parana Rivers, is an alluvial sedimentary plain that hosts arid subtropical forests and savannah that are largely uninhabited.. The Paraneña region is occupied by hills, mountains, grasslands and tropical forests, with many rivers and streams which flow south into Argentina.

The fauna of this country is extensive with a rich variety. There are 200 species of fish, over 600 species of birds, and over 150 types of mammals. Animals include the jaguar (especially numerous in the Chaco), wild boar, capybara, deer, armadillo, anteater, fox, brown wolf and tapir. Paraguay’s watercourses have an abundance of crocodiles, and the boa constrictor thrives in the west of the country. The carnivorous piranha is common. The vegetation, like the rainfall, is concentrated in the oriental part of the country where broadleaf, urunday, cedron, curupay and lapacho trees are found. The climate is described as subtropical in the Paraneña region and tropical in the Chaco.

While the Paraguayan government has taken measures to reduce deforestation in the country, it still remains a key environmental issue, particularly in the Atlantic Forest region of the country. Water pollution is also a problem.

PRINCIPAL LEGISLATION AND REGULATION

Law No.294/1993 (Law) pertaining to Environmental Impact Assessments (EIA) and its Regulation, Decree 14281/1996 (Reg.), are the primary sources of regulation pertaining to the EIA process in Paraguay. The Department of Environmental Management (Dirección General de Gestión Ambiental (DOA)), which forms part of the Environment Secretariat (SEAM) an autonomous agency connected to the Ministry of Agriculture and Livestock (Ministerio de Agricultura y Ganadería), is the authority responsible for reviewing Environmental Impact Statements (EISs, or DIAs in Spanish).

EIA PROCESS

Pursuant to Article 1 of the Law, an EIA is required for any work or activity that will have a positive or negative result, direct or indirect, on the environment, including health, personal safety, habits and customs, cultural heritage or livelihoods. According to Article 7(f) of the Law, mining projects require an EIA and, according to Article 5.4 of the Decree, the following activities in particular are subject to an EIA process:

• Extraction Operations (non-metallic): where the production involves (A) the removal or movement of more than 10,000 cubic metres; (B) operations within 300 metres of a river; (C) operations on a slope that has an angle greater than 10%; (D) operations within the vicinity of indigenous communities; or (E) operations within two kilometres of a town with more than 1,000 inhabitants;

• Exploration or Exploitation (metallic): all such operations require an EIA process.

Any person or entity that proposes such an activity must present to the DOA a basic environmental questionnaire, which contains information as to project type; any alternatives to the project; the total investment to be made; the technologies to be used; the tonnes of material to be processed per year; and various other types of information. Where an EIS is mandatory or requested, the DOA will set out the terms of reference for the study.

The EIA will be made public within 15 days of its submission. All members of the public may submit comments, but particular reference is made to comments having a scientific or commercial nature. The Regulation has helpful guidance as to what the “public” may consist of in a particular case; the meaning is to be set out in the terms of reference having regard to the “area of influence” of the project; the area of influence is taken as the hydrographic basin in which the project is located (Art. 11, Reg.). Ultimately, the decision as to whether or not a public meeting or hearing is called rests with the DOA (Art. 16(4), Reg.).

When completed, the DOA has 90 days to review the EIS. If no response is given, the presumption arises that the EIS has been approved (Art. 15, Reg.). The DOA may reject the EIS (in whole or in part); accept the EIS with or without conditions; or return the EIS for correction or rectification (Art. 17, Reg.). The DIA (or environmental approval) will have a maximum life of two years; it must then be reassessed and reissued through a new EIA or the modification of the existing one (Art. 17, Reg.). In the case of rejection, the mining operator may appeal the DOA’s decision before the Deputy Minister of Environmental and Natural Resources and, if sustained, a further appeal may be made to the Ministry of Agriculture and Livestock (Chpt VII, Reg.).

PARAGUAY – MINING OVERVIEW COMMENTARY

GENERAL

Paraguay, officially the Republic of Paraguay, is one of two countries in South America that is completely landlocked, possessing no coastline. The country is found in the centre of the continent surrounded by Argentina to the south, Bolivia to the north and Brazil to the east. It is a relatively small country, divided by the Paraguay River into two regions: the oriental (Paraneña), which is the most densely populated, and the occidental (Chaco Boreal). Paraguay’s territory consists of 17 departments and a capital district (Distrito Capital) each of which has numerous districts. The population of Paraguay is approximately 7 million people that, thanks to economic growth and a number of government initiatives focused on social reform, are increasingly enjoying an improved standard of living.

The Paraguayan economy is open and heavily dependent on agricultural production and foreign trade, particularly soybean and beef, which comprised nearly 40% of exports in 2013 (World Bank). Over the past decade, the country has made significant progress on major social reforms, including free access to primary health care and basic education. In 2015, economic growth is expected to reach 4.5% (World Bank). The country does not have a history of mining, unlike so many of its neighbours, though the country has deposits of uranium, titanium, gold, nickel, cobalt and chrome. For the purpose of promoting investment in Paraguay’s mineral sector, the government recently reviewed and updated its mining legislation.

PRINCIPAL LEGISLATION AND REGULATOR

Mining Law No. 3180 (ML) and its amendments (Laws No. 4259 and No. 4935) govern mining activity in Paraguay. The Ministry of Public Works and Communication (MOPC or Ministry), through its Vice Ministry of Mines and Energy, is the responsible body for granting mineral rights. Mineral resources belong to the state with the exception of calcareous, rocky and earthy substances. Any individual or entity, national or foreign, may carry out mining activities. Foreigners, however, must have a domicile in Paraguay or a representative who resides therein. Mining rights do not grant ownership to the land (Titulo II, Capitulo I / Title II, Chapter I, ML).

GRANTS AND MINERAL TITLE

There are specific permits and concessions conferring the right to prospect, explore and mine minerals, as well as specific rights for small scale and artisanal mining activities. The ML provides for the following:

• Prospecting Permits: Prospecting permits are granted for one year and may be extended for a period of up to one additional year (Art. 31, as amended 2011). The extension must be requested two months before the expiry date of the permit. The permit holder may establish a prospecting area of up to 400,000 hectares (Art. 30, as amended 2011). Once prospecting activities are completed, mining operators are entitled to select two or more plots of land within the prospecting area to carry out exploration activities, restricted to no more than two types of minerals.

• Exploration Permits: An exploration permit grants the exclusive right to engage in exploration activities for three years, renewable for periods of up to one year on three occasions. The extension must be requested within two months before the expiry date of the permit (Art. 32, as amended 2011). Each exploration permit may cover a maximum area of 50,000 hectares (Art. 32, ML).

• Mining Concessions: Mining concessions must be approved by Congress and are granted by means of a contract, granting its owner the exclusive right to operate in the concession area and to smelt, refine, transport and sell all the minerals discovered for a period of 20 years from the date of production. The concession is renewable for another 10 years, with the exception of gold mining (Art. 35, as amended 2011). The maximum concession area is 25,000 hectares (Art. 35, ML).

Small-scale and artisanal mining activities are separately licensed and may be carried out in areas specified by the Ministry of up to 10 hectares, for a period of 10 years (Art 16, ML). Small-scale mining rights cannot be transferred, encumbered, leased or assigned (Art. 18, ML).

DEVELOPMENT CONSIDERATIONS

Pursuant to Decree 14281/1996 amending Law 294/1993 on Environmental Impact Assessments (EIAs), all prospecting, exploration and mining activities are subject to an EIA process. The Department of Environmental Management is responsible for granting the Environmental Impact Statement (Declaración de Impacto Ambiental) (DIA), which allows the mining operator to undertake such work. The DIA must be reassessed not later than every two years, when the competent environmental authority shall consider the issuance of a new EIA or modification of the existing one. Mining operators are also obligated to submit an investment plan (work plan and budget) for each mining stage (prospecting, exploration and mining), and a technical or geological report every three months.

With respect to surface rights, mining operators must agree with landowners on the use or purchase of private land. Failing such agreement, the mine operator is essentially reliant upon the government to expropriate the land (Arts. 53 and 54, ML). Mining rights are subject to the payment of a royalty each year, which increases in the event that the mineral title is renewed. The failure to pay royalty results in the termination of the permit or concession. In 2013, a new type of royalty was introduced, consisting of a payment to the state of a percentage equal to between 2% - 8,5% of the quarterly net income of the mine operator (Art. 65, as amended 2013).

EIA PROCESS

 See Paraguay – Environmental Overview Commentary.