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  • GDP, US$bn: 52.5
  • GDP per capita, US$: 15,243.6
  • Population, mn: 3.4
  • Inflation, CPI ave: 9.7
  • FX, LCY/US$: 30.1
  • Budget Balance, % of GDP: -3.9
  • Mining GVA, US$bn: 0.2
Regulatory Risk Rating
Score: 39
Severe Risk
Essentially, the mining law is so poor that the government passed the Large Scale Mining Law in 2013 to circumvent it in relation to virtually any mine that might attract foreign direct investment; nevertheless, this law requires the mine developer to agree with the state on development and operating terms subsequent to discovery, which renders the law completely arbitrary. On the whole, therefore, the risk of investment is very high.

Corruption Potential Index

Score: 30
Very High Corruption Potential

Corruption Risk Index

Score: 85
Very Low Corruption Risk

Regulatory Risk Rating

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Environmental Overview Commentary plus sign



Uruguay, officially the Eastern (or Oriental) Republic of Uruguay, sits on the south eastern edge of the South American continent; ; it separates the eastern edges of Brazil (to the north) from Argentina (to the south). While the country faces various environmental issues, such as water and air pollution, it is consistently recognised for its high quality living standards, with the capital Montevideo recognised as the city with the highest quality of living standards in South America (Mercer).

Uruguay is the second smallest sovereign nation in South America, with an area of 176, 215 km2. The country’s landscape primarily consists of vast expanses of rolling plains, with low hills and mountains found across the region, increasing in the north as they converge into the Brazilian highlands. The 660 km coastline, which stretches across the southern end of the country, is a popular tourist destination thanks to the consistent and pleasant climate the country enjoys. Uruguay has four deltas, including the Río de la Plata, the Uruguay River, the Laguna Merín and the Río Negro. The principal internal river is the Río Negro ('Black River'), which was dammed in 1945 to create the Rincon del Bonete Lake. Several lagoons are found along the Atlantic coast. Uruguay’s landscape has been heavily affected by agriculture and cattle ranching, which has largely destroyed its natural grasslands, palm savannahs and forests. Large animals have mostly disappeared from the country, but there remain the carpincho (water hog), armadillo and avestruz (an ostrich), among others.


Environmental regulation in Uruguay is based on Section 47 of the Uruguayan Constitution, the Environmental General Act (Law No. 17283), the Environmental Law (Law No. 16466) and its Regulatory Decree No. 349/005 (EIA Reg.). It is the Environmental Law (EIA Law), which sets out the requirements for an environmental impact assessment (EIA) of, inter alia, proposed mining operations (Art. 6(E), EIA Law). Law No. 16112 establishes the Ministry of Housing, Territorial Planning and Environment (hereinafter the “MOE”) as the agency responsible for administering and enforcing environmental law. Pursuant to Law No. 17283, municipal authorities are also granted some delegated authority in respect of the administration and enforcement of environmental law.


Pursuant to the EIA Regulation, an EIA is required for projects involving the extraction of minerals, including the opening of a mine (open, pit or underground) or the recommencement of mining where the original mine was not subject to an EIA process. The regulation also refers to “further drilling” as requiring an EIA (Art. 2(13), EIA Reg.). Certain mining operations involving quarry materials, or aggregates, do not require an EIA (Arts. 2(13) and (14), EIA Reg.). The MOE classifies projects as being Category A, with no significant negative environmental impact; Category B, with moderate environmental impact; or Category C, with significant environmental impact. In the case of Categories B and C an environmental impact study (EIS) is needed in order to obtain an Environmental Authorisation (or Prior Environmental Authorization as it is called in the legislation) (Arts. 5 and 8, EIA Reg.).

Upon application, the MOE has ten days to confirm or reclassify a project (Art. 6, EIA Reg.); a certification of classification is issued at this stage (Art. 8, EIA Reg.). The environmental impact study (EIS) shall contain the following parts:

  • Part I – Characteristics of the Relevant Environment, including areas that are particularly sensitive or at risk, the applicable water, air, soil, fauna, flora, aquatic biota, local population, land use and historical or cultural sites;
  • Part II – Identification and Assessment of Impacts, including both negative and positive environmental impacts and measurements of identified environmental impacts in comparison with accepted standards;
  • Part III – Mitigation Measures, including risk prevention plans, environmental management plans, contingency plans, restoration and compensation plans;
  • Part IV – Monitoring and Auditing Plans;
  • Part V – Technical Qualifications and Reservations, including details of EIS authors and any areas of technical weakness of uncertainty.


The project proposal will be published for comment in a journal or newspaper in the town closest to the project area and at least 20 days shall be given for comment (Art. 15, EIA Reg.). For Category C projects, a public hearing is mandatory; for other projects, a public hearing is discretionary (Art. 16, EIA Reg.). The MOE has one hundred and twenty (120) days to either grant or reject the environmental authorisation (Art. 18, EIA Reg.). It may accept a project with negative environmental impacts, provided mitigation measures or conditions to achieve acceptable levels of impact have been provided for in the authorisation (Art. 17, EIA Reg.). Once the Prior Environmental Authorisation is granted, mining activities are subject to an Operating Authorisation that has to be renewed every three (3) years (Art. 23, EIA Reg.).

As well as the EIA approval and the renewal of the Operating Authorisation, there is also a need for a Mine Closure Plan for large-scale mines, which must also be reviewed at least once every three (3) years. Large-scale mines are those that meet at least one of the following criteria: a mining area over 400 hectares; an investment over eight hundred thirty millions inflation-indexed monetary units (830,000,000 UI; approximately US$100 million); or an annual marketing value of the mining activity over 830,000,000 UI (approximately US$100 million). Additionally, the Executive Power may denominate as large-scale mining: projects that use substances presenting a health or environmental hazard; projects that require more than 500 gigawatt per hour of electricity; or projects that produce acid mine drainage.

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Mining Overview Commentary plus sign



Uruguay, officially the Eastern (or Oriental) Republic of Uruguay, sits on the south eastern edge of the South American continent; the country separates the eastern edges of Brazil (to the north) from Argentina (to the south). Originally colonised by the Portuguese, it was the subject of political “quartering” by the Portuguese, Spanish, Argentinians and Brazilians. Whatever the pressures, Uruguay survived in tact with a strong democracy and a very high rating in terms of governance and quality of living. Transparency International rates the country an outstanding 21 out of 175 countries in its Corruption Perceptions Index, 2014.

Despite the fact that Uruguay’s domestic economy is strong, it is heavily influenced by the relative strength of the economies of its neighbouring countries, Brazil and Argentina. While the mining sector only contributes 1% to the gross domestic product of Uruguay its mining potential has only recently been recognized. Uruguay’s mineral endowment includes clays, semiprecious gemstones, gold, iron and steel, sand and gravel, and stone. Aside from one relatively small gold mine held by Orosur Mining (TSX and AIM-listed), there is virtually no metallic mineral production in the country.

The Fraser Institute ranks the country 56th out of the 109 jurisdictions covered in its 2015 Policy Perception Index.


Mining in Uruguay is governed by the Mining Code (Act No. 15,242, as amended by Law No. 18,813) (Code) and the Large Scale Mining Law (Law No. 19,126) (LSML). The Mining Code is supplemented with its Regulatory Decree (No. 110/1982). Environmental matters are governed by the Environmental Law (Law No. 16466) and its Regulatory Decree (No. 349/005), which provide for the requirement for an environmental impact assessment of mining projects. The LSML regulates virtually any mine of scale to the foreign investor (e.g., mines involving an investment in excess of US$100,000,000 approximately). Pursuant to the Mining Code, all minerals within the subsoil are the property of the state (Art. 4, Code). The mining authorities consist of the Executive, which is responsible for granting exploration and mining concessions; the Ministry of Industry, Energy and Mining (Ministerio de Industria, Energía y Minería (MIEM)); and the National Directorate of Mining and Geology (Dirección Nacional de Minería y Geología).


Any person or entity, public or private, national or foreign, may obtain permits, licences and concessions to conduct mineral exploration and mining activities. The right to prospect, explore and mine are obtained through a prospecting licence, exploration permit and mining concession, respectively (Art. 11, Code). Minerals are awarded by reference to their “Category”, of which there are four: (I) oil, natural gas, coal, lignite, peat, bituminous rocks, oil sands, and other minerals that generate energy; (II) minerals that are recorded within the government Mining Reserve or the Vacancies Registry; (III) metallic and non-metallic minerals not included above; and (IV) non-metallic, construction materials and aggregates used for building or industrial purposes.

With respect to Category II (known deposits), the Executive Power will award known mineral deposits pursuant to an auction process. With respect to Category III (metallic and non-metallic) minerals, one may obtain a prospecting licence, exploration permit and mining concession, which have the following characteristics:


  • Prospecting Licence: these are granted for a period of 3 up to 36 months, but must be renewed every 12 months. In order to get an extension, 25% of the original area must be relinquished. Once the prospecting term has expired, an activity report must be submitted.


  • Exploration Permit: the applicant with a prospecting licence takes precedence in the application for an exploration permit; however, the applicant nevertheless must demonstrate its technical and financial capacity and submit its proposed investment plan. The exploration permit has a duration of 1 to 3 years, which can be extended three times for periods of one (1) year each (Art. 94, Code). The titleholder is obliged to submit an activity report every 3 months and a final report at the end of the exploration activities.


  • Mining Concession: The applicant for a mining concession must produce, among other things, a reserves report, a technical report, a mine closure plan, evidence of technical and financial capacity, and the form of security or bond for environmental damage (Art. 100, Code). The maximum duration is 30 years, renewable for successive periods of 15 years while reserves remain (Art. 103, Code).


Notwithstanding the foregoing, pursuant to the LSML virtually all aspects of the mining rights and obligations are subject to negotiation. Large-scale mining projects are those that meet at least one of the following criteria: (a) they occupy more than 400 hectares of surface area; (b) they involve an investment in excess of 830 million Indexed Units (approximately US$100 million); or (c) they involve annual sales of 830 million Indexed Units (approximately US$100 million). As well, the Executive may designate a project as a large-scale mining project if it involves: (a) the use of dangerous chemicals or substances; (b) annual electricity consumption in excess of 500 gigawatts of power; or (c) the production of acid drainage. Upon application for a mining concession, the holder has 360 days to reach agreement with the state as to the terms and conditions to develop and operate the mine; if agreement is not reached, then property may be lost.

A large-scale mining contract must specify the duration of the concession, the construction period, the expected rates of production, and address other relevant matters (LSML, Arts. 25, 26 and 27). The mining contract may also address:

  • Tax incentives, including tax stabilisation guarantees for a period of ten years and any tax holiday;
  • Commitments by government to undertake the construction of supportive infrastructure;
  • The right to pledge the project in favour of creditors, transfer the mining concession and effect changes of control; and
  • Dispute resolution mechanisms;


(LSML, Arts. 30 and 32). The causes for terminating a large-scale contract render the right inherently unstable; it may be terminated for, among other things: the non-payment of taxes; transfers (of mining titles or shares in holding companies) without approval of government; loss of financial integrity to carry out mining activities; any failure to build or operate the project as specified in the contract; and discontinuity of production for a period of more than six months (LSML, Art. 32).


All property the subject of a permit or concession carries the right to access the surface for prospecting, exploration, temporary or permanent occupation, drilling, movement of vehicles, establishment of facilities, power, water and other mining and exploration activities (Art. 31, Code). The owner of surface rights has the obligation not to block mining activities and to permit reasonable exercise of mining rights (Art. 30, Code); the owner has the right, however, to be indemnified for any damages arising from mining use (Art. 28(a), Code). Surface rights such as easements and expropriation may be granted by the Executive Power (Art. 32, Code), subject to prior compensation to the landowner (Art.28(b), Code). The price for property expropriated shall be based on nearby property without consideration of mineral value (see also Title III, Chpt. I and Title V, Chpt. I of Reg.).

Decree 349/005 states that mining activities with an environmental impact need a Prior Environmental Authorisation to be developed; the law is simple and easy to understand; its drafting suggests that projects with impacts that result in mitigated damage within acceptable standards of pollution are permissible. The law appears to relieve most exploration activities from EIA processing. There is also a relatively modern and sophisticated law on mine closure and security for closure obligations in respect of "large-scale mines" which embraces most mines that would justify or attract foreign direct investment (Large Scale Mining Law).


 See Uruguay – Environmental Overview Commentary.

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