Mining investment and a fiscal regime that promotes the investment: an inter-temporal model

Abstract

This paper aims to show how both mining company and government will improve financially by promoting the reinvestment of profits. It will start with a theoretical framework about the mining investing sustainability. Then, an inter-temporal model will be proposed to formalize, theoretically, how the reinvestment will improve, in present value, profits and revenues for both firm and government, respectively. Also, empirical evidence will be shown, particularly, for Peru and Chile. Then, an approach to strong sustainability in Peru will be set by explaining the main variables of sustainability in the Peruvian mining sector as well as its main sustainability items. Finally, some conclusions will be presented.1