.gif)
Loading
Chile’s Senate has postponed for almost three weeks a vote on an opposition-sponsored bill that could increase taxes on miners by up to 75% depending on the price of copper, the country’s main export.
The bill, first introduced in 2018, calls for a 3% royalty on sales of more than 12,000 tonnes of copper production per year and 50,000t/y of lithium.
Half of the funds obtained from the royalty would go into a convergence fund to finance regional and municipal development projects. The other half would directly fund projects to mitigate, compensate or repair the environmental impacts of mining in communities near mining projects.
The legislation, which faces multiple procedural hurdles, could put at risk about 1 million tonnes of annual copper production, which represents about 4% of global output.
More than half of Chile’s foreign-owned copper mines have fiscal stability agreements that expire in 2023, limiting their immediate exposure to the law’s eventual passage. But the future development of the mines would be in danger.
Chile’s current tax regime for miners includes a 27% corporate tax and a special tax or royalty of up to 14% on operating profits, depending on production rates. Below 50,000 tonnes of copper per year, miners pay 9%.
The Energy and Mines Committee has been discussing the bill for seven weeks and has not set a date for a vote. The proposal has already been accepted by the lower house.
Supporters of the bill argue that provincial governments do not receive sufficient compensation for extracting mineral resources and that the new taxes will change the situation. Mining industry representatives and analysts, in turn, warn that the proposed law would drive away new investment and some mining operations and expansions would become economically unviable.
Chile, the world’s largest copper producer, also holds about 52% of the world’s known lithium reserves. The nation aims to make the white metal its second largest mineral resource.
