Wednesday, May 31, 2023

Chilean Congress approves tax hike for large copper mining

The initiative would generate an additional $1,500 million for the state, a third of which would be distributed across all Chilean regions.

“It is a project that will allow the state to increase its participation in the economic rents from copper mining,” Finance Minister Mario Marcel said after the vote.

The increase in the special exploitation tax “will allow the distribution of one-third of these resources across all regions of the country, to the mining communities most affected by mining activities in their regions and to the 302 communities with the least resources,” added the minister.

The rest of the resources will initially go to reforming the police and justice, amid investments in research and development as well as a growing sense of insecurity in the country.

The initiative now only awaits enactment by the government to become law.

With an annual production of 5.6 million tonnes, equivalent to about a quarter of the global supply, Chile is the main copper producer. Mining giants such as Anglo-Australian BHP and British Anglo American operate in the country, as well as state-owned Codelco.

Better distribution of wealth

The bill, which establishes compensation in favor of the state for the exploitation of copper and lithium mining, was lodged in Congress in 2018 by pro-government leftists and was reactivated last year by the government of President Gabriel Boric.

With later modifications, it extends only to large copper mining.

The initiative was approved by 101 votes in favor, 24 against and three abstentions in the Chamber of Deputies, which reviewed amendments made to the project last week in the Senate in a special session on Wednesday.

President Boric celebrated on his Twitter account, “Mining royalties will be law! Thanks to the transversal agreement, we have approved a project that will allow us to better distribute the generated wealth among all of us.” Added a valuable victory in Congress with the support of the right of the opposition.

The president announced a majority of the state’s participation in lithium exploitation in late April, with strong demand also for copper for manufacturing electric cars. Chile is currently the second largest producer of it in the world and is believed to have one of the largest reserves of this mineral to address climate change.

Investment certainty

The new law excludes companies producing less than 50,000 metric tonnes of fine copper (TMCF) per annum.

For those who produce an equal or greater amount, this entails the payment of an ad valorem tax (according to the value of an item) of 1% on sales, as well as rates of between 8% and 26% on operations. presents. Income. mining.

A maximum tax burden has been set at 45.5% for companies with an output of less than 80,000 TMCF and 46.5% for the rest.

According to the Chilean government, the law leaves the country’s average effective tax burden at 40.1%, “below other copper-producing countries”, such as Peru, which has 41.4%, and Australia, which has 42.3%.

Currently, the rate in Chile is 35.5%.

“We can tell the mining industry that it is true that they will have to pay higher taxes, but they already know what taxes they will have to pay” and that they “are in a position to evaluate their investment projects”. There will be” certainty,” added Minister Marcel.

Nation World News Desk
Nation World News Desk
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