Chile's Senate on Thursday pushed for a revised version of the country's mining royalty bill, which would raise tariffs on companies operating in the world's largest copper producer, although watered down in industry resistance.
The Mining Committee of the House of Lords approved a revised draft designed to address concerns within the copper and lithium industries that higher tariffs would hurt Chile's competitiveness and hurt new investment.
The committee approved the revised bill, which proposes royalties based on two aspects: first, the value of total copper sales, and second, based on profitability, similar to the industry's current tax model.
The committee said the bill would impose an "ad valorem tax" equivalent to 1 per cent of annual sales of copper products on companies that produce less than 200000 tonnes of copper a year. Mines with an output of less than 50000 tons will be exempted.
The committee added: "for companies with higher production, royalties will be charged on the basis of the annual average copper price registered on the London Metal Exchange."
Chile's mining industry strongly opposes the plan to raise taxes, arguing that tax levels have reached their limits. Lawmakers, especially those from the left-wing opposition, have pushed for higher taxes to support social spending.
Left-wing presidential election Gabriel Bocker (Gabriel Boric) entered office in March after winning last year's general election. However, he does face a divided Congress, which could ease any reform plan.
The revised bill includes a lithium sales tax of about 3 per cent, but does not include contracts with Salar de Atacama's development office, where Albemarle and SQM, the two main lithium miners, currently operate.
The bill will now be submitted to the Senate Finance Committee and then reviewed in plenary session of the House of Representatives before returning to the House of Commons.
"We hope that the Finance Committee will deal with this initiative quickly and that we can submit the project to law by March 11 this year." The chairman of the parliamentary body, Senator Yasna Provost, said.
Global copper prices have hit a decade high on expectations of a recovery from the coronavirus pandemic.
In addition to Codelco, the state-owned mining company, the world's largest copper producer, multinationals such as BHP Billiton, Anglo American, Glencore, Antofagasta Mining and Freeport also operate in Chile.
