Chile Amends Mining Royalty Bill with Ad Valorem Tax

Chilean government on Tuesday amended its mining royalty bill amid industry criticism, removing provisions that assessed higher rates for larger miners and linked payments to copper prices, while implementing a flat 1% ad valorem tax rate for large producers. The original bill was first introduced in July and drew criticism from mining giants like BHP and Antofagasta, who argued that it would negatively impact competitiveness and investment in Chile, the world’s largest copper and second largest lithium producer.

The finance and mining ministries announced that the new proposal would impose a flat rate ad valorem tax of 1% on large scale copper miners that produce more than 50,000 tonnes annually. The ad valorem tax would not be assessed if operating margins are negative.

Additional royalties would be assessed at rates fluctuating from 8% to 26% based on miners’ operating margin, rather than being adjusted according to the price of copper as was originally proposed.

Depreciation, as well as supply and work costs, would be taken into consideration in calculating operating margins.

The government’s amendments will be evaluated at the mining and energy committee of Chile’s congress before continuing with the legislative process.

“Considering these changes, it is estimated that the mining royalty would collect an additional 0.6% of GDP, of which 0.46% of GDP would be the product of the new structure and the remaining 0.15% the result of growth in production and costs,” the Finance Ministry said in a statement.

The original bill established two components for royalty payments: The first was an ad valorem tax ranging from 1% to 2% for producers of between 50,000 and 200,000 of fine copper and from 1% to 4% for those over that limit.

The other component was royalty rates between 2% and 32% on profits for copper prices between $2 and $5.

Both components were to have varied based on the copper price.

Need to access the insight?

Start your 7-day free trial now

Need to access the insight?

Start your 7-day free trial now

Need to access the insight?

Start your 7-day free trial now

Do you need to access special insights on this matter?

Start your 7-day free trial  and become a member today

Subscribe to Top Insights Today

Subscribe to Executive Newsletter Top Insights Today

The Executive Newsletter -Top Insights Today- puts global business events in perspective through special insights

Join the ranks of global executives and subscribe to Top Insights Today

Top Insights Today covers insights on energy, clean-tech, oil&gas, mining, rare earths, defense, aviation, infrastructure, manufacturing, electrical vehicles, big-tech, finance and politics of business

By clicking subscribe you agree to our privacy and cookie policy and terms and conditions of use.

Read more insights

India’s Tata and Airbus Venture into Defense Manufacturing Partnership

India’s largest conglomerate Tata and Airbus made an agreement to manufacture the C-295 transport aircraft in the country, the government announced on Thursday. It will be the first such production by a local private company as part of the Indian government’s push for an expansion of defense manufacturing. India, one of the world’s largest arms importers, has been scrambling to increase domestic output in order to reduce reliance on imports. Only state-owned Hindustan Aeronautics currently makes aircraft in India, mainly for the armed forces.

Exxon Signs CCS Contract with U.S. Steelmaker Nucor

Exxon Mobil said on Wednesday it signed a carbon capture and sequestration (CCS) contract with U.S. steelmaker Nucor Corporation, a first for the energy giant from a hard to abate industry. Exxon last year launched a business dedicated to making money from burying underground carbon dioxide (CO2) produced by companies looking to reduce their own atmospheric emissions. The U.S. oil producer is targeting a market it calculates has potential to reach $4 trillion globally by 2050.

Iron Ore Prices Soar As Chinese Imports Continue to Grow

Price of iron ore surged on Tuesday after China’s imports rose 14.6% in November from a month earlier to reach their highest since July 2020. China, the world’s No.1 consumer of iron ore, imported 104.96 million tonnes in November, surpassing the October’s 91.61 million tonnes. The imports are up by almost 7% from November 2020.  

Stay informed

error: This content is protected !!