Ivanhoe’s Kipushi zinc mine in the DRC officially reopens
The restart marked exactly a century since the mine first went into production.
Chile can raise the tax burden for copper producers by about 5 percentage points without significantly affecting the industry or its competitiveness, according to Fitch Ratings.
“If the tax burden went up by 5 percentage points and hit a level of around 42%, a little bit over 40%, I don’t think it would have an impact,” Alejandra Fernandez, a director at Fitch who covers the Latin America mining industry, said in an interview. “It would be digestible and wouldn’t generate significant distortions.”
After a broader tax reform proposal was rejected, Chile’s left-leaning government is pushing for a bigger share of profit at giant mines owned by companies such as BHP Group and Freeport-McMoRan Inc. to fund social programs. While the industry is prepared to pay more, it warns that the current version of a royalty bill would erode competitiveness and investments.
This week, Finance Minister Mario Marcel amended the bill to ensure the royalty rate would adjust to keep the total tax burden for each company capped at 50%, thereby keeping the industry average rate well below that level.
But talks over how high taxes should go are being complicated by a disagreement over where they are now, with the government estimating the current effective rate at 33% and the industry saying it’s closer to 40%. Much of the gap is explained by different assumptions on how much profit is paid out in dividends.
Still, after a series of modifications, the proposal is now “significantly more reasonable,” Fernandez said. In fact, Minister Marcel said Thursday he’d be willing to discuss a lower ceiling.
Lifting the effective rate to about 40%, “wouldn’t generate a distortion,” she said. “But if it’s effectively closer to what the industry is saying, that it would hit 50%, then we can say it would generate a more distorted scenario.”
(By Marcelo Rochabrun and James Attwood)
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