Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Chile’s government is “pretty confident” of paring back a copper tax bill in order to stay competitive with other major producers, the mining minister said in comments that may help ease concerns over future supplies.
The lower house approved a version of the bill last month that, according to government estimates, would raise the total tax burden for mining companies to 70-80% from about 40% now, Mining and Energy Minister Juan Carlos Jobet told Bloomberg Television on Wednesday.
The ruling center-right coalition has fought the opposition-backed bill on the grounds that it would undermine future investments and production in a country that accounts for more than a quarter of the world’s mined copper at a time of rising demand and record-high prices.
But as the senate starts to debate the proposal, Jobet opened the door to at least some increase. He said somewhere around what other major producers charge, of as much as 45%, would be reasonable.
“Most senators understand that the deal approved in the lower chamber is not a good deal and we’re pretty confident we’ll be able to reach a reasonable agreement,” Jobet said.
That would be “to see if there is room to increase the revenue that the mining industry contributes to the country and, if that room exists, to agree on a tax reform that is reasonable and leaves Chile within the range of other countries that produce copper and have big reserves,” he said.
Still, brokering a less onerous tax reform for the mining industry won’t be easy given mounting pressure to address economic inequalities exacerbated by the pandemic.
The challenge was underlined by the political establishment’s crushing defeat in elections to chose an assembly to write a new constitution.
(By James Attwood and Alix Steel, with assistance from Daniela Sirtori-Cortina)
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