The finance minister for Chile, Mario Marcel, has reportedly outlined a tax reform plan that will not only raise taxes across the country, but will also increase mining royalties for copper companies producing over 50,000 tonnes annually.
The plan, according to a Reuters report, would impact some of the industry’s largest producers including BHP, Antofagasta, Codelco and others. It has two components; one is via an ad valorem tax proposed between 1% and 2% for companies producing between 50,000 and 200,000 tonnes of fine copper annually and a rate between 1% and 4% for those that produce more than 200,000.
The other is a rate between 2% and 32% on profits for copper prices between $2 and $5. Both components would vary based on copper prices.
“This means an increase in revenue from royalties, an increase in state participation in mining income,” Marcel said, per Reuters. “But also ensuring the mining sector has enough income to encourage investment.”
He noted that smaller producers would continue working under the current outlines. The ultimate target of the reform is raising 4.1% of GDP over four years. Of that, 0.7% would be earmarked for a new guaranteed minimum pension fund.