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Chilean mining chief warns royalties bill in current form 'akin to expropriation'

CommoditiesMay 04, 2021 07:13PM ET
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© Reuters. FILE PHOTO: The Codelco El Teniente copper mine, the world's largest underground copper mine is shown near Rancagua, Chile, August 13, 2020. Picture taken through a window. REUTERS/Fabian Cambero

By Fabian Cambero

SANTIAGO (Reuters) - Chile's National Mining Society (Sonami) has warned that a royalty project being discussed in Congress proposes levels of taxation that are "akin to expropriation" and would paralyze investment in the Andean nation.

The plan, which proposes a progressive tax of at least 3% on copper and lithium sales, is driven by opposition-party legislators as a way to fund more expansive government social programmes as the country struggles to recover from the coronavirus pandemic.

The bill has been tweaked in Congress' mining and finance commissions and will be voted on in the chamber of deputies on Thursday. If approved, it will move to the Senate.

Chile has seen a number of initiatives aimed at extracting more value from its largest industry over the years but the latest bill is gathering steam and alarming miners.

It follows intense social protests over inequality and elitism that exploded in October 2019 and simmer to this day, and comes after economic hardships inflicted by the pandemic.

The government opposes the royalties plan, with Mining Minister Juan Carlos Jobet saying it risked putting Chile "completely out of kilter" with other mining nations.

However, last week Congress - including ruling-coalition lawmakers - approved a third drawdown by citizens on Chile's privately held pension pots despite staunch government opposition. The country is also in the process of forging a new constitution - a key demand of the protests.

Big miners are stepping up lobbying efforts to oppose the latest plan.

Diego Hernandez, the president of Sonami, which represents copper miners across Chile, issued a statement reiterating earlier comments that the project is unconstitutional, and that if it were approved as currently conceived it would have serious consequences for the industry and the country.

He said that under the current proposal, 12 of the 15 biggest miners operating in the country would end up operating at a loss.

"These are tax levels akin to expropriation and this is going to inhibit investment immediately," he said. In addition to the state-owned Codelco, Chile is host to mining operations by BHP Group (NYSE:BHP) Ltd, Anglo American (LON:AAL) Plc, Glencore (OTC:GLNCY) Plc, Antofagasta (LON:ANTO) Minerals and Freeport-McMoRan (NYSE:FCX) Inc.

Chilean mining chief warns royalties bill in current form 'akin to expropriation'
 

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Comments (3)
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Ad Cline May 05, 2021 4:21AM ET
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socialism is not Communism the fact you can't tell the difference says a lot about your education level. there are no countries practicing economic communism. their hasn't been one since the Mungul empire and the indo -chinese states in the 18th century. Karl Marx economic philosophies have never been used in any modern industrial state. What developed in Russia and China was just another form is state capitalism. what you are doing is just reinterating propaganda used by the far right to turn you and other's like you against democracy.
Felipe Daniel
Felipe Daniel May 04, 2021 8:14PM ET
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Socialism and communism two birds of a same feather always want to tax higher in order to promise what they never fulfill, to take more care of the people. Communism inhibits and repels investment.
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Ad Cline May 04, 2021 8:14PM ET
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history tells. us what your saying us not true. Obama Administration raised taxes on corporations after the 2008 crash an we went into full recovery. during the Clinton era taxes were high yet America's middle class thrived and the debt was dropping. supply side economic policy which with your post you are suppting, dosn't work; in the end always fails, and usually ends with economic crashes and massive bank failures.
JR Pierce
JR Pierce May 04, 2021 7:46PM ET
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Because it worked out so well for the socialists/Commies in Venezuela.
 
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