A controversial mining windfall tax is set to be the subject of a month-long debate in Chile's Senate, as lawmakers hear from companies and unions about the potential impact on mines that account for more than a quarter of global copper production.
The Senate's Mining and Energy Committee will hold weekly hearings on the proposed royalties until mid-July, according to a meeting held Wednesday. The committee received submissions from BHP Billiton Group, Antofagasta PLC and Teck Resources Ltd. And other executives to appear in court.
A thorough discussion of the impact of a bill imposing a surtax on copper prices would provide some relief. The version approved by the lower house would raise the total tax burden to levels well above those of other major copper jurisdictions, threatening the future need for new investment intended to help fill the shortfall in copper supplies from a shift away from fossil fuels to cleaner energy sources.
The ruling centre-right coalition opposes the bill, saying the existing sliding tax on profits should be allowed to operate in the current environment of high prices. Copper futures are up 69% over the past year as the economy recovers.
Earlier this month, Juan Carlos Jobet, the minister of mines and energy, called for a broad discussion on what the biggest copper-producing countries want from the mining industry, rather than rushing to a vote on a proposed new tax regime.
The minister said at the time that most major mines had signed tax stability agreements until 2023, meaning there was no need to rush technical analysis and there were better ways to raise money for social spending.
Still, lighter tax reforms for the mining sector will not be easy, given the growing pressure to address the inequalities that have increased as a result of the pandemic. The political institutions' crushing defeat in the elections to choose an assembly to write a new constitution underscores the challenge.
If there are major changes, the royalty bill would still have to go to the Senate and return to the lower house.
