Chile is an important mining country in Latin America. The output value of mining industry accounts for about 10% of GDP, and the contribution of related industries driven by mining industry to GDP is even more than 30%.
Chile also has the largest copper reserves in the world. Data show that the proven copper reserves in Chile are more than 200 million tons, accounting for about 1/3 of the world's reserves, ranking first in the world.
In 2020, Chile produced more than 5.8 million tons of copper.
Chile's Codelco, the world's largest copper mining company, told lawmakers in a letter that about 40 percent of its copper production is at risk if the glacier bill is approved by Congress, Reuters reported.
Established on April 1, 1976, Cco is the world's largest copper mining company. Its operations include the development, extraction, refining, processing and marketing of copper deposits, with annual copper production of 1.7 million to 1.9 million tons in the last decade.
Mines that could be restricted include Andina, El Teniente and Salvador, which produce about 600,000 to 700,000 tons of copper a year, or about 40 percent of Copperstate's annual production capacity, the company said.
The "Glacier Bill" is currently being considered by Chile's Senate, which would ban mining and other activities in areas classified as glaciers, glaciers and permafrost.
In Chile, glaciers are the most important source of fresh water. In 2020, Chile experienced its worst drought in a century, which made people realize the urgency of protecting glaciers again.
Supporters of the bill say Chile's glaciers are already threatened by climate change and that immediate action should be taken to protect them from industrial activity.
The bill has been proposed since 2018, and in the coming weeks, a committee of the Chilean Senate will review the bill further and make a procedural vote on it.
The Glacier bill has been a headache for Chile's national copper company, but there is another big one, the royalty bill now before the Senate.
In late March, Chile's lower house of Congress approved a "royalty bill" proposed by the opposition.
The bill proposes an AD hoc 3 per cent premium on the value of mined copper for companies that produce more than 12, 000 tonnes a year.
According to the analysis, if the new royalty system is implemented, the tax rate of relevant enterprises will be as high as 44%.
This month, Chile elected delegates to a new "constituent assembly". The new constitution will be changed in the hands of the pan-left, and the ruling coalition is far smaller than the number of veto holders, which means the chances of a new "royalty bill" being passed will be increased.
In recent years, the grade of copper ore resources mined in Chile has been decreasing gradually.
That means more ore will have to be mined, and more money will have to be spent, to keep production going.
Just to maintain current production, Cco will have to spend tens of billions more.
The vast majority of its operations are in Chile and most of its large mines are 100% owned and operated independently.
Mines producing more than 100,000 tonnes of copper include:
El Teniente (460,000 tons), Chuquicamata (380,000 tons), Radomiro Tomic (270,000 tons), Andina Division (170,000 tons), Ministro Hales (150,000 tons) and Gabriela
Mistral (100,000 tons).
The royalty bill, if implemented, will further squeeze the profits of the country's copper companies, especially Copperstate.
At present, Chile's mining investment and development environment is facing unprecedented challenges.
For nearly 20 years, the Fraser Institute has published a ranking of the attractiveness of mining investment for the year, combining the mining environment of countries around the world.
Chile ranks 30th in 2020, down 13 places from 2019 and 24 places from 2018, a sharp drop for the second consecutive year.
Cco has been controlled by Chile's national government and is one of the country's main sources of finance, with the ruling coalition its biggest backer.
If the ruling coalition had won the "assembly" in the new clause of the constitution about a third of the seats, Chile's state copper company, then all problems will be solved, but unfortunately, the right to make changes in the new constitution will be Chile held by pan left-wing opposition, they advocate environmental protection and tax concept obviously got more public support,
For Chile's state copper company, this time it is in real trouble.
In other words, if this is the case for Codex, it could be even worse for other big mining companies with deep operations in the country.
