Chile gives the green light to mining tax reform that boosts government profits

The reform will require major copper and lithium producers operating in the mineral-rich Latin American nation to pay more taxes and royalties to the government.

Chile is the world’s first producer of copper and the world’s second producer of lithium, both of which are considered essential for the realization of future fleets of electric vehicles powered by rechargeable batteries.

With a vote of 101 votes for and 24 against, legislators on Wednesday approved the changes to the bill on taxes and royalties, approved by the Senate last week.

The vote was welcomed by Finance Minister Mario Marcel, who stressed that the government’s greater assumption of obligations to mining companies would address past abuses.

“With this legislation, we seek to avoid what happened many times with the natural wealth of our country: they were exploited, they disappeared, which left very little for the country and for its future development,” Marcel told reporters after the vote .

Under the reform, the maximum tax rate will go up to almost 47% for companies that produce more than 80,000 tons of fine copper per year, considered large by the industry.

It also imposes an ad valorem tax of 1% on copper sales of companies selling more than 50,000 tonnes of fine copper, as well as an additional tax of 8% to 26%, depending on the operating margin of the miner.

The Sonami mining association expressed relief that the measure ended uncertainty over the type of reform lawmakers would ultimately pass.

“The uncertainty lasted almost five years and undoubtedly affected the main productive activity of the country,” Sonami said in a statement.

The association described the project as “better” than the one originally proposed by the government, crediting Marcel for passing industry-friendly revisions.