Copper tax, a bill that is controversial in Chile
Audio 01:45
Officers at the port of Valparaiso in Chile check a shipment of copper ready for export to Asia, January 25, 2015. Reuters / Rodrigo Garrido
By: Marie-Pierre Olphand Follow
5 mins
In Chile, the Assembly has just adopted a bill to increase the taxation of lithium and copper.
There is still a vote in the Senate, but the subject is already making noise among the world's largest producer of red metal.
Publicity
The debate is not new and could still last several months in Chile.
The bill has yet to pass the Senate and the authorities say they are ready to use all possible remedies to block its passage.
The controversial text provides for the introduction of higher taxes via royalties on copper sales, according to a scale indexed to market prices.
Taxes that could be expensive for companies, in a period like today when prices are reaching new heights.
In Chile, copper is one of the pillars of the economy.
But this rent has not made it possible to reduce inequalities.
In 2019 according to Business France - a public structure that supports the development of French companies internationally - 1% of the richest concentrated 33% of the world's wealth.
Miners are already threatening to stop investing in the country
Hence the launch by the left in 2018 of a reform of the tax mechanism that would benefit residents and protect the environment in mining areas.
A strategy that does not surprise Yves Jegourel, president of the Commodities for Nations association and professor at the University of Bordeaux.
"
The link between regulation and market dynamics is common to all mineral materials, rising prices generally lead to higher taxes
."
But this commodity analyst remains skeptical about the idea of imagining "
feeding development from mining revenues
".
The conservative government of President Sebastian Pinera is standing up against this tax because it fears a devastating effect on the economy.
And he may not be wrong: the spokesperson for the group that operates the Antucoya mine - Antofagasta Minerals - has already indicated that the mine's activities will be suspended if the bill passes.
The former president of Codelco, the public company, which produces 30% of Chilean copper, also warned that the measure would not be tenable for the sector.
A bill for 2024
"
If the law passes it could be a hell of a mess,
" confirms Mathieu Le Guérinel analyst at the Bureau of Geological and Mining Research (BRGM) who mentions the possibility of seeing companies leave for Peru, the second largest producer of red metal, especially as several Chilean mines are reaching maturity and will require large investments to continue to be exploited.
"
We are not going to replace Chile like that,
" reassures a raw materials expert.
Its world copper reserves - 25% in 2017 according to the BRGM - are unparalleled and this is what makes the country essential.
The law, if adopted, will not enter into force until 2024, after the expiry of the stability pact signed between the authorities and the miners.
But before that "
this story risks making prices jump
" predicts a mining subcontractor based on the African continent.
This would make people happy especially in the Democratic Republic of the Congo where one of the future largest copper mines in the world should come into operation in the coming weeks.
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