Chile has opened the door to further modifications to proposed tax increases on copper producers, which could ease concerns that threaten to hold back investment in the industry.
The government – which suffered a major setback last week with the rejection of a sweeping tax reform bill – is now willing to study further changes to a separate mining royalty bill, Finance Minister Mario Marcel told reporters Tuesday.
Further moderation of the bill could help remove barriers to billions of dollars in investment in a country with the world’s largest copper reserves but where ore quality has fallen.
BHP Group said a year ago it would invest US$10 billion in Chile if the rules don’t change too much.
Unlocking more Chilean copper is key as global demand rises with the trend away from fossil fuels.
Without offering details, Marcel said authorities are studying limits on tax categories within the bill to measure the total burden better.
In October, the government capped a proposed new sales tax at 1%, down from 4% previously, and set a new rate on operating profit at 8% to 26%, down from 2% to 36% previously proposed based on copper prices.
Marcel said that the government is evaluating adjustments to the so-called royalty bill before it goes through the Senate finance committee.
The industry hopes that the surprise defeat of the flagship tax reform bill last week means that both sides of the aisle will be eager to claim a victory with the mining royalty bill.
The important thing now is to provide certainty where there are spaces to do so; the mining royalty is an opportunity in that regard, Marcel said.
With information from Bloomberg