NEW YORK, Oct. 19 (Reuters) – Mining behemoths BHP and Antofagasta Minerals warned on Wednesday that Chile’s proposed mining royalty law will reduce the country’s competitiveness and prompt miners to reconsider their financial commitments. The government of Chile, which is the top copper-producing country in the world, has suggested a royalty with a component based on sales and the other subject to profitability, which advances as copper prices rise.
BHP’s vice president of corporate relations for the Americas, Rene Muga, stated in a speech to Chile’s Congress that the present measure would have a negative impact on the company’s activities in other countries as well as its ability to compete internationally.
It is our responsibility to caution people that Chile cannot excessively raise taxes without adversely hurting investment levels in today’s fiercely competitive global economy, Muga said. The effort, he continued, would cause the mining business to reevaluate its announced $10 billion investment portfolio because it was created “without contemplating such an exorbitant tax burden increase.”
For his part, Rene Aguilar, vice president of corporate relations at Antofagasta Minerals, noted that the proposed revisions would result in a total tax burden of more than 48%, bringing Chile on level with high-tax nations like the Congo, Mongolia, and Zambia.
The depreciation of investments must be taken into account when determining mining profits, according to Aguilar. This is a really important aspect, especially for organisations like Antofagasta, which might invest close to $5 billion over the next few years.
Both company officials agreed that the mining industry might contribute more, but they urged for cooperative arrangements that preserve their companies’ viability.Mining Giants Warn Chile’s New Mining Royalty Could Impact Investment
Major mining companies have raised concerns over Chile’s proposed mining royalty reform, warning that it could negatively impact investment in the country’s mining sector. Chile, the world’s largest producer of copper, is considering higher taxes on mining profits to increase government revenues and fund social programs. However, industry leaders argue that the proposed changes could make Chile less competitive compared to other mining jurisdictions, discouraging new projects and expansions.
Concerns Over Competitiveness and Investment
Mining giants such as BHP, Antofagasta, and Anglo American have expressed concerns that increased taxation could lead to a decline in foreign direct investment. The proposed reform includes a sliding-scale tax based on copper prices, meaning companies would pay higher royalties when prices are high. While the Chilean government argues that this system ensures fairer wealth distribution, mining executives warn that it could increase operational costs and make Chile a less attractive destination for investment.
According to the Chilean Mining Council, the industry already contributes significantly to public revenues, and additional taxes may reduce profitability, leading to delays or cancellations of planned investments. Mining companies emphasize that stable and predictable tax policies are essential for long-term investment planning, as uncertainty can drive investors to seek opportunities in other mining-friendly countries such as Peru, Australia, or Canada.
Government’s Justification and Industry Response
The Chilean government, led by President Gabriel Boric, supports the royalty reform as part of its broader strategy to address social inequality and fund public services. Officials argue that mining companies have benefited from high copper prices and should contribute more to national development. However, industry stakeholders caution that higher taxation could lead to reduced production, job losses, and lower overall economic growth in the long run.
Despite opposition from mining firms, the government insists that the reform is necessary to ensure a fairer distribution of mining wealth. Negotiations between policymakers and industry representatives continue, as both sides seek a balance between economic growth and social.
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