Chile lawmakers pass bill to raise mining royalties

SANTIAGO (BestGrowthStock) – Chile’s lower house on Wednesday approved a revamped bill to raise royalties paid by mining companies in the world’s top copper producer to help fund reconstruction after a devastating February earthquake.

The government-backed legislation must now be signed into law, after the Senate approved it on Tuesday.

Mining companies currently pay a royalty of between 4 and 5 percent. The new bill initially sets the royalty at 4 percent to 9 percent on mining sales on a sliding scale, and raises this to 5 to 14 percent starting in 2018.

With the royalty change, the government aims to raise $1 billion over the next three years for post-quake rebuilding.

The new royalty cannot be forced on companies covered under a 12-year tax invariability clause signed in 2005, though the government hopes many major miners will voluntarily adopt the new scheme.

Chile’s mining sector includes private multinationals BHP Billiton, Anglo American and Xstrata in addition to state copper giant Codelco.

Miguel Angel Duran, head of the country’s mining council lobby group and chief executive of Anglo American Chile, said on Tuesday night that after the tax hike Chile will likely have one of the highest tax burdens in the mining world.

The country produces about a third of the world’s copper.

A rescue operation to hoist 33 miners trapped deep inside a mine in Chile advanced rapidly on Wednesday afternoon and officials hoped to have all out by the end of the day.

President Sebastian Pinera’s swift handling of the rescue bid may have helped the bill’s passage.

(Reporting by Ignacio Badal; Writing by Eduardo Garcia; Editing by Lisa Shumaker)

Chile lawmakers pass bill to raise mining royalties