LMEWEEK-Chile royalty bill could hit $8 bln investment -group

LONDON, Oct 13 (BestGrowthStock) – Chile could lose around $8
billion in fresh investment in the mining sector if Congress
approves a hefty tax hike on miners operating in the world’s top
copper producer, the head of the country’s Mining Council lobby
group said.

Miguel Angel Duran, who is also chief executive of Anglo
American Chile, told Reuters the bill proposed by President
Sebastian Pinera could make companies review plans to develop
mines with low-ore grades and divert fresh investment to
neighboring Peru.

The bill is seen sailing through Congress after the Senate
approved it following an agreement between the center-left
opposition and Pinera. The lower house still has to give it
final approval.

The $8 billion at risk is about a quarter of projected
investment by mining companies in Chile over the next seven
years.

The new law initially sets the royalty at 4 to 9 percent on
the companies’ margins on a sliding scale. It raises the royalty
to 5 to 14 percent starting in 2018.

Mining companies currently pay a royalty between 4 and 5
percent.

“At these levels we will likely end up with one of the
highest effective tax rates in the mining world,” Duran said
late on Tuesday.

“Operations will continue because they are here, but this
bill is likely to hit Chile’s competiveness and divert
investment to other commodities or countries.”

He said around eight projects could be at risk if the new
legislation is approved including copper plays owned by miners
Anglo American (AAL.L: ), Antofagasta Minerals (ANTO.L: ) and Teck
Resources Ltd (TCKb.TO: ).

There was no immediate calculation for the combined
potential output of those operations, but Antofagasta’s Antucoya
project alone could produce up to 80,000 tonnes of copper per
year.

For years some political and union leaders have said mining
companies in Chile pay too little to extract the red metal as
prices recurrently hit record highs, urging the government to
impose steeper royalties.

The council, which represents the country’s top operators,
said big companies have paid over $24 billion in income tax in
the last five years.
(Reporting by Alonso Soto, editing by Anthony Barker)

LMEWEEK-Chile royalty bill could hit $8 bln investment -group