10/01/2022
SANTIAGO, June 24 (Reuters) - With copper prices soaring and Chile's economy reeling from the COVID-19 pandemic, lawmakers want to fund recovery efforts by hiking royalties on the booming mining sector but the drive could flounder because of deals that previous governments signed decades ago to freeze tariffs on the biggest miners.
Major foreign miners operating in the world´s largest copper producer obtained tax stability agreements that maintain payment regimes, and a Reuters review shows these do not expire for two to 15 years.
The deals, meant to buffer investors from political or economic upheaval, helped attract investments in some of Chile's largest mines.
Experts interviewed by Reuters said that even after likely passage of a law outlining a royalty as high as 75% on copper sales, the agreements could diminish Chile's windfall.
Some lawmakers want to push to renegotiate the stability clauses, taking a cue from nearby Peru, the world's second-largest copper miner. There, Pedro Castillo, who pledged to boost social spending to help the poor, is on the verge of being confirmed as president after a disputed election. read more
Castillo's team has suggested he will seek to circumvent any delays to a plan to raise taxes on miners by renegotiating tax stability agreements covering 25 operators including major Chinese mines. read more
Among those in Chile who want to take a similar tack is Catalina Perez of the radical-left Democratic Revolution party. She and other opposition lawmakers, many representing mining areas, co-authored the mining royalties bill.
Nonetheless, miners and Pinera's administration will seek to modify the bill as it moves through the senate, with more than a month of evidence-gathering sessions starting this week. read more
But industry analysts warned that trying to override tax stability agreements could damage Chile's business-friendly reputation and bring legal action.
