Chile Mining Sector To Benefit From Australia Tax Changes-Minister

14th Jun 2010 12:36

(This article was originally published Friday.) SANTIAGO (Dow Jones)--The Chilean mining industry stands to benefit from the stir the proposed Resource Super Profits Tax is causing among miners in Australia, said Chile's Mining Minister, Laurence Golborne. Mining companies including Anglo-Australian giants BHP Billiton (BHP.AU) and Rio Tinto (RIO.AU) have railed at the planned tax, saying it will make Australia one of the highest-taxing countries in the world for miners and could hurt the viability of future projects. Miners argue that the new 40% tax, which kicks in when a project's rate of return exceeds 6%, will stymie investment in the sector. "The situation in Australia is a tremendous opportunity for Chile if we can offer the mining sector stability and tranquility. Let them know that our tax schemes are stable over time," Golborne told reporters at the Ministry on Friday. Chile, which is the world's leading copper producer, accounting for over a third of global red metal supply, is also looking to change taxes for miners, as it recently put forward a new copper-royalty bill to help finance post-earthquake reconstruction. However, the Chilean royalty change is temporary and isn't mandatory. Chile's new conservative government hopes that most mining companies will voluntarily adopt the tax increase to help reconstruction efforts following a devastating earthquake that killed hundreds and left some $30 billion in damages. For 2010 and 2011, the new proposal has a variable tax rate, between 3.5% to 9%, depending on the copper-mining company's sales margins and on copper prices. It then reverts to 4% from 2012 to 2017. "We shouldn't lose sight of the fact that as a country we compete for investments for our mining sector. Just because you have resources doesn't guarantee investments. There are plenty of countries with mining potential and investments will go to the countries which offer the best economic conditions," said Golborne. Some large mining companies have already come out to applaud the Chilean government's decision to respect the stability of previous tax agreements. "We welcome the fact that the government's current proposals respect the tax stability agreements previously entered into with the Chilean state, and also reflect temporary changes to the tax system, to address the current exceptional requirements of the country," Jean-Paul Luksic, the chairman of London-listed Chilean mining company Antofagasta PLC (ANTO.LN) recently said. "Beyond these exceptional measures, we expect Chile to continue to provide a stable and supportive environment for long-term mining investment," Luksic added. Chile's government aims to raise $600 million to $700 million from the royalty increase, but the exact amount will depend on how many companies switch over to the new tax scheme. -By Anthony Esposito, Dow Jones Newswires; 56-2-715-8929; [email protected] (END) Dow Jones Newswires June 14, 2010 07:36 ET (11:36 GMT)