The BHP said the tax hike poses a threat to Chile’s mining industry

BHP, the head of operations in the Americas, reported that taxes and royalties threaten the mining industry in Chile.

Last week, a committee in the Santiago congress approved amendments to the Mining Bill, which would add a progressive tax on sales of copper and lithium, with metals expected to play a key role in changes to cleaner energy.

Although the project is unlikely to go away as it is today, analysts believe that higher taxes and royalties are coming in Chile and other countries with rich resources.
Chile also intends to rewrite its constitution.

Significant rise in commodity prices, copper was trading at more than $ 10,000 a tonne for the first time in a decade in the last week, concern is being raised by miners who will be headed by governments that plan to pay for pandemic recovery programs.

Former Australian Prime Minister Kevin Rudd recently called on the country’s major iron ore producers to make super profits – BHP, Fortescue Metals Group and Rio Tinto -. In Peru, the pioneer in the presidential election has promised a fairer distribution of mining wealth.

In Chile, tax increases could be overseen by foreign mining companies investing in new projects or expanding to satisfy existing mines increasing demand for copper and lithium electric vehicle manufacturers and the renewable energy industries.

“You can try more from the golden goose, but you need to be very clear about what the long-term effects are,” Ragnar Udd, president of BHP Minerals Americas, said in an interview with the Financial Times. “And the reforms that are currently being proposed will be very detrimental to the industry.”

Chile is the largest copper-producing country in the world, accounting for approximately 28% of the world’s total metal production, from appliances to electrical cables. Copper is an essential part of the economy, however, many mines are aging, with lower ore levels and high mining costs as they deepen into the ground.

“Chilean deposits are not deposits from 20-30 years ago,” Udde said. “The reality is that the grades have dropped significantly. In the last 15 years we have gone from 1 per cent to 0.6 per cent to 0.7 per cent. . . so you have to work harder and find different ways to be more productive. “

“Over the last 15 years, the share of copper extracted from Chile has risen from 34% to 28% of the world market,” he added.

Udd, a Canadian engineer who joined the BHP in 1997, began his role in November. In addition to conducting BHP operations in Chile, Escondida is also home to the world’s largest copper mine. He is also responsible for that Jansen, a huge potash project the company wants to develop in Canada.

While the U.S. business is a major source of BHP’s profits, investors in Western Australia’s iron ore mines are often overlooked, Udd believes it will be key to growth and the company’s search for “future raw materials”.

“I really see this as an engine of organizational growth for the next 30 to 50 years,” he said.

BHP’s management will decide whether to approve the first stage of the Jansen project in the middle of the year, but it will likely continue to spend $ 4.5 billion already.

“What we like about potassium is that it brings one of the diversifications we see to BHP,” Udde said. “Not only geographic and customer diversification. . . the drivers of the growth in demand for potassium are slightly different than that of copper. ”Potassium consumption has historically been closely linked to industrialization with the population.