Beginning in 2024, mining royalties in Chile will rise to a range of 8% to 26% of operating margin from the current range of 5% to 14%.
There will also be a 1% ad valorem tax based on sales for miners that post a profit, Reuters reports.
Chile's Mining Council, which comprises large private firms, estimates this will ultimately boost the average tax rate of 44.7%, exceeding the top of the range of 38-to-44% in competing countries such as Peru and Australia.
The elevated royalty is the latest flashpoint between the mining industry in the world's No. 1 copper and No. 2 lithium producer and the leftist government of Gabriel Boric, who came to office promising to get the country's mining industry to help pay for expanded social programs.
With Chile's aging mines producing less copper, analysts noted that the more mining investment was needed to produce the government's desired revenue increase, even with the higher royalty.
"I think there will be investment, what I don't think is that production will grow more, it will be difficult for us to go above 6 million (metric) tons in Chile and that is what ultimately determines revenue," said Gustavo Lagos, a professor at the mining department at Catholic University in Santiago.
Chile's copper production in 2022 totaled 5.33 million metric tons, down from a record 5.83 million in 2018.
Alex Shishlo for Rough&Polished
