Chile’s lower house of parliament voted in favour of a bill seeking to impose an additional tax on sales of copper and lithium even after the opposition from the country’s president and the mining industry, which is against the high tax burden. The bill was approved with 79 votes against 47 and will move to the Senate for final approval.
About a third of the global copper supply comes from Chile, with its rich copper deposits in the Atacama deserts.
In 2020, Chile produced 5.7mn mt of copper, representing 28.5pc of the global copper output for the year. Lithium production was 18,000mt, accounting for 22pc of the global share.
If both houses pass the bill, a 3pc royalty will be imposed on the sales of copper and lithium. The money collected through royalty will be spent on social welfare and environmental compensation in the mining areas. The bill is supported by the left parties but opposed by President Sebastian Pinera, who represents conservatives.
Minister of Mines, Chile, Juan Carlos Llobet believes that additional taxes would put the country at disadvantage over its competitors. Copper metal is in high demand for being a good conductor of electricity and heat and is used to generate solar, hydro, thermal, and wind power. Apart from copper, Chile is a top producer of lithium used in electric vehicle batteries.
Meanwhile, the LME three-month copper contract crossed the $10,000/mt mark on Thursday.