Is there a consensus on mining proposals for Chile’s new constitution?
Next month Chile’s constitutional convention will decide which proposals it will evaluate to move forward with the design of a new constitution.
National mining association Sonami, copper research center Cesco, the mining chamber, mining supplier association Aprimin, the mining council (which represents large-scale miners) and Compromiso Minero, the Chilean network promoting sustainable mining, have all submitted proposals and BNamericas reviews some of the main points to see if there is a consensus.
Sonami, Cesco and the mining council are the associations that have produced the most specific proposals.
With regard to ownership of the country’s mineral resources, Sonami and Cesco agree that the Chilean state must remain the owner.
On taxes, the mining council suggests that these must remain a prerogative of the president, while Sonami backs taxes applied to profits and operating margins in order to increase tax revenue during periods of higher prices.
Meanwhile, Cesco’s proposal is to apply a royalty on non-renewable resources that would replace the current specific mining tax.
The three organizations are opposed to the royalty bill that is now being debated in the senate, which seeks to add a 3% tax on sales of more than 12,000t/y of copper and 50,000t/y of lithium, as well as a progressive rate depending on copper prices.
The bill was approved by the country’s lower house in May, but the changes proposed at the end of 2021 will have to be discussed by the mining and energy committee and the finance committee before it is sent back to the lower chamber.
Another key issue for the industry is mining property.
Cesco recommends changing the duration of exploration concessions to up to three years, renewable only once for an additional three years, but it also proposes setting a minimum investment commitment and increasing the cost of the annual license.
Sonami’s proposal is that mining rights should continue to be granted by the courts, but it suggests that mining concessions should have an indefinite duration, while exploration concessions should only be temporary.
Meanwhile, the mining council considers that annual payments for licenses for mining concessions should be maintained.
In Chile, exploration concessions currently last two years, but are extendable for another two if at least half of the area covered in the original request remains unexplored.
Current legislation establishes the payment of an annual fee, but there is no obligation to actually conduct exploration work.
With regard to lithium, Sonami proposes a review of the non-concessionary status of deposits to prevent the country from losing ground in the market, while Cesco recommends the establishment of a general framework for lithium use by the state through its companies or through partnerships with the private sector.
The mining council also suggested that environmental regulation should be defined through specific laws and regulations.
In more general aspects, the Compromiso Minero proposals are focused on promoting and guaranteeing sustainable use of mineral resources, as well ensuring that the sector’s tax contributions benefit mining communities.
Moreover, the mining chamber proposes new standards on environmental protection and social development, as well as maintaining and protecting private property rights, and legal and tax security.
Aprimin recommends providing greater support to SMEs and having the environmental aspects of projects reviewed by specialized parties, with prior citizen participation, but without the intervention of political actors.
“If a project is considered harmful to the environment during its technical-environmental analysis, it doesn’t proceed. But if it’s considered that its impacts are duly controlled, then it has to be developed,” said Sergio Hernández, executive director of Aprimin, during a presentation to the constitutional convention earlier this month.
Photo credit: Chile's mining ministry
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