Chilean lawmakers agree to postpone law on mining reform to 2024

A large majority of lower house Chilean lawmakers voted to approve a motion to postpone until January 2024 the application of law 21,420, which cuts or abolishes tax breaks for the mining industry and changes various regulations for concessions.

"The haste in passing [the law] led to gaps and inconsistencies in the mining regulations," the lower chamber of congress said in a statement.

Some 128 lawmakers voted to approve the motion, while only one voted against and there were five abstentions. It now goes to the senate for debate and, if passed, the law would not go into effect on February 4 as originally planned, but be pushed back to the start of next year.

The aim of law 21,420 is to increase the State's revenues and help fund the universal guaranteed pension (PGU). Under the legislation, the value of mining permits will rise progressively and the holder of a concession will be required to prove they are carrying out activities or a project exists for the property.

In addition to stimulating the development of mining projects, the objective is to make "those properties that are not being explored, exploited or worked pay a higher rate. That's the cost a company must pay if it has an asset that is being used as a liability," Philippe Hemmerdinger, president of the association of industrial mining suppliers (Aprimin), told BNamericas.

The vote in congress came after lawmakers saw a report prepared by the mining ministry and national geology and mining service Sernageomin, outlining the expected impacts of the law as it stands.

In particular, the deadlines established to amend the geodetic coordinates of mining properties from the UTM to SIRGAS reference system were considered unfeasible to meet, the congressional statement read. 

A six month period is given to register the new coordinates with Sernageomin and, in the case of non-compliance, it would lead to the immediate expiration of mining titles.

The law seeks to end hoarding of mining concessions by a small number of companies for speculative purposes. In 2021, nearly 14,500 exploration concessions and 1,250 exploitation concessions were awarded, where 50% of the areas for the former and 46% of the latter were owned by just 15 companies.