MercoPress. South Atlantic News Agency

Additional levy on Chilean mined copper

Chile the world's biggest copper producer passed a bill increasing taxes on the mining industry taking advantage of the international bull market for the metal which is a main source of government revenue.

"We're charging companies for using a non-renewable resource as mining countries across the world do", argued Senator Jaime Gazmuri, adding "we need these funds to increase research and help us become a developed country".

The government said the additional tax revenue will be invested in research to help prepare Chile for when copper deposits run out.

But mining companies such as Antofagasta Plc which produces 10% of Chile's copper said the tax discriminates against the industry and will make Chile less attractive for investors.

"It's bad news for the mining industry and the country; it will affect competitiveness", said Ramon Jara a director form the London based Antofagasta.

Copper has surged 22% in a year reaching 1,53 US dollars the pound last April but now is trading at 1,37 US dollars. Fueled by Chinese demand copper has ballooned from a 14 year low of just over 60 US cents in 2001 to the current situation.

"Now there's a cycle of bonanza", said Mr. Jara who added that "you also have to look at the long term: these prices won't last".

However Senator Gazmuri said the tax won't affect investment because Chile's vast and rich copper deposits "makes mining costs low".

When the Chilean government began debating the tax bill over a year ago it estimated that revenue will increase by 145 million US dollars annually with copper at an average price of 90 cents per pound. Chile accounts for a third of global mined copper output.

Last January the Chilean National Mining Society which represents most of the largest mining companies in the country told Congress that the "tax raises concerns that Chile might make other changes to mining laws in the future".