APRIL 16, 2024

Everything you need to know about the mining royalty in Chile

A mechanism known as Bridge Funds has been created in anticipation of resource collection from the royalty in 2025. The mechanism will allow municipalities to receive this year an advance on half of the money to be transferred from next year. 

Thanks to the Mining Royalty Law, Chile now has fresh resources to directly improve the lives of millions of families throughout the country. 

The Mining Royalty Law came into effect in January 2024, after being approved by Congress in 2023 following several years of processing, before being enacted by President Gabriel Boric. 

A mechanism known as Bridge Funds has now been created in anticipation of resource collection from the royalty in 2025. The mechanism will allow municipalities to receive this year half of the money to be transferred from next year. 

This year, we will make more than $93 billion Chilean pesos (US$101 million) freely available to the communities that benefit from the mechanism. Resources will double next year.

Here, you can review how the mining royalty is distributed by municipality. 

You can find answers to the main questions about the mining royalty and how it will benefit millions of Chileans, below. 

President Gabriel Boric spends time with children from Calaca, after presenting the benefits that the royalty will provide to municipalities. 

What is the goal of implementing the mining royalty in Chile? 

The main goal of the mining royalty is to improve the quality of life of millions of families in Chile, by providing more resources to municipalities. This will be a concrete change in the lives of Chilean families, who will be able to see the direct benefits in their neighborhoods. 

Another goal of the Mining Royalty Law is a fairer distribution of our country’s wealth. 

How much will the Mining Royalty bring in? 

The Mining Royalty Law will allow us to bring in US$1.35 billion annually from 2025. 

Of the total, US$450 million will be allocated to the development of regions throughout Chile. 

Half of these resources will be provided to all regional governments through the Productivity and Development Fund, and the other half to 90% of the country’s municipalities through two instruments: 

  • Territorial Equity Fund, to be distributed among the municipalities with greater dependence on the Municipal Common Fund. 
  • Mining Municipalities Fund, to compensate mining communities that directly experience the effects of mining activity. 

This year, we will transfer resources through the Bridge Funds to municipalities, which will directly benefit 12 million people. $93 billion pesos (US$101 million) will be made available for 2024, to address the most pressing needs of each municipality. 

What are the benefits of the Mining Royalty? 

The royalty means a better future for different municipalities in regions throughout Chile. It means a better quality of life for families, more resources to provide greater security for municipalities, more and better public spaces and infrastructure, and improved health and education services. 

It also means greater justice for mining communities, so that the resources produced in those municipalities remain there. 

In simple terms, the royalty means fresh money for municipalities, which will improve the lives of 12 million people. 

How does the Mining Royalty work? 

The mining royalty is a specific tax for large-scale mining companies that is common throughout the world, considering that mining is an industry that exploits scarce and non-renewable natural resources. 

This mechanism seeks to generate fair and efficient tax collection in order to increase resources for regions throughout Chile, and promote the development of the economy. 

The Mining Royalty Law seeks to improve the quality of life of people in all regions of the country. For this reason, it will provide resources to about 90% of the municipalities in the different regions in order to reduce the income gaps that exist between municipalities and deal with the direct effects of the activity in mining communities. 

How could municipalities use the resources provided by the mining royalty? 

Municipalities that receive resources from the royalty will be able to use them freely, based on the most pressing needs that they identify in their territories. 

They could, therefore, build plazas, install more lighting and fix the streets, among other works to improve people’s lives. 

For example, a municipality that has an extra $700 million pesos (US$766,000) in its budget could implement any of the following changes: 

  • Install 200 security cameras. 
  • Install more than 150 new lights. 
  • Invest in 60 new wells to obtain drinking water. 
  • Improve electrical infrastructure and public lighting to benefit more than 8,000 homes. 

It should be noted that resources from the royalty cannot be used to pay municipal debts. 

How will we ensure that municipalities and regional governments make good use of the resources they receive from the royalty? 

The royalty will strengthen the autonomy of municipalities, who will be able to use the resources based on their needs. There will, however, be controls to monitor their proper use. 

It has therefore been established by law that municipalities must inform the Regional and Administrative Development Undersecretary’s Office (SUBDERE) how the resources are used. 

In turn, SUBDERE must report the use of such resources to Congress. This is a chance for the public to know how the funds have been spent and a valuable opportunity for the impact of their contribution to be reviewed. 

The monitoring of the use of resources will also be available to the public on the SUBDERE portal.