President Gabriel Boric has finally enacted the Mining Royalty Law, after more than four years of processing. The initiative has been promoted by the Government and received widespread support. It aims to use resources from large-scale mining to promote the development of regions throughout Chile.
How will Mining Royalty Law resources to used?
The President explained that resources will be collected through this new tax scheme from 2024. It will focus on the mining sector’s largest companies, those operators whose sales are more than 50% copper and that produce more than 50,000 metric tons of fine copper (MTFC) per year.
Some US$450 million will be distributed from this tax collection to promote the development of regions and municipalities throughout the country through three funds:
Regional Productivity and Development Fund
The “Regional Productivity and Development Fund” is aimed at all regional governments in order to finance plans and programs to promote regional development investment projects, as well as scientific and technological investment. The tax contribution for this fund will be US$225 million per year.
Territorial Equity Fund
The second fund includes a US$170 million investment to support territorial equity. It will benefit the most vulnerable municipalities that are more dependent on the Municipal Common Fund (FCM). A total of 302 municipalities will receive resources through this channel.
Mining Municipality Fund
The “Mining Municipality Fund” will provide US$55 million to municipalities that have works directly related to mining activity, such as deposits, smelters and refineries, tailings and ports. A total of 32 municipalities have been specified to benefit in the Tarapacá, Antofagasta, Atacama, Coquimbo, Valparaíso and O’Higgins regions.
What is the royalty?
The royalty is a charge on mining activity that is very common throughout the world. It takes into account that mining exploits scarce and non-renewable natural resources, for which it receives a high profit.
President Boric stressed that Chile needs to make effective progress towards decentralization by injecting more resources into regions throughout the country. He stated, “the road to development is through territorial justice”.
He also emphasized that the Government intends for regions throughout Chile to have greater autonomy, and for the resources generated by large-scale mining to be significantly returned to the towns from which they are extracted. This will promote investment, development and a better quality of life for families.
You can find out more details about the large-scale Mining Royalty through Gobierno Informa (Government Informs).