Mining Royalties, Elections and the Constitution in Chile

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[co-authors: Daniela Cuellar and Maria Camila Opsina]

Chile is now considering new taxes for its mining industry, which could dramatically impact the supply of minerals that are critical for the world’s industrialization and energy transition. In particular, we estimate that, if the new taxes are approved, Chilean copper mining companies could see their tax rates increase to as much as 80% and profit margins drop by more than 50% at current copper prices. With this change, Chile would become the nation with the highest tax burden on copper mining, forcing companies to revisit the viability of their current and future investments.

The Chilean Senate is currently reviewing a proposed Mining Royalties Law which would impose new taxes on copper and lithium sales. Chile is the world’s largest copper producer, so its decisions have an outsized impact on copper supply and prices worldwide. It is also the world’s second largest producer of lithium.

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