A temporary tax adjustment on diesel driven by the Chilean government to mitigate rising fuel prices will hit the mining sector’s competitiveness, the top mining body in the world’s largest copper producer warned.
The government measure reduces the recovery of a specific diesel tax for certain companies to finance mitigation measures without increasing fiscal spending.
Chile’s Mining Council, whose members include state-owned Codelco and international miners BHP, Glencore, Freeport-McMoRan and Anglo American, said the industry will pay about $100 million in just six months linked to the modification.
The association added that the mining sector will bear 74% of the measure’s total cost, based on the government’s estimated total revenue of $135 million.
The group said in a statement that altering a tax to selectively burden strategic sectors is not equitable and will negatively affects their competitiveness.
Chile’s mining sector faces high operational costs and excessive permitting bureaucracy.
On Monday, Chile’s government invoked a clause in its fuel stabilization mechanism to rapidly align with surging international prices.
To offset rising gasoline and diesel prices, the government in Chile, one of Latin America’s largest oil importers due to a lack of domestic production, froze public transport fares and lowered the price of kerosene.
(By Fabian Cambero; Editing by Natalia Siniawski)
