Chile’s copper miners will be safe with Boric, says advisor

Mining heavyweights like BHP Group and Anglo American Plc have nothing to fear if former student leader Gabriel Boric becomes the next president of Chile, said one of his top advisers.

Although a Boric government would seek to raise taxes to help finance a green transformation, it would not overburden the industry by removing incentives for investments, Willy Kracht said in a phone call on Thursday. The left-wing candidate wants the state to play a more active role in lithium extraction and technology projects, but has no plans to interfere with existing concessions.

“There is no intention to change the rules of the game, only to strengthen the institutional framework so that things work well or better,” said Kracht, who is head of the mining engineering department at the University of Chile and director of the Center for Studies of copper, CESCO.

With just two weeks to go into the first round of voting, his comments could help ease concerns that a Boric victory would stifle investment in a country that accounts for more than a quarter of the world’s copper mined.

Mining companies warned that the mining royalty bill currently in Congress would erode Chile’s competitiveness by creating one of the heaviest tax burdens among the major producing nations of the red metal.

Still, both government and industry representatives agree that there is scope to raise taxes in some way. Boric’s proposal is twofold: a royalty on sales and a sliding levy on profits. That would increase the equivalent of an additional 1% of gross domestic product.

“This mixed structure, an ad valorem royalty and a progressive one, should work better in terms of collection, always taking care not to put the life of the projects under development at risk,” said Kracht, without offering the proposed rates.

He also indicated that there is considerable consensus on what needs to be done in terms of decarbonization and social participation.

One of the Boric team’s priorities is to create a development bank to help finance technology in collaboration with the private sector. For example, the state could help finance a privately run project to convert traditional mining trucks to electric, which could then be marketed as a solution in neighboring countries.

Boric’s program also prioritizes the development of state-owned companies Codelco and Enami, in addition to seeking to promote investments in local refining, as well as gradually increasing taxes on carbon and fuel.