Over the years, Chile has been a stable mining jurisdiction—but recent changes have heightened the pre-investment risks to mining. These changes are mostly political. In fact, while the world awaits the conclusion of Chile’s constitutional experiment, the Boric administration pushes ahead with its own agenda. In January 2022, the Chilean congress passed a bill to cap unlimited water allocations at 30 years and to empower regulators to suspend rights that aren’t being used, or if supplies are at risk. At the same time, the Chilean senate approved a tax bill proposal that targets both copper and lithium mining. Different options tax gross revenue versus profits. The mining industry will continue to lobby for restraint in any attempts to raise tax levels.
These current — and upcoming — political battles highlight the importance of conducting mining project due diligence in Chile. This requires specialized risk intelligence to help investors understand the issues in play, the players, and the different scenarios to prepare for as they weigh risk vs. reward.
Now, even with these political challenges, at 13% of GDP and 57% of exports, around 12% of direct tax contribution and approximately 25% in indirect tax contribution, mining is the lifeblood of the Chilean economy, a fact that is well-understood by both the political class and voters.
What is less certain is how politicians and voters will decide to act in regard to the mining industry. To augment your understanding of these issues in Chile, you may want to explore AMI’s 2022 Latin America Mining Risk Index. This free report offers investors and miners an additional resource for analyzing and comparing risk between Chile and other leading mining jurisdictions to help them determine a project’s viability and improve their capital budgeting efforts.
Please click below to learn more about this unique report, the first to quantify mining risk in Latin America, and learn more about how it can help you conduct mining project due diligence in Chile and Latin America.