MINING ACTIVITIES ACCOUNT FOR HALF OF CHILE’S INCOME

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Published On : Wed, Oct 4th, 2006
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(October 4, 2006) Chile’s government estimates privately and publicly owned mining companies will pay US$13.6 billion in royalties and taxes in 2006, which would equal about 47 percent of the state’s annual income. The biggest contributor to the national treasury is state-owned copper company Codelco, with 2006 profits estimated at US$10.1 billion.

Chilean law requires that 10 percent of Codelco sales be directed to the nation’s armed forces, or about US$1.3 billion in 2006, compared to US$830 million in 2005.

The remaining US$8.8 billion will be distributed according to criteria developed by the Bachelet government.

Chile’s private mining sector will pay US$2.8 billion this year in taxes and royalties out of total profits estimated at US$14 billion.

The largest private contributor is BHP Billiton. The Australian mining company is the owner of Escondida, the world’s largest privately owned copper mine. Escondida accounts for 30 percent of the private sector’s tax revenues.

In 2006 private mining companies for the first time in Chile’s history released figures detailing their first quarter profits, in accordance with a new law requiring the private mining sector to be more transparent.

This new law, known as Royalty 2, forces private companies to provide the Chilean Securities and Exchange Regulator (SVS) with quarterly figures throughout the year (ST, June 5).

Royalties in 2006 are expected to generate between US$600 and US$700 million for the National Council for Competition and Innovation (NCCI), a special entity created to administer the funds and invest them in cutting-edge research and development projects in Chile (ST, May 9).

SOURCE: LA TERCERA
By Morten Szygenda (editor@santiagotimes.cl)

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The Santiago Times Team