The higher copper price pays off for the fiscal coffers. Companies in the sector added US$ 600 million in specific mining taxes in the first half of the year. Collahuasi, Escondida and Pelambres lead the amounts and account for 71% of the total.

The increase in the price of copper since last year has left at least two winning sectors in Chile: private mining and the Treasury. The former because they can have more income for the same amount sold, while the latter because of the flows coming from Codelco, as well as from private sector taxes.

Thus, the data for the first half of the year show a sharp jump in the specific tax, better known as royalty, on mining: almost 200%.

In total, 17 companies in the sector reported a total payment of US$600 million, which is exactly 193.8% more than last year in the same period.

Of the 17 companies that submitted their data, the two leading companies in terms of amounts provisioned for specific mining tax account for 53% of the royalty. These are Collahuasi, which alone accounted for 28.5% of the royalty during the first half of the year. It is followed by Minera Escondida (owned by BHP Billiton), with a contribution of 25% of the total.

Moving up one more place, Minera Los Pelambres (belonging to the Luksic group) appears, whose royalty accounts for 17.5% of the industry’s total. Thus, the first three account for 71% of the specific tax.

Behind this performance is the strong increase in the price of the red metal. “I would say that the main effect is clearly the higher price. The average January-June 2021 is 66% higher than the average January-June 2020″, explained the executive director of Plusmining, Juan Carlos Guajardo.

Indeed, the average copper price was US$4.12 per pound in the first half of 2021, compared to US$2.495 in the same period of the previous year.

So far this year, with one day to close the third quarter, the average copper price is US$4.16, which compares to a slightly more demanding base: US$2.65. Today the commodity traded at US$4.18 per pound in London, according to figures published by Cochilco.

Guajardo adds another factor into the equation. “After (the price), the behavior of production plays a role. Some mines have performed better this year and are the ones that have increased their royalty payments the most,” adds Guajardo.

This is not something generalized in the industry. Mining production contracted by 0.7% year-on-year in the first half of the year and copper production specifically fell by 0.4%.

Thus, it is noteworthy that the number one in contributions, Collahuasi, increased its production in the semester: it went from 323,000 tons to 331,000 tons, that is, an increase of 2.5%.

Source: La Tercera