Mining Companies lower their contribution to the State by rising costs and lower copper prices
For royalty, companies like Los Pelambres site belonging to Antofagasta Minerals, pertaining to the Luksic group-recorded a drop in its contribution of 53%, according to what was informed by the SVS. In turn, Escondida and Collahuasi increase their specific tax payment
The rising costs of the mining industry and the decline in copper prices hit strong government coffers. In September this year the state received less than U.S. $ 1,510 million compared to the same period of 2012. A fall in U.S. $ 751 million of Codelco’s surplus during the first 9 months of the year, down adds in taxation of private mining, which the third quarter of 2012 accumulated U.S. $ 3,255 million, whereas now reduced to U.S. $ 2,496 million, or $ 759 million less.
This includes a decrease in income tax from $ 2.446 million raised in the first three quarters of 2012 to $ 1,542 million.
In the case of specific mining tax (royalty), a decrease is observed from raising $ 430 million in 2012 to $ 212 million in 2013. While the additional tax withheld increased its revenues by $ 363 million.
From the mining royalty companies like Los Pelambres-site of Antofagasta Minerals, belonging to the Luksic group-recorded a drop in its contribution of 53%, according to the information to the Superintendency of Securities and Insurance (SVS). In turn, Escondida and Collahuasi increase their specific tax payment.-
The research manager of the National Mining Society (Sonami), Alvaro Merino said that private industry increased production by 9.2% to September this year, while the price of copper fell 7.2%, so that “the fall in tax revenues for the third quarter of this year is mainly explained by the significant increase in costs observed in mining companies.”
“The significant increase in costs significantly impacts both the mining industry and tax revenues, the industry generates a substantial decline in margins and, consequently, decrease the amounts for taxation” adds Merino.
This scenario adds to projections downward copper. According to Sonami’s figures for every penny that lowers the price of copper, the country fails to receive from exports $ 120 million, while the IRS fails to collect an amount close to U.S. $ 55 million, by concept of Codelco’s surplus and taxation of private mining.
What will happen in the future? “Definitely a decrease in copper prices and a fall in costs at a lower rate will affect both the mining companies and the state, because mining companies decline in margins and the state in turn will get lower tax collection . However, it should be noted that one of the characteristics of the mining industry is facing price cycles and costs for his part in the medium term tend to adjust to these price levels. “
Today the price of copper closed down 0.26% on the London Metal Exchange (LME), after trading at $ 3.17 a pound, compared to U.S. $ 3.18 on Friday. Thus, the monthly average is U.S. $ 3.17 while the annual fell to $ 3.3 per pound.
Source: La Segunda
