Chile to levy charge on mining companies

Chile will impose a charge on mining companies operating there in an effort to ensure that the country receives more benefits from its mineral wealth. The charge will be tied to companies’ sales and take into account their profits.

The charge will be credited to companies’ tax payments for the first three years and would raise about $100 million annually after that, based on a copper price of US90 per lb.

Chile is the world’s largest copper producer, accounting for more than a third of global output from copper mines. The country is taking a step back from low-tax policies that have helped attract investment from companies, including London-based BHP Billiton, the world’s biggest mining company, and Phoenix, Ariz.-based Phelps Dodge.

“It’s fair and responsible to establish a mechanism that allows the accumulation of funds to meet the future depletion of mining resources,” the government says in a release.

Companies with sales of less than US$14 million per year would be exempt from the charge. The charge would apply to companies that have operating profit margins greater than 5%.