Diego Hernández and the mining royalty: “This is a project that has not been well thought out. They have not done the calculations well "

The president of the National Mining Society (Sonami), referred to the project that is currently being discussed, commenting that "hopefully a tax will be maintained on the operating margin and not on sales."

 

Diego Hernández, President of the National Mining Society (Sonami), referred to the mining royalty project saying that   “this is a project that has not been well thought out. They have not done the calculations well and it would have to be modified in order to try to raise a little more when prices are high, but when they go down, it does not liquidate the companies that have higher costs. And as the project is now, that would happen ”.

 

Hernández commented that "it is a decision between the Executive and the Senate and hopefully the decision is looking at the short and long term." Something similar to what happened with the first mining royalty and then when modifications were made to the contract in 2010, consensus was generated in the limes.

 

Being clear when saying that "we cannot place conditions as if this price were to remain forever."

 

Hernández explained that “the current tax has an increasing rate depending on the operating margin. For example, in 2011, when we had an average price of $ 4, the private company paid $ 4 million, not counting Codelco. And in 2016 nothing was paid because no one made a profit and that reflects the variability and cycles that the price of copper has and consequences on the balance sheets of the companies. This makes the industry stronger and bigger, if you have a long-term vision ”.

 

Commenting that with the project that "imposes a royalty on sales and value and that means that when it is low, as happened in 2016 when Codelco had to pay 8 million dollars without having any profit for the 10% that is paid to the Armed Forces. and he had to ask for money to pay the tax ”, concluding that “ hopefully a tax will be maintained on the operating margin and not on sales ”.

 

Hernández gave an account of a quick calculation exercise that he did taking from 2001 to 2020. “Currently, if the treasury receives 1 from private mining, it receives 2.2 from Codelco. If you do the calculation, it means that investors are keeping 54.5% and the treasury with 45,% of the profits in the period 2001-2020. That is a proportion, not an exact one, but it is an approximate calculation and we believe that this level of profits is adequate and competitive for the treasury. In a period of cycles of high prices and other low ones ”.

 

Hernández also recalled what mining was like since 1919 when the country was not very involved and most of it was carried out with executives and foreign capital and in which the expectation for Chile was to have taxes and foreign exchange. But since the 90s, mining has changed, developing what we currently have.

 

“We want to preserve 21st century mining and grow it and not say that I want it only if they can pay a lot of taxes. It's a paradigm shift, ”he said.

 

He was also clear when saying that this new mining royalty does not affect small mining “because it is below the threshold, but the median that had a limit of 20 thousand, would now lower it to 12 thousand, then it will affect it and it has more high”, concluding that“ it is a sector that must be defended, most of it is a national company ”.