Chile's proposed tax bill threatens copper supply
Copper prices, which catapulted to record highs this year, may find some staying power. And the government of Chile, the world’s largest producer, holds the cards.
Catch up fast: Chile’s Senate just passed a bill that would create a massive additional tax burden on the metal, which is used in electronics and construction, Bloomberg reported.
- The ultimate fate of the bill is tied up with the outcome of Chile’s presidential election runoff on Dec. 19 — if the leftist candidate, Gabriel Boric, wins, the bill will more likely turn into law, wrote the Atlantic Council's Josh Lipsky and his GeoEconomics Center team in a recent note on the global economy.
Why it matters: BHP Group, which mines copper in Chile, says the bill would chill investment in copper development in the South American nation, which produces a quarter of the world’s supply.
- That could make the difficult task of meeting rising demand even harder, Bloomberg wrote.
- “Copper prices reached an all-time high in 2021 and this bill would ensure the market stays hot into 2022,” according to Lipsky.
The intrigue: The Senate’s bill is unclear on whether the new tax is instead of, or in addition to, existing taxes — if the latter, the total tax burden could be as high as 80%, Bloomberg notes.