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.
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