Well...It seems the new policies of the Chilean government, will drive the price of copper even higher....
The government of Chile, the world's leading copper producer, has sent a long-awaited mining royalty bill to Congress that it says will only affect producers like BHP when profits are high, though miners say it will hinder new investment.
The bill, which the Government hopes will become law in 60 days, is slightly tougher than a draft proposal floated several weeks ago setting out a sliding charge of between 0 per cent and 3 per cent, depending on profitability.
Most of the world's large miners operate in Chile and the legislation would hit the royalties of BHP Billiton, Anglo-American, Falconbridge, Phelps Dodge, Placer Dom, and Barrick Gold.
Once the law is passed, companies will have a three-year grace period before having to pay up.
The new proposal would introduce a 3 per cent flat charge on net sales of metallic mineral and a 1 per cent charge on sales by non-metallic miners, Finance Minister Nicolas Eyzaguirre told reporters.
The fee would apply on sales after discounting labour costs and production factors.
To prevent the new cost from crimping earnings during times of low market prices, it would apply only when this sales figure is equivalent to 15 per cent of gross sales or more, the minister explained.
"We don't want to introduce a charge that implies that some activities that are now profitable will stop being so just because of this charge," Mr Eyzaguirre told reporters.
"We were careful not to affect those undertakings that have very moderate profitability," he added.
Chileans have been debating ways to wring more cash out of mines since being scandalised in 2002 by news that Exxon had not paid profit taxes on its copper mine in Chile for 25 years, prior to selling the asset for $US1.3 billion.
Government officials argue that companies use legal loopholes to avoid paying taxes, which the firms deny.
The royalty means the Government would collect an additional $US100 million a year from the 10 largest private copper miners operating in Chile at a copper price of 88 cents per pound, according to official calculations.
The funds would go into a special fund for technological innovation, with the majority earmarked specifically for mining districts.
