The increasing tax burden from the royalty law isn\u2019t the only thing worrying Chile\u2019s mining industry, which is also tracking the so-called Law 21,420 that modifies exploration and mining concessions in the local mining code.<\/p>\n
The law was seen as having such a potentially negative effect on the industry that congress earlier this year decided to postpone its implementation until January 2024 and to work to improve it with the help of the mining ministry and sector groups.<\/p>\n
BNamericas spoke about this legislation and other key issues for the industry with Rony Zimerman, a mining lawyer at Lembeye Abogados.<\/p>\n
BNamericas:<\/strong>\u00a0The royalty law\u2019s lack of incentives, such as tax invariability, has been criticized. Is there still work to be done on this front?<\/p>\n Zimerman:<\/strong>\u00a0Yes. Congress\u2019 mining committee is reviewing possible modifications to law 21,420, which is basically a tax law but also significantly modifies the regulations surrounding mining concessions. This law was poorly drafted, both in technical and substantive aspects, due to the accelerated manner in which it was drafted and promulgated.<\/p>\n Perhaps they can discuss tax invariability or some other type of incentive as they revise it. We have to look at what is happening in other jurisdictions, such as Canada and Australia, where incentives for mineral exploration are being established. The future health of the Chilean industry depends on discovering new deposits. Without exploration, the industry will fade away. In this context, obtaining permits is an extremely relevant issue. Delays and uncertainties in permitting processes can BNamericas:<\/strong>\u00a0Law 21,420 raises the cost of exploration and mining patents but offers discounts if the company can prove it is advancing a project. Are these good ways to encourage the good use of concessions?<\/p>\n Zimerman:<\/strong>\u00a0Conditioning the payment of a less onerous patent on mining work in a concession seems like a good policy and can boost exploration and development. In addition, it minimizes speculation through the holding of concessions.<\/p>\n Something similar already exists in water use rights, but in this case, it\u2019s a better-regulated proposal because even by presenting a pending environmental permit, it is understood that mining works are being carried out. In water rights, the interpretation does not have such a broad definition.<\/p>\n However, the law was left with a very drastic increase in patents and it seems to me that it should be more gradual.<\/p>\n BNamericas:<\/strong>\u00a0Changing the coordinate system from UTM (Universal Transverse Mercator) to Sirgas is worrying because delimiting each territory again in a short time could bring consequences such as overlapping properties.<\/p>\n Zimerman:<\/strong>\u00a0That is a problem, and also the penalties that accompany not completing the process in a timely manner, which could result in the loss of a concession. It is a very sensitive issue. Large mining companies probably have greater capacity and equipment for this task. For medium and small players, it will be more complex.<\/p>\n BNamericas:<\/strong>\u00a0This law will require the delivery of all geological information within three years after the expiration of the exploration concession. It is believed that certain information should be treated confidentially because it is strategic for the company.<\/p>\n
\nThere is very little exploration and new projects in Chile.<\/p>\n
\nmake Chilean projects less attractive.<\/p>\n