SANTIAGO - Chile's government said on Tuesday it was sending a revamped bill to Congress aimed at raising royalties paid by mining companies that would be used to pay for reconstruction from February's massive earthquake.
President Sebastian Pinera's government reworked the bill after its center-left opponents shot it down in July, in a major challenge to his legislative agenda.
Pinera hopes to raise around $1 billion over three years from the royalty in the world's No.1 copper producer, and said he would give around $300 million of that to Chile's regions.
Analysts say a rise in Pinera's approval rating for his handling of a rescue bid to save 33 miners trapped deep inside a mine in far northern Chile could help the bill's passage.
The royalty revamp is part of a wider plan to finance the state's $8.4 billion share of reconstruction after the earthquake. The government has also issued $1.5 billion in international debt, raised taxes on some goods and tapped copper boom savings.
Mining companies currently pay a royalty of between 4 and 5 percent. The bill that was rejected called for a sliding scale starting at 4 percent.
The new bill initially sets the royalty at 4 percent to 9 percent on mining sales and raises it to 5 percent to 9 percent starting in 2018.
"The royalty establishes a minimum rate of 4 percent, which we have today, and so ensures a floor," Pinera said.
"But it allows that when the price of copper is at high levels, as we have seen in recent years and hope it continues to remain so, the state and all Chileans will in a way be partners of the mining industry and we can share these benefits."
However, the royalty would have to be voluntary because the country already has contracts with foreign miners that expire around 2017. Pinera hopes miners will agree to pay higher royalties amid growing expectations for foreign companies to contribute more to the post-quake rebuilding.
"The table has changed, because it begins at 4 percent for all those who pay 4 percent today, and for everyone else it starts from 5 percent to 9 percent," Finance Minister Felipe Larrain said.
"Then from 2018, the table is from 5 percent to 9 percent for everyone."
Public pressure has been building in Chile to make foreign miners who profit from the country's resources contribute more to rebuilding damage from the earthquake.
The opposition-led legislature scrapped Pinera's original royalty proposal after leftist lawmakers said the government should aim for a higher royalty increase.
Global miners like BHP Billiton, Xstrata and Anglo American currently pay a fixed royalty of around 5 percent. Some smaller miners currently pay around 4 percent.
Larrain said the new royalty would raise several billion dollars more from 2018 through 2025. He said he hoped Congress would approve the bill by the end of September.
"We can't keep discussing this forever, we need these funds," Larrain said. "Time is running out."
Source:Reuters