New Chilean President a popular choice for the mining industry as China

first_imgInternational PBX Ventures reports that international mining groups this week have been effusive in their support of Chile’s newly elected president, center-right candidate Sebastián Piñera, a billionaire businessman with substantial holdings in the airline Lan, Chilevision (a TV station) and Colo Colo (a popular soccer team). Canada’s Globe and Mail reported a series of interviews Monday with international mining leaders, all ecstatic with the election results and all saying the mineral-rich and politically stable country will attract even more foreign mining investment under its new leader.“His reputation is to have a favourable stance towards business and taxes, so those are all positives,” said Tye Burt, the President and CEO of Kinross Gold, which operates two mines in Chile and is considering investing close to $2 billion more on a pair of development projects. “But even before Piñera stepped in, we think Chile is absolutely one of the best jurisdictions in the world for what we do,” Burt said.Piñera reportedly plans to offer new tax incentives to mining companies that develop new technologies and expand mining research. Chile already has an extremely low corporate tax rate of about 17% for foreign mining firms on income that is reinvested back in the country.Burt believes Chile’s tax policy is so effective it should serve as a model for Canada’s mining tax regime. “I’ve been trying to urge the Canadian Government to think about a similar stance to help Canada remain an attractive place for foreign investment in mining,” he told the Globe and Mail.Piñera’s election brings to an end 20 years of power of the center-left Concertacion coalition, a four-party alliance that includes the Christian Democratic Party, the Socialist Party, the Party for Democracy and the Radical Party. Piñera’s presidential bid was supported by Chile’s two rightist parties – his own moderate-right National Renovation (RN) party and the further-right Independent Democratic Union (UDI) party.Among other campaign promises, Pinera pledged to sell up to 20% of state-owned copper company Codelco, the world’s largest copper producer. Participation in the world’s largest copper producer would likely be sold to private pension funds in Chile, although Pinera’s advisers have also floated the idea of listing Codelco shares on Chile’s stock exchange.The new president has also suggested creating incentives for companies to build desalination plants to provide water to mining operations in dry regions such as the Atacama Desert, where miners including Teck, Kinross and BHP Billiton, the world’s largest mining company, all have operations. The latter is already using desalinated water.Teck, Canada’s largest base-metals mining company, has spent more than $4-billion acquiring copper assets in Chile in the past three years. “Chile has great copper resources. It has a very stable political and economic system and a stable and well thought-out tax regime. Those factors are all good for encouraging investment,” said Greg Waller, Teck’s VP of Investor Relations.Pinera’s opponent, Sen. Eduardo Frei, had pledged to double revenues from Chile’s 5% mining royalty to raise an additional $300 million per year for government coffers, which raised mining firms’ fears.Orest Wowkodaw, a mining analyst at Canaccord Adams, said Pinera’s election can only strengthen Chile’s lead on rival countries as South America’s top mining jurisdiction. “It is the best. It is that simple. Ask any mining executive where they want to own assets in South America and No. 1 on their list is always Chile,” he said. International PBX also noted the Chinese government announcing plans to part finance exploration work undertaken by Chinese mining firms operating in Chile. “The Chinese government will cover 40-50% of the exploration costs incurred by any Chinese mining companies searching for deposits overseas” said Fernando Reyes Chilean ambassador to Beijing. “As the world’s largest copper producer, Chile is a prime target for this financing.”This policy follows a recommendation made last October by the Chile-China Mineral Commission that Beijing should directly invest in Chilean mining operations in order to boost Chinese industry.Chinese mining company Shunde Rixin recently announced a $2.2 billion investment in the Vallenar iron ore mine in Chile’s Atacama region. Economists predict that reserves at the Vallenar facility will satisfy 10% of China’s iron ore demand in the coming years.Chile’s trade with China grew by 6.3% in the nine months up to September 2009, while the Asian giant has toppled the US as Chile’s most important customer for the past two years.last_img

Leave a Reply

Your email address will not be published. Required fields are marked *