In the next series of blogs, we will provide a summary of the impact of shifting politics on the mining investment landscape in the Andean region, including Chile, Peru and Ecuador. In this first blog, we will provide an overview of the current environment in Chile.
The mining investment landscape in the Andean region of Latin America is in a period of transition due to rapidly shifting politics. While Canadian and other foreign mining companies should prepare for increased regulatory and tax burdens in Chile, political risk appears to be moderating slightly. In Peru, while the perception of risk remains elevated following the election of the new far-left president, Pedro Castillo, and the appointment of his cabinet, there may be openings for the intrepid. Meanwhile, Ecuador's new government may introduce regulations that could enhance the appeal of that country for miners. Although opportunities clearly remain abundant throughout the mineral-rich region, mining companies must bring an increasingly sophisticated appreciation of shifting political currents to the structuring of their investments.
Chile: Prospects for Pragmatic Outcomes
Mass protests and violent unrest in Chile, which began in October 2019, shocked mining investors, who knew Chile as a solid democracy with a longstanding market orientation and a strong rule-of-law track record. Subsequently, when, in an attempt to stem riots, politicians offered a pathway for the drafting and public approval of a new constitution, many investors raised their level of alert. Then, in May 2021, when Chileans elected a constitutional assembly to draft such a new constitution and right-leaning parties failed to secure the one-third of seats that would have given them a veto over the draft, that level of alert was raised.1 Additional cause for acute concern came that same month when surveys of Chileans' voting intentions for the November presidential elections showed that Daniel Jadue, the leader of the country's communist party, had pulled ahead of all other candidates. On top of that, left-wing parties in Chile's congress brought forward a bill to impose punitive new royalties on copper and lithium mining, which would, at the high end, be imposed at a rate of up to 75%, computed by reference to gross sales. All of these developments have driven both headlines and trepidation among Canadian and other miners.
However, the picture has grown rather more nuanced of
late:
First, on July 16, a somewhat more moderate left-wing party's
candidate, Gabriel Boric, bested the communist party leader, Jadue,
in a primary to determine who would lead the left-block into the
general election – and did so by a resounding margin, giving
some credence to those who argued that Chileans' relative
pragmatism should prevail in the end.2
Second, after much in the way of theatrics in the weeks immediately following the opening of the constitutional convention, the delegates appear to be getting down to work and taking more seriously the grave task they are charged with. This may be partly a result of recent polls that showed a slight downwards trajectory in public approval of the constitution-drafting process.3 The delegates know that whatever document they draft must ultimately be approved by the electorate before it can come into effect, and the vote will be mandatory, meaning that less radical elements of the electorate, which may have sat out the election of assembly delegates (which only saw 40% of voters turn out) will have their voices heard.4 Therefore, while the new constitution, which will be presented to the public in mid-2022, seems likely to propose changes to areas of law that are relevant to mining, including mineral property rights, Indigenous Peoples' rights, the environment, and workers rights, among others, it is not a foregone conclusion that these changes will be radical in nature, and they may be manageable for mining companies.
Third, the royalty proposal, which originated in the lower house of congress, is of suspect constitutionality, given that the (current) Chilean constitution assigns taxing powers to the executive branch.5 Moreover, far from hurtling through the legislative branch, the bill is currently the subject of much careful and reasoned scrutiny in a senate committee. The committee has been taking advice on it from international metals and mining industry experts, who have left little doubt about the damaging effects that the bill would have on mining investment. Therefore, many analysts expect that, while taxes on mining are bound to increase, actual increases are likely to fall far short of the nearly expropriatory regime proposed in the lower house.
Companies wishing to proceed with investments will need to give greater attention to their exposure to social and environmental risks, and to their cost structures, and will need to draft financing, joint venture and other agreements in a manner that will enable them to respond flexibly to possible legal changes. Mining investors already present in the country must carefully examine the benefits of any existing tax stabilization agreements that they may have signed, while foreign investors generally can look to the protection available under international investment treaties. Canada's Free Trade Agreement with Chile provides investors with some protection.6
政治形势转变对安第斯地区矿业投资格局的影响
在接下来的博客系列中，我们将讨论政治形势转变对安第斯地区矿业投资格局的影响, 包括智利、秘鲁和厄瓜多尔。在第一篇博客中，我们将概述智利的当前环境。
由于政治形势的迅速变化，拉丁美洲安第斯地区的矿业投资格局正处于转型期。 虽然加拿大和其他外国矿业公司应该为智利增加的监管和税收负担做好准备，但政治风险似乎略有缓和。在秘鲁，尽管在新左派总统佩德罗·卡斯蒂略（Pedro Castillo）当选并任命内阁后，人们对风险的认识仍然很高，但对于无畏的投资者还是有机会的。同时，厄瓜多尔新政府可能会推出相关法规，以提高该国对矿工的吸引力。尽管整个矿产丰富的地区机会显然仍然充裕，但矿业公司必须越来越成熟地认识到政治潮流的变化，以构建其投资结构。
智利：务实成果的前景
2019 年 10 月开始的智利大规模抗议和暴力骚乱震惊了矿业投资者，他们深知智利是一个稳固的民主国家，具有长期的市场导向和良好的法治记录。随后，当政客们为遏制骚乱提供了起草和公开批准新宪法的途径时，许多投资者提高了警惕。然后，在2021年5月，当智利人选出制宪会议起草这样一部新宪法，而右倾政党未能获得三分之一的席位以否决该草案时，这种警觉程度就提高了。 1 同月，就智利人参加11月总统选举的投票意向的调查显示，智利共产党领导人丹尼尔·贾杜(Daniel Jadue)领先于所有其他候选人，这又引起了人们的极大关注。 最重要的是，智利国会中的左翼政党提出了一项法案，该法案将对铜矿和锂矿征收新的高额采矿权使用费，并对其征收最高达75％的采矿权使用费。所有这些事态发展都成了加拿大和其他矿业界的头条新闻并造成惶恐。
然而，最近发生的一些事情,让情况变得更加微妙：
首先，在 7 月 16 日，稍微温和的左翼政党候选人加布里埃尔·博里奇 （Gabriel Boric）在初选中击败了共产党领导人贾杜（Jadue），以确定谁将带领左翼政党参加大选，并以绝对优势获胜。这让那些认为智利人的相对实用主义最终应该占上风的人有一些可信度。 2
其次，在制宪会议开幕后的几周内，代表们似乎开始认真工作并更加认真地对待他们肩负的艰巨任务。这可能部分是由于最近的民意调查显示宪法起草过程的公众批准略有下降。 3代表们知道，他们起草的任何文件都必须最终得到选民的批准才能生效，而且投票将是强制性的，这意味着投票包括选民中不太激进的成员， 而这些成员有部分没有参加大选投票（大选只有 40% 的选民投票）。4 因此，虽然将于 2022 年年中向公众公布的新宪法似乎可能会提议修改与采矿相关的法律领域，包括矿产权、原住民权利、环境和工人权利等，但不能确定新宪法中的变化会是激进的，它们对矿业公司来说可能是可控的。
第三，考虑到（现行）智利宪法将征税权分配给行政部门，源自国会下议院的有关采矿权使用费的提案具有可疑的合宪性。 5 此外，该法案远未通过立法部门，而是目前在参议院委员会中受到非常仔细和合理审查的主题。该委员会一直在听取国际金属和矿业专家的建议，他们对该法案对矿业投资的破坏性影响毫不怀疑。因此，许多分析人士预计，虽然矿业税势必会增加，但实际增加的税额幅度可能远远低于下议院提出的几乎征用制度。
希望继续投资的公司需要更加关注他们面临的社会和环境风险以及他们的成本结构，并且需要以一种使他们能够灵活应对的方式起草融资、合资和其他协议，包括可能灵活应对的法律变化。现有的矿业投资者必须仔细审查他们现有税收稳定协议，外国投资者通常可以寻求国际投资条约下的保护。《加拿大与智利自由贸易协定》也为投资者提供了一些保护。 6
1 https://elpais.com/internacional/2021-05-19/la-derecha-chilena-se-queda-sin-opciones-de-veto-en-el-articulado-de-la-nueva-constitucion.html
2 https://www.emol.com/noticias/Nacional/2021/07/18/1027082/daniel-jadue-reconoce-triunfo-boric.html
3 https://plazapublica.cl/wp-content/uploads/2021/07/Track-PP-393-Julio-S4.pdf
4 https://www.gob.cl/procesoconstituyente/
5 https://www.ey.com/es_cl/tax/ey-tax-alert-chile/camara-de-diputadas-y-diputados-aprueba-regalia-minera
6 https://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/chile-chili/fta-ale/index.aspx?lang=en&_ga=2.202694488.859143106.1627423786-1935275916.1627334389
To view the original article click here
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
