Copper may not quite be king in Chile, but uneasy lie the heads of Codelco who fear their government's economic policies;
State-owned mining giant and stalwart of the Chilean economy, Codelco, may have to scale back ambitious investment plans and risks taking on significant debt after lacklustre government support, according to some mining experts.A polite way of saying 'overtaxation', as the government determines how Codelco's profits are reinvested, or not.
Earlier this week, Finance Minister Felipe Larraín announced that the Chilean government would return US$1 billion to Codelco — less than 25 percent of the firm’s 2012 after-tax profits — for the company to reinvest in its mining operations.
The decision raised concerns about Codelco’s ability to continue financing a variety of investment projects, and prompted the company’s board of directors, the Senate’s mining commission and a powerful copper workers’ union to urge the Ministry to change course.And it's not hard to see why;
“It sends a very negative signal for the future,” Gustavo Lagos, mining expert at the Universidad Católica, told The Santiago times.
Lagos said that Codelco should be able to continue financing projects this year by taking out additional loans. However, he added, the Ministry’s decision might set a precedent for under-investment which could potentially leave the company overburdened with debt in years to come.
“Without this [future] investment, Codelco will not be viable after five or six years,” he said.Apparently, the high school students occupying their schools in Santiago could not be reached for comment.
Post a Comment