Voluntarily accepts changes t

RNS Number : 3627Z

Antofagasta PLC

12 January 2011

 



Antofagasta plc

Antofagasta's mining companies voluntarily accept changes to the Chilean mining tax

London, 12 January, 2011

Antofagasta plc ("Antofagasta") (LSE: ANTO.L) announces that its four mining companies, Los Pelambres, Esperanza, El Tesoro and Michilla, have voluntarily elected to accept amendments to the Chilean mining tax (royalty) as permitted pursuant to a law enacted in Chile on 21 October 2010.  This law was introduced by the Chilean Government in order to contribute to the financing of overall reconstruction costs following the severe earthquake which affected the country on 27 February 2010.

The four mining companies of the Antofagasta group (the "Group") currently have tax stability agreements which set the rate of the mining tax at 4% of operating profit until 2017 in the case of Los Pelambres, the El Tesoro central open pit and Michilla and at 5% of operating profit until 2023 in the case of Esperanza. 

Under the law enacted on 21 October 2010, a company with a tax stability agreement may voluntarily elect to waive its tax stability for the three-year period of 2010 to 2012 during which it will then be subject to mining tax on its operating profits at a sliding scale rate of 4% to 9%, based on its operating profits as a percentage of its turnover; after 2012 its mining tax percentage will revert to the rate set out in its existing stability agreement until the expiry of that agreement.  In exchange for this voluntary waiver, the company will be granted an additional stability period of six years after the end of its existing stability agreement during which it will be subject to a mining tax on its operating profits at a sliding scale rate of 5% to 14% (again based on its operating profits as a percentage of its turnover).

Companies and operations which do not have stability agreements are subject to a sliding scale rate of 5% to 14% from 2010 compared with a previous rate of 5%.

As Antofagasta has previously announced, a temporary two-year increase in the corporate tax rate in Chile (known as "first category tax") from 17% in 2010 to 20% in 2011 and 18.5% in 2012 was enacted on 31 July 2010; the Group also incurs withholding taxes on any remittances of profits from Chile.  The mining tax remains an allowable expense in determining liability to first category tax.

Marcelo Awad, CEO of Antofagasta Minerals S.A., the Group's mining division, said:  "The Antofagasta Group has consistently sought to contribute to Chile's reconstruction effort, as demonstrated since February last year through our committed presence at the coast in the Maule Region.  Given the exceptional circumstances of the situation resulting from the severe earthquake, Antofagasta's mining companies have decided voluntarily to elect to accept the changes to the applicable mining tax regime in order to support Chile's reconstruction efforts.  The mining industry is characterised by cyclicality, high risk, significant levels of capital investment and long lead times for the development of projects.  We anticipate the legislative amendments of last year will allow Chile to remain a stable and favourable destination for mining investment in the long-term, encouraging the development of new projects without further changes."

Enquiries - London   Antofagasta plc Tel: [phone] www.antofagasta.co.uk Desmond O'Conor Email: [e-mail] Hussein Barma Email: [e-mail] Philip Holden Email: [e-mail] Press Enquiries - London Bankside Consultants Tel: [phone] Simon Rothschild Email: [e-mail]

Enquiries - Santiago   Antofagasta Minerals S.A. Tel: + 56 2 798 7000 Francisco Veloso Tel: [phone] Email: [e-mail] Eduardo Tagle Tel: [phone] Email: [e-mail]

 

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