With the changes in exports, there will now be two different regimes for copper: fixed export duties at 4.5%, as they already existed, or mobile withholdings, which vary between 0 and 8%, according to the international price. But, in addition, the Government expects three other projects to advance in the short term: Mara, by Yamana Gold and Glencore, in Catamarca; Taca Taca, from First Quantum Minerals, in Salta; and, Los Azules, from McEwen Mining, in San Juan. The sum of these projects (including Josemaría) will imply investments of US$13,065 millionaccording to a work by the Ministry of Mining.
At the moment, only the Chamber of Mining Entrepreneurs (CAEM) came out to express itself publicly, assuring that “it is necessary that export duties be eliminated as a tax tool”, because “the tax pressure in Argentina is significantly greater than that of the competing countries. However, they added that the creation of the optional regime for copper “must be analyzed by each mining project.” Beyond the public rejection, the new scheme was reached through dialogue between the Ministry of Economy and the business chamber.
In these meetings, it was observed that the great benefit passes through the accounting projections of the companies. Currently, the price of copper is very high, after rising in 2020 and 2021, when it reached an all-time high. But, for investment projects, the average values of the last 20 years are used. With these values, lower than the current ones, companies would have 0% withholding. With current prices, the mobile retention would be 4.6%, similar to the 4.5% of the current scheme. That is why the analysis of the return on investment, with historical average values and a 0% rate, the benefit is greater.
However, the rate would reach 8% if international prices continue to rise. But the reading of the economic team is that, if the value of copper grows above the values it has today, it is already “hyper profitable”. So the concern of the companies is not if the commodity goes up, but down, and in those cases, the retention is eliminated. “Argentina also benefits from record international prices, because the retention goes from the current 4.5% to 8%, that is to say that the collection would double,” explained an official source.
According to an official document, based on the World Bank, the price of copper is going to decrease in the short term, so the current scenario would be “price overshoot”to resume an upward trend as of 2025, and position itself around US$8,000 per ton by 2035, higher than the average of recent years, and with “moderate fluctuations”.
In the Government they consider that the new scheme seeks to promote a sector with strong potential, such as copper, an important mineral for the energy transition. In fact, businessmen, governors and officials who are in Toronto, Canada, in the most important mining forum in the world, are “Surprised” by global interest in investing in miningin a context where they negatively observe the political situation in Chile and Peru.
For these reasons, the new scheme was also defined as “optional”. In the Ministry of Economy they know that modifying taxes in a sector with long-term investments “is not a minor issue”, much less in copper, which requires very strong investments, well above what lithium demands, for example. “We did not want it to be read as something negative, so each company chooses, but in general the industry likes it, Peru, Chile and Bolivia also have progressive taxes,” explained an official source.
Source: Ambito
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