Analysis: Chile miners to dodge Bachelet reforms but face future risks

Thu Nov 7, 2013 2:10pm EST
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By Alexandra Ulmer and Fabian Cambero

SANTIAGO (Reuters) - Chile's presidential election front-runner, Michelle Bachelet, is unlikely to radically shake up the giant copper industry in the short-term but there are signs that some of the favorable terms miners have enjoyed in past decades could be watered down.

Bachelet, a center-leftist who led Chile from 2006 to 2010, is poised to crush her rivals in this year's election, thanks to her affable style and a vow to hike corporate taxes to fund an educational overhaul.

That raised concerns that her government might seek to tap the profitable metals industry in the world's No. 1 copper producer, though aides say the sector will not be significantly affected by her reform blitz beyond a planned across-the-board corporate tax increase to 25 percent from 20 percent.

Her program is scant on details but some suggested constitutional changes could pave the way for a greater state role in the industry and an end to miners' sweet deals on water use in the future, mining industry executives and local analysts say.

Still, Bachelet has emphasized that Chile must "recover" its competitive edge in mining, chiefly by taming high power prices and improving the concessions system to facilitate the creation of new mines and encourage exploration.

There has been no mention of higher mining royalties or hints that Bachelet - a moderate in her first term although with a more left-leaning agenda this time around - will take a firm stand against controversial mining and power projects.

"There's no fear of a big change in mining," a high-level mining industry executive told Reuters, speaking on condition of anonymity to avoid ruffling the feathers of Bachelet's team.

Around 47 percent of Chileans said they would vote for Bachelet, while 14 percent backed right-wing candidate Evelyn Matthei, a CEP poll showed last month.   Continued...

Chilean presidential candidate Michelle Bachelet of the "Nueva Mayoria" (New Majority) coalition of political parties takes part in a campaign event in Valparaiso city, about 121 km (75 miles) northwest of Santiago, October 31, 2013. REUTERS/Eliseo Fernandez