Chile Not Nationalizing Mining

 

Why Chile Tax Doesn't Affect Capstone Mining

Capstone Mining has an exemption from Chilean tax hikes for 15 years after commercial production due to DL 600.

Chile Increases Tax Rate on Copper

Chile is about to apply a higher tax rate on incremental marginal copper production.

When applying these marginal tax rate, we are looking at a 50% tax on $8/lb copper.

This will be very bad for development projects in Chile. Nobody will want to start up a mine with these taxes. As these taxes are on the revenue side, this will outprice high cost producers from the low cost producers. High cost producers won't be able to survive, while low cost producers (like Capstone Mining) will thrive.

U.S. Dollar Denominated Debt

This graph shows who is the most vulnerable to a rising USD.

China can easily service its dollar debt, while Chile, Argentina and Mexico will have more difficulties.

According to Lyn Alden, the U.S. has a $11 trillion dollar hole in their net assets (amount of assets owned - amount of assets owed to other countries).