LME WEEK 2021: Royalty, tax changes in South America could roil metals industry

Some of the most important countries in global mining production are moving forward with talks to secure a larger share of the commodity price escalation seen during the Covid-19 pandemic, mostly to fund their own social programs - but companies and industry groups fear this could compromise future investments.

South American mining giants Chile, Peru and Brazil seek to increase mining royalties, eyeing this price uptrend. While members of the Chilean and Brazilian lower houses of Congress have already greenlit this change, Peruvian authorities began discussing the move after the election of a left-leaning government in July.
The necessity for higher state revenues arose amid public deficits, demands for improved national services and social inequality on the continent. The Covid-19 crisis aggravated this environment, adding health problems and a need for economic relief to the mix.
Global metal prices rocketed from 2020 lows, due mostly to insufficient supply and logistic woes. After producers had to halt operations to prevent the virus from spreading, demand recovered at a much faster pace than expected, leaving a shortage in international markets.
Prices, however, have since corrected from multi-year highs.

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