The news out of Chile regarding the drop in royalties paid to the givernment by its copper mining sector is interesting from several angles. Word is that in the first six months of 2012
- Royalties collected by Chile are U$311m, down $105m, or ~25%, from the U$416m in the same period of 2011.
- Of the payers, the big three payers have dropped payments substantially. They are BHP’s La Escondida (down 31% to $87m), Antofagasta’s Los Palambres (down 37% to U$67m) and Anglo/Xstrata/other’s Collahuasi ((down 39% to U$41m.
- The reasons for the drop in royalties are a) the lower market prices for copper which shouldn’t surpirse any of us and b) an approximate 15% rise in costs of production, which is interesting to read.
Bottom line: Think margins.