On February 4, 2022, Law No. 21,420 which Reduces or Eliminates the Indicated Tax Exemptions Thereof, was enacted with the aim of sustaining economically the new Guaranteed Universal Pension (PGU). In addition, article 10 of Law 21,420 amended the Mining Code in several matters. Other matters amended by Law 21,420 included the Law on Sales and Services Tax (which regulates, among others, the value added tax) and the Income Tax Law, among other tax laws.
After the enactment of Law 21,420, some inaccuracies were noted in article 10 approved by Congress, as well as the deletion of a transitional rule on taxation. As a result, the Administration submitted a bill seeking to amend Law 21,420. On July 26, 2022, Law 21,462 that Amends Law 21.420, was enacted. In mining matters, Law 21,462 corrects the reference and calculation errors that existed in the original article 10. Regarding tax matters, the omitted transitional rule was reincorporated.
However, Law 21,462 did not correct all loopholes and inconsistencies generated by the publication of Law 21,420. Thus, on November 23, 2022, the Administration submitted a new bill that seeks, among other objectives, to address and resolve the inconsistencies and loopholes contained in Law 21,420: Bill15,510-08. In order to have enough time to discuss Bill 15,510-08, on January 26, 2023, Law 21,536 was published, which postpones the entry into force of article 10 of Law 21.420. The legislative procedure of Law 21,536 can be reviewed here.
In the following sections, there is a description of the amendments introduced to the Mining Code by Law 21,420 that will become effective on January 1, 2024.
- Exploration Mining Concession.
- The duration of the concession is increased from 2 to 4 years, eliminating the possibility of requesting an extension.
- The holder of an extinct exploration mining concession is prohibited from acquiring, directly or through an intermediary, a new exploration mining concession that includes the area of that extinct concession.
- A public action of complaint is granted against the acquisition of exploration mining concessions subject to the abovementioned prohibition.
- Exploitation Mining Concession.
- The time limit for the applicant of the exploitation mining concession to request its survey is increased from 20 to 30 days, which are counted between 90 and 120 days as of the date of the filing of the exploitation mining concession claim to the court.
- The on-site survey operation and the placement of landmarks are eliminated.
- The time limit for the presentation of the survey minute and blueprint is reduced from 15 to 10 months from the date of the filing of the exploitation mining concession claim to the court.
- Annual Mining License.
- The distinction between licenses of exploitation mining concessions over metallic and non-metallic substances is eliminated.
- The value of the license of exploration mining concessions increases from 1/50 to 3/50 UTM per hectare.
- The value of the license of an exploitation mining concession will increase progressively from 4/10 UTM per hectare during the first 5 years of validity, up to 12 UTM per hectare from year 31, according to the following scale.
- As an exceptional benefice, two cases of reduced licenses are established:
(i) The value of the license of an exploitation mining concession that proves mining works is set at 1/10 UTM per hectare.
(ii) The value of the license of an exploitation mining concession under environmental evaluation or has an approved Environmental Assessment Resolution in order to execute mining works will cost 3/10 UTM per hectare.
- The National Geology and Mining Service (“Sernageomin”) will publish a list of concessions benefiting from reduced licenses.
- Geological Information.
- Upon extinction or at the end of their term -in the case of exploration mining concessions- or every 2 years -in the case of exploitation mining concessions-, the holder must submit to Sernageomin all the geological information obtained from exploration works performed in them.
- Fines up to 100 UTM will be imposed to those who do not deliver the information obtained.
- Technical Elements.
- The new SIRGAS datum is introduced, regarding the U.T.M. coordinates.
- A process of unification of the coordinates system to the SIRGAS datum will be initiated for existing mining concessions when the amendments to the Mining Code come into effect.
- Possessory Actions.
- The concession holder must prove to be the holder of a mining easement or other right in rem encumbering the surface property comprising his concession in order for the possessory action to be admissible.
* UTM (“Unidad Tributaria Mensual”) is a Chilean monthly unit of account for tax and penalty purposes, updated according to inflation.
Even though the provisions of Law 21,420 became effective as of the first day of the month following the date of its publication in the Official Gazette, that is, April 1, 2022, special rules were established on mining matters.
Specifically, the modifications introduced to the Mining Code shall become effective on January 1, 2024. As a result:
- Exploration Mining Concessions.
- The amendment of the duration of exploration mining concessions to 4 years, non-extendable, shall become effective on January 1, 2024.
- Exploration mining concessions registered in the relevant Custodian of Mines, in force as of January 1, 2024, and that have not been extended to that date, shall be understood to be granted for a term of 4 years from the date of their final judicial award.
- Exploitation Mining Concessions.
- The amendments to the procedure for the constitution of an exploitation mining concessions shall come into effect on January 1, 2024.
- Proceedings of constitution pending on January 1, 2024, shall continue to be governed by the provisions in force at the time of their initiation.
- Annual Mining Licenses.
- The elimination of the distinction between licenses for mining concessions over metallic and non-metallic substances, the modification of the values of the annual license for each type of mining concession (exploration and exploitation) and the benefit of a reduced license in certain cases shall come into effect on January 1, 2024.
- On the other hand, for calculating the terms of the progressive license of unworked exploitation mining concessions, those exploitation mining concessions that are subject to the payment of annual mining licenses prior to January 1, 2024, shall be deemed to have completed their first year of validity on February 28, 2024.
- Geological Information.
- The obligation of the holder of a mining concession holder to submit all geological information obtained from exploration works carried out in its concession shall come into effect two years after the entry into force of Law 21,420, that is, on January 1, 2026.
- Change of Datum.
- The process of unification of the coordinates system to the SIRGAS datum shall be initiated for mining concessions in force as of January 1, 2024.
- Possessory Actions.
- The requirement for a mining concessionaire to have a mining easement or other right in rem encumbering the surface land of its concession for a possessory action against the owner, possessor or mere holder of such surface land to proceed, shall become effective on January 1, 2024.
Within 6 months of the entry into force of the modifications to the Mining Code, the Mining Code Regulations and other necessary regulations or administrative rules shall be amended accordingly.
