The government presented a tax reform seeking $25 billion, $7 of which would come from the extractive sector. Some of the proposed mechanisms have generated alarm on the part of the mining sector, given that they would make their operation unviable, by reducing their profits and even generating losses. About, Juan Camilo Nariño, president of the ACM, assured that other alternatives must be evaluated.
(The main concerns of the mining sector about the tax).
How has the semester been for the mining sector?
It has been a semester that in terms of prices, and not so much in terms of production, has been good. Production has remained stable, particularly coal, nickel and gold. In terms of income, companies have performed very well. This will be reflected in the sector’s contributions to the country this year, on average they were $5 billion between rents and royalties. This year due to the cycle of high prices, the Government is going to receive some $14.7 billion.
What happened to the production?
In coal, in relation to last year there will be about 5 million tons more. The productive capacity in gold, coal, nickel and others needs to be planned and built some time in advance and the drastic variations due to prices cannot be adjusted so easily. In the case of coal, the commercial dynamics are longer-term, so that the contracts are for a longer period, but with more stable prices, so that it does not benefit as much in this cycle of high price in the spot indices.
They have warned about the viability of projects for the tax, which would be most affected?
This is a generalized approximation to the entire industry of the country. Passing taxes on average from 68% to 90% in any sector generates imbalances and compromises the financial viability of current projects in operation and also of future ones. There is also the coal and the one from the center of the country that later becomes coke. Despite the fact that coke is an industrial product, it is being valued in the same way as other products, so the impact is general.
(Tax reform: the changes that the unions ask Petro).
Would the tax go against the energy transition?
Definitely. That is the discussion that the country has to give and the reflections that we have to make together with the Government. If the reform is approved as it is, it will compromise the future of the minerals that we need for electric mobility, to make fertilizers, to give a few examples.
The government expects a collection from the sector, what are they willing to give up? What alternatives are there?
The most important thing at this stage is that we jointly review with data the impact that the reform has on the sector. Once we agree on the impact, which reaches 92% in the case of thermal coal or 90% for gold, we can start discussing what’s next. A taxation directed at a sector that increases the government take up to 90% has no precedent in the countries of the region, nor in developed mining countries. This is mainly due to the royalty tax and the export tax. When one compares with other countries, it is found that in almost all of them it is deductible.
Would a surcharge be better for the sector?
That is a possibility, without a doubt, that must be explored.
How has the rapprochement with the government been to present your points?
They have been effective, cordial meetings that have allowed us to tell the Ministry of Finance, the director of the Dian, about the impacts. Of course we want a new discussion with Minister Ocampo to advance in this technical discussion that we already had with his teams and thus move towards an understanding that allows us to understand where the reform is going.
What should be the next step to prioritize strategic minerals projects?
I feel that the environmental licensing and the processes in charge of the autonomous corporations or the ANLA, as well as those that the Ministry has, must be very technical conversations. We all have to seek for these institutions to be more technical and this generates independence from interests different from the only one that should be central, which is the environment.
(Banrep, highlighted among the best central banks in the world).
Should Anla be more independent?
This agency has been on a path to increase its independence and strengthen its analytical capacity, which has been an appropriate path that must continue to be strengthened.
The Minister spoke of reviewing the contracts, what could this mean?
Today within the powers of the National Mining Agency is to control and review mining titles, as well as environmental commitments. This is an obligation that, to the extent that it is done with technical rigor and that it complies with the legislation, gives guarantees to everyone.
What should be the government’s route in mining? should it be done
new mining rounds?
Definitely. Colombia needs to know more about its territory in geological matters, to know the potential that exists in the minerals that we need to feed ourselves better, for the energy transition. We do not know the potential of the subsoil. There are other countries that have guidelines expressing interest in the supply of these strategic minerals. That is a path we should travel.
Daniela Morales Soler
[email protected]
