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Chile’s mining

and metals

investment guide

2023

Chile’s mining

and metals

investment guide

2023

03Chile’s mining and metals investment guide2023

This work is limited in scope. This publication

contains information in summary form and is

therefore intended for general guidance only. It is

not intended to be a substitute for detailed research

or the exercise of professional guidance. It is also

not intended to be tax or legal advice and hence

cannot be relied upon for any such purpose.

In order for EY to issue an opinion or tax advice,

additional steps are required including (but not limited

to) verifying the facts and assumptions upon which

the opinion or tax advice would be based. Moreover,

additional research and analysis may be required

prior to issuing any tax opinion or advice. EY does

not guarantee the accuracy of the data from publicly

available sources included in this document. Neither

the local EY entity nor any other member of the

global EY organization can accept any responsibility

or liability for loss occasioned to any person acting

or refraining from action as a result of any material

in this publication. On any specic matter, reference

should be made to the appropriate advisor.

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Chile’sminingandmetalsinvestmentguide2023Chile’sminingandmetalsinvestmentguide2023Chile’sminingandmetalsinvestmentguide202303Thisworkislimitedinscope.Thispublicationcontainsinformationinsummaryformandisthereforeintendedforgeneralguidanceonly.Itisnotintendedtobeasubstitutefordetailedresearchortheexerciseofprofessionalguidance.Itisalsonotintendedtobetaxorlegaladviceandhencecannotberelieduponforanysuchpurpose.InorderforEYtoissueanopinionortaxadvice,additionalstepsarerequiredincluding(butnotlimitedto)verifyingthefactsandassumptionsuponwhichtheopinionortaxadvicewouldbebased.Moreover,additionalresearchandanalysismayberequiredpriortoissuinganytaxopinionoradvice.EYdoesnotguaranteetheaccuracyofthedatafrompubliclyavailablesourcesincludedinthisdocument.NeitherthelocalEYentitynoranyothermemberoftheglobalEYorganizationcanacceptanyresponsibilityorliabilityforlossoccasionedtoanypersonactingorrefrainingfromactionasaresultofanymaterialinthispublication.Onanyspecificmatter,referenceshouldbemadetotheappropriateadvisor.04Chile’sminingandmetalsinvestmentguide2023AboutthisAliciaDomínguezminingMiningandMetalsandmetalsLeadingpartnerinvestmentEYChileguideTheguidealsoprovidesaccesstoessentialThisminingandmetalsinvestmentguidehasinformationtoassistforeigninvestorsinbeenstructuredtoserveasaninitialstepinunderstandingtheregulationsgoverninginvestmenttheprocessofevaluatingthemininglandscapeandinparticularthelegal,taxationandregulatoryinChile.Assuch,itwillbeusefultothoserequirementstooperateinChile’sminingsector.whocontemplatethepossibilityofmakinglong-terminvestmentsintheexplorationandThisguidehasbeendesignedtobeeasilyconsulteddevelopmentofnewminesinthecountry.andtoofferabalancedandobjectiveaccountofareasofpotentialinteresttoforeignmininginvestors.Thispublicationhasbroughttogetherseveraloftheminingindustry’sleadingprofessionalsfromEYChile,Wehaveincludedthemostrecentdataavailableandwithamixoflegal,tax,economicandaccountingadditionalcommentaryonavarietyofcriticaltopics,backgrounds,tosharetheiruniqueinsightsandaswellasinformationaboutmajorreformsthatwereexplainthekeyelementsforasuccessfulexpansionbyrecentlyapprovedandarecurrentlybeingdiscussed.internationalminingandmetalscompaniesintoChile.TheaimistosupplyinternationalexplorationandWithinthisguidewehaveexaminedvariousaspectsminingcompanies(majorsandjuniors)withafactbaseusuallytakenintoconsiderationbyminersandinvestorsandcriticalinformationtofacilitateandsupporttheirfromaroundtheworldbeforemakingcriticaldecisionsinvestment-makingdiscussionsanddecisions.Wehopeonthedevelopmentofnewminingoperations.thatthisnewmaterialwillbeusefulintheeffortstoattractgreaterflowsofforeigndirectinvestment(FDI)IncludedinthisguideisanoverviewofChile’spoliticalandthattheflowsinturnwillbenefitthecountry.structure,businessenvironment,macroeconomicprofile,keyindicatorsandoutlookforthecomingyears,geologicalpotential,miningandmetalssectortrendsandrecentdevelopments.0506Chile’sminingandmetalsinvestmentguide2023Content1.Backgroundinformation075.4Structuresmostoftenusedbyforeigninvestors701.1Overview085.5CustomsDuties701.2IntroductiontotheChileaneconomy105.6LaborLegislation721.3Economicsituation116.Accountingstandards831.4Economicsectorsandbalanceoftrade176.1IFRSstandardsinChile841.5Regionalleader186.2IFRSforminingentities842.MininginChile216.3Explorationandevaluation852.1ImportanceofChile’sminingsector226.4Strippingcosts852.2Miningpotential246.5Impairmentofassets862.3EYTop10risksandopportunities2023–296.6Depreciationofproperty,plantandequipment86ImplicationsforChile6.7Functionalcurrency873.Mininglegislation356.8Jointventures873.1Securityoftenure376.9Decommissioningliabilities873.2Mineralandsurfacelandownership386.10Financingcosts873.3Righttotransferminingrights386.11Inventories873.4Sizeofconcessionrights387.Appendix893.5Governmentpoliciesonthesaleofmineral397.1Miningsectorregulatorsandstakeholders90products7.2WhyEYinMining&Metals933.6Environmentalmatters393.7Waterrights403.8LithiumregulationsinChile414.GeneralTaxSystem434.1IncomeTax454.2TransferPricing534.3Taxessolelyappliedtotheminingindustryin54Chile4.4Incentives574.5ForeignInvestmentStatutes585.BusinessLegislation615.1StartingabusinessinChile625.2Speciallegalvehiclesformining695.3Jointventures700708Chile’sminingandmetalsinvestmentguide2023Backgroundinformation091.1GovernmentoverviewOverviewGovernmenttypeConstitutionalrepublic1.1.1FormofgovernmentLegalsystemChilehashadastabledemocracysincetheendofBasedonCivilLawthePinochetgovernmentin1990.IthasarepublicansystemofgovernmentcomprisingthreeseparateExecutivebranchandindependentbranches:executive,legislativeand•Chiefofstateandheadofgovernment:Presidentjudicial.GabrielBoric(sinceMarch2022)Theexecutivebranchisheadedbythepresident,who•Elections:Everyfouryearsbypopularvote(non-iselectedbyapopularvoteforasinglefour-yearterm.Thepresidentappointsthecabinetandisadvisedbyconsecutivereelection);nextelections:Novembercabinetministers.Inthe2021elections,GabrielBoric2025waselectedaspresident(theyoungestinthehistoryof•Cabinet:CouncilofMinistersappointedbythethecountry).ThelegislativepowersarevestedwiththePresidentGovernmentandtheChileanCongress.LegislativebranchThelegislativebranchismadeupofaSenate(with•BicameralCongress50senators)andtheChamberofDeputies(with155•Senate:50seatsdeputies).•ChamberofDeputies:155seats•Nextelections:November2025Thejudicialbranchisanindependentbody,headedbytheSupremeCourtandsupportedbyregionalcourtsJudicialbranchofappeal.ThepresidenthasthepowertoappointSupremeCourtjudgesareappointedbythesupremecourtjudges.PresidentandratifiedbytheSenate.TheCourtprovidesthelistofcandidates.Chileisdividedinto16regions.Regionsaresubdividedintoprovinces,whichareheadedbyanelectedInternationalrelationshipsgovernor.Theseprovincesarefurthersubdividedinto•ThecountryisanassociatedmemberofMercosurmunicipalities,whicharegovernedbyademocraticallyelectedmayor.andtheAndeanCommunityofNationsandafullmemberoftheAsia-PacificEconomicCooperationOnSeptember4,2022,Chileanvotersresoundingly(APEC)forumandthePacificAlliance.rejectedinareferendumaproposednewconstitution.•ChilehasbeenafullmemberoftheOECDsinceThisnewversionwastheresultofaconstitutional2010reformprocessthathadbeenpresentedasasolutionproposaltoaddresstheproblemsmanifestedduringthesocialoutbreakof2019.OnJanuary11,2023,Chile’sCongressapprovedasecondconstitutionalprocess.ThistimethedocumentwillbepreparedbygroupofexpertstogetherwithapopularlyelectedbodyandwillbesubmittedtoanewreferendumtobeheldonDecember2023.10Chile’sminingandmetalsinvestmentguide20231.1.2Geography1.1.3PeopleChileextendsfor4,270kilometers(km)(or2,670Chilehadanestimatedpopulationof19.2millionpeoplemiles)alongthewestcoastofSouthAmericaborderingin2020.thePacificOceanandis175kmwideonanaverage.Chile’sprimaryterritorysharesaborderwithPerutoThepredominantreligionisRomanCatholicandthethenorth,BoliviatothenortheastandArgentinatotheofficiallanguageisSpanish.Englishisthesecondmosteast.ChilealsohastheEasterIslandinOceaniaandimportantlanguageinthecountrybutisnotwidelyterritoryinAntartica.spoken.InChile,theavailabilityofbilingualpersonnelislimited.Chile’sgeographyisextremelydiverseandvariessignificantlyfromthenorthtothesouth.ChilecanbePeopleoverview20221dividedintothreegeographiczones:PopulationGrowthrate•Mostofthenorthernregionisaridandiscomposedofthe19.2million3.35%600-mile-longAtacamaDesert.ThisregionprovidesChilewithsalt,nitrates,lithium,ironandmostofitscopper,AgestructureFertilityratemolybdenum,goldandsilvermining.Otherproductive•0–14years:29.2%1.5birthsperwomaneconomicactivitiesincludefishing,fishmealandfishoil•15–64years:68.5%industries,fruitandwineproduction,aswellastourism.•Over65years:12.2%•Thecentralpartofthecountry,oftenreferredastheUrban/RuralLifeexpectancyatCentralValley,isdevotedprimarilytoindustry,agriculturepopulationbirthandminingactivities.MostofChile’sbusinessactivitiesare89%/11%80yearsconcentratedinthisregion.Santiago,Chile’scapital,andothermajorcitiesarelocatedinthecentralregion,whichhasthehighestpopulationdensityinthecountry.FromtheCentralValley,Chileexpandedduringthelate19thcenturytoincludethenorthernandsouthernregionsofitscurrentnationalterritory.•ThesouthernregionofChilefeaturesrichgrazinglandsandforests,aswellasmanylakesandaseriesofvolcanoes.Thisregionisthecenteroftheforestryindustryandsalmonindustry.Cattleandsheepfarmingarealsosignificantactivities.Petroleumandnaturalgasarefoundinthefarsouth.1.Backgroundinformation111.2IntroductiontotheChileaneconomyChileistraditionallyconsideredoneofthestrongestInthissense,anddespitethesignificantlocalLatinAmericancountriesintermsofinstitutionalismuncertaintyandinternationalrisks,theInternationalandfiscalpolicies.AccordingtotheWorldBank,ithasMonetaryFund,duringitslasttechnicalvisitinMarchbeenoneofLatinAmerica’sfastest-growingeconomies2022,consideredthat“thegreatsolidityofeconomicinrecentdecades,allowingthecountrytosignificantlyfundamentalsandpublicpolicyframeworkspromotereducepoverty.Chile’sresilienceanditscapacitytorespondtoshocks”3.However,recentyearshavebeencomplexnotonlybecauseofthepandemicandtheinternationalscenario,Inaddition,inanotherreporttheinternationalbutalsobecauseoffactorsspecifictothenation.organizationsaidthatitexpectsChile’sGDPpercapitatoincreaseandexceedUS$30,000in2024,beingtheAfter2021,inwhichtheGrossDomesticProduct(GDP)firstcountryinSouthAmericatoreachthismilestone4.grew11.7%,theexpectationsforthecomingmonthsaremuchlower.In2022,anexpansionofonly2.4%isexpectedwhileashrinkbetween-1.75%and-0.75%2isexpectedfor2023.Moreover,accumulatedinflationhasalreadyreacheddouble-digitlevels,somethingtowhatChileisnotusedto.TheannualinflationrateinChilereached12.8percentinDecemberof2022.Themainreasonsforthesharpriseinpricesarethesignificantboostinspendingduring2021andtheglobalinflation,addedtothelackofrecoveryofglobalsupplychainsandthewarbetweenRussiaandUkraine.However,expertsexpectthattheeconomicslowdownwillhelpinflationconvergetothe3%targetoverthenexttwoyears3.Inthefirstmonthsof2023,inflationhasalreadybeguntoslowdown.Chile’sannualinflationrateslowedforathirdmonthto11.9%inFebruary2023.Likewise,by2024,macroeconomicimbalancesareexpectedtoberesolvedandgrowthtoresumeitspotentialrate(between2%and3%).Alsoaspresentedabove,thecountryunderwentamajorprocessofchangeinitsconstitutionandaseriesofregulatoryreformsareunderdiscussion,whichhasledtogreateruncertainty.12Chile’sminingandmetalsinvestmentguide20231.3EconomicSituation1.3.1Overview“thecountry’spolicyframeworksareanchoredintheinflationtargetregime,thestructuralfiscalbalanceChilehasbeenoneofthecountrieswiththehighestrule,afreelyfloatingexchangerateandasoundGDPpercapitainLatinAmericaonasustainedbasisinfinancialsystembackedbyeffectivesupervisionandrecentyears.regulation”6.TheInternationalMonetaryFundhighlightstheTheUnitedNationsHumanDevelopmentIndexplacescountry’sresiliencethankstoitsverysolideconomicChileas42ndintheworldin20227,beingtheleaderfundamentalsandpolicies,whichhaveallowedittoamongLatinAmericancountries.recoverfromrecentshocks.Likewise,ithighlightsthatMaineconomicindicatorsChile$310.866Indicator$575.516GrossDomesticProduct2022(Currentprices,USD,million)8GrossDomesticProduct2022(Currentprices,Purchasingpowerparity,International$24.550dollars,million)9PerCapitaGrossDomesticProduct2022(Currentprices,Purchasingpowerparity,$39.154Internationaldollars)10$233.909InternationalReserves2022(USD,million)1184,0%ForeignDebt2022(USD,million)12$105.324ForeignDebt2022(%ofGDP)1339,1%TotalPublicDebt,september2022(USD,million)147,9%TotalPublicDebt,september2022(%ofGDP)1514,2%UnemploymentRate(movingquarterofOctobertoDecember2022)16$521Populationbelowpovertyline202017MinimumMonthlyWage(USD)181.Backgroundinformation131.3.2Percapitafigure19.Theagencyadvancedthisgoalbyayear,despitethepandemic.IMFexpectsthatin2024Chile’sGDPpercapitawillNevertheless,theconsequencesofthepandemic,reachUS$30,000,measuredatpurchasingpowerinflationarypressuresandgeopoliticalriskscouldaffectparity(PPP),makingthecountry,togetherwiththesefigures.Uruguay,thefirstinSouthAmericatoreachthatSource:WorldEconomicOutlookDatabase.October2022.InternationalMonetaryFund.Figure1:Percapitagrossdomesticproduct.Purchasingpowerparity.Internationaldollars.35.000Chile30.000Argentina25.000Mexico20.000Brazil15.000Colombia10.000Peru5.000020162017201820192020202120221.3.3GrowthexpectationsTheChileaneconomyhascontinuedwithitsadjustmentprocessfollowingthemajorimbalancesitaccumulatedAftera2021inwhichtheeconomyreboundedgrowingduring2021.TheMonthlyIndexofEconomicActivity11.7%,itslargestannualincreasesincethedatahasfor2022(IMACEC)grew2.7%22.Indecemberof2022beenrecorded,asignificantslowdownisexpected.Thetheindexfell-1%,comparedtothesamemonthofCentralBankofChileexpectstheGDPtocloseat2.4%2021.in2022andtoshrinkbetween-1.75%and-0.75%by202320.IntheOctober-December2022quarter,nationalunemploymentratereached7.9%,increasing0.7Thisisinlinewithotherestimatesofinternationalpercentagepoints(pp.)inyearoveryear23.organizationssuchastheInternationalMonetaryFund(IMF),which,forthesameyears,considersavariationof2%and-0.9%respectively21.Figure2:Source:NationalAccount,CentralBankofChileGrossDomesticProduct,LevelsandGrowthGDPatcurrentprices(Chilean300,00025%pesos,billions)250,00020%200,00015%GDPvolumeatchainedprevious150,00010%year'sprices(Chileanpesos,100,0005%billions)0%50,000-5%GDPatcurrentprices(variation0-10%comparedtothepreviousperiod)20182019202020212022(f)GDPvolumeatchainedpreviousyear'sprices(variationcomparedtothepreviousperiod)(f)Forecast.14Chile’sminingandmetalsinvestmentguide20231.3.4InflationThecountryclosed2022withanannualinflationof12.8%24,thehighestin31years,drivenbydomesticInChile,theCentralBankistheagencyinchargeofdemand.Inflationarypressuresofdomesticoriginhaveensuringlowandstableinflationovertime.Itstructuresworsenedwiththeinternationalscenario.By2023,itsmonetarypolicywithinaconceptualframeworkoftotalinflationisprojectedtoaverage6.6%,endingthetargetsandusesinstrumentstoensurethattheannualyearat3.6%25.variationininflationisaround3%annuallywithatolerancerangeofonepercentagepoint.ThispolicyisGiventhis,theCentralBankhasincreasedthemonetarycomplementedbyaflexibleexchangerateregime.policyinterestrate(MPR)consistentlysinceJuly2021,reaching11,25%inDecember2022.Figure3:GeneralCPI2018=100.MonthlyVariationSource:CPIandunderlyingmeasures.CentralBankofChile.21,510,50-0,5JanFebMarAprMayJunJulAugSepOctNovDecJanFebMarAprMayJunJulAugSepOctNovDecJanFebMarAprMayJunJulAugSepOctNovDec1.Backgroundinformation151.3.5ExchangerateInrecenttimes,bothinternalandexternaluncertaintyfactorshaveledtheChileanpesotoincreaseitsChileadoptedafullyflexibleexchangerateregimeinvolatility.thelate1990sandsincethen,theCentralBankonlyintervenesintheforeignexchangemarketoccasionally.Afterastrongdevaluationin2022,inthefirstmonthsof2023theChileanpesohashadasignificantappreciation.MultilateralExchangeRate(MER26)andForeignCurrencies27Currency201720182019202020212022759.27872.33USDollar649.33640.29702.63792.22897.37917.596.916.67Euro732.44755.74786.35902.68117.74129.54111.16120.59Yen5.795.86.457.42YuanRenminbi96.1596.86101.61114.72MER106.11102.68106.4114.95Figure4:Source:CentralBankofChileEvolutionofMultilateralExchangeRate(MER)andInternationalCurrencies(baseline2014=100)140%130%120%110%100%90%80%70%2016201720182019202020212022USDollarYenYuanRenminbiEuroMER16Chile’sminingandmetalsinvestmentguide20231.3.6Fiscalaccountsrepresented1.1%oftheGrossDomesticProduct(GDP).Itwasthefirstsurplusinadecadeandthelargestin11Since2001,Chile’sfiscalpolicyhasbeenguidedbyayears28.rulebasedonacyclicallyadjustedbalance(CAB),betterknownastheCentralGovernment’sstructuralbalanceStill,theyear2022endswithalevelofpublicdebtofrulecomplementedbyasovereignstabilizationfund.37.3%ofGDP,thehighestsince1991,mainlyduetoThispolicyputsthefocusoftheTreasury’ssituationtheextensivefiscaltransfersofthepandemicperiod,inamedium-termperspective,insteadofitscurrentamongotherthings.Thedebtisexpectedtoreachasituation.maximumof41.7%in2025andthendecreaseto40.4%in202729.ThesenumbersarestillmuchlowerthanHowever,inrecentyears,Chilesufferedadeteriorationmostoftheregionandmostdevelopedcountries(e.g.,initsfiscalaccounts.Nevertheless,attheendof2022,theEuroArea’sis95.6%).theeffectivefiscalbalanceoftheCentralGovernmentFigure5:Source:Budgteofﬁce(Dipres)Fiscalbalance:previousresultsandforecastpercentageofGDP420-2-4-6-8-10-1220122013201420152016201720182019202020212022(f)2023(f)2024(f)2025(f)2026(f)2027(f)Eﬀec�veBalanceStructuralBalanceSource:Budgteofﬁce(Dipres)Figure6:PublicdebtpercentageofGDP45403530252015105019911992199319941995199619971998199920002001200220032004200520062007200820092010201120122013201420152016201720182019202020212022(f)2023(f)2024(f)2025(f)2026(f)2027(f)1.Backgroundinformation171.3.7ForeigninvestmentsAccordingtoInvestChile,theamountis12%higherthanthataccumulatedinthesameperiodof2021,Preliminarily,theCentralBankreportedthattheflow36%higherthantheaverageofthelastfive-yearofforeigndirectinvestment(FDI)receivedbetweenperiod(US$12,617million)and23%higherthantheJanuaryandDecember2022reachedUS$17,105averageofthehistoricalseries2003-2022(US$13,921million.million)30.Figure7:Source:ForeignInvestmentinChile.CentralBankofChileForeignInvestmentDirectInvestmentLiabili�es9.000DirectinvestmentAssets7.0005.0003.0001.000-1.000-3.000-5.000Investmentin$USDMMQuarter1Q-20152Q-20153Q-20154Q-20151Q-20162Q-20163Q-20164Q-20161Q-20172Q-20173Q-20174Q-20171Q-20182Q-20183Q-20184Q-20181Q-20192Q-20193Q-20194Q-20191Q-20202Q-20203Q-20204Q-20201Q-20212Q-20213Q-20214Q-20211Q-20222Q-20223Q-20224Q-2022Figure8:Source:ForeignInvestmentinChile.CentralBankofChileForeigndirectinvestmentﬂows2012-2021,percentageoftotalFinancialservices5%10%15%20%25%Electricity,gasandwaterNotallocatedMiningCommerceManufacturingTransportandstorageConstructionCommunicationsAgricultureandﬁshingRealestateandbusinessservicesOtherservicesHotelsandrestaurants0%18Chile’sminingandmetalsinvestmentguide20231.4EconomicSectorsandBalanceofTrade1.4.1MaineconomicsectorsHowever,in2022theeconomybegantoshowasignificantslowdown.AsofDecember2022,economicChileistheworld’sleadingproducerofcopperanditsactivityfell1%,whichisexplainedbythedecreaseinGDPgrowthisdrivenbyexportsofminerals,wood,commerce(-6.4%)andmanufacturingindustry(-5%)fruit,seafoodandwine.sectors.Ontheotherhand,theservicessectorendedwithanincreaseof2.3%andtheminingsectorwithaIn2021alleconomicsectorshadapositivegrowthof1.2%,whichhelpedtomoderatethedropinperformancewiththeexceptionofmining(-0.7%)31.generaltermsintheeconomicactivity32.ThebiggestcontributorstoGDPgrowthweretradeandpersonalservices,duetothereopeningfollowinghealthrestrictionsandstrongdomesticdemand.Figure9:Source:Grossdomesticproductbyclassofeconomicactivity.CentralBankofChileGDPbyeconomicsector,2021,percentageofGDPMiningFinancialandbusinessservicesPersonalservicesRetail,restaurantsandhotelsManufacturingHousingandrealestateservicesConstructionTransportPublicadministrationAgricultureandforestryCommunicationsandITservicesElectricity,gas,waterandwastemanagementFishing0%2%4%6%8%10%12%14%16%1.Backgroundinformation191.5Riskratingdescription34RegionalleaderQualityMoody'sS&PFitchChilecontinuestobethecountryintheregionwiththelowestcreditriskandthebestratingfromriskHighestqualityAaaAAAAAAratingagencies.AlthoughtheglobalsituationposesAA+AA+anuncertainscenarioforalleconomies,thecountryHighqualityAa1AAAAcontinuestoshowleadershipintermsofpaymentAA-AA-conditions,withsolidlegalandpoliticalinstitutions.HighqualityAa2A+A+AADebtratinginLatinAmerica33HighqualityAa3A-A-BBB+BBB+Upper-medium-gradeA1BBBBBBBBB-BBB-CountryMoody’sS&PFitchUpper-medium-gradeA2BB+BB+ChileA2AA-Upper-medium-gradeA3BBBBBBBBBB-Lower-medium-gradeBaa1BB-BB-BB+PeruBaa1BBBBBB-Lower-medium-gradeBaa2B+B+BB-BBMexicoBaa2BBBBLower-medium-gradeBaa3B-B-B-CCC+CCC+CCC-Speculativenon-Ba1CCCCCCCCC-CCC-ColombiaBaa2BB+investmentgradeCCCCCUruguayBaa2BBBSpeculativenon-Ba2SDRDinvestmentgradeDDDDBrazilBa2BB-Speculativenon-Ba3NRDDDinvestmentgradeBoliviaB2BHighlyspeculativeB1EcuadorCaa3B-HighlyspeculativeB2ArgentinaCaCCC+HighlyspeculativeB3SubstantialriskCaa1ChileistheleaderinLatinAmericainseveralSubstantialriskCaa2internationalrankings.IthasthefirstpositioninLatinAmericaintheEconomistIntelligenceUnit’sBusinessSubstantialriskCaa3EnvironmentRankingandisalsofirstintheregionaccordingtothe2022IndexofEconomicFreedom,ExtremelyspeculativeCaHeritageFoundation.ExtremelyspeculativeIn2022itmaintaineditspositionasleaderofalltheLatinAmericancountriesintheWorldCompetitivenessLittleprospectofRanking,carriedoutbySwitzerland’sInstituteforrecoveryManagementDevelopment(IMD)andtheFacultyofEconomicsandBusinessattheUniversidaddeChile.IndefaultCIndefaultIndefaultNotratedWR20Chile’sminingandmetalsinvestmentguide20231.Estimatedvaluefor2022.Estimatesandprojections2002-2035base2017.NationalInstituteofStatistics.2.MonetaryPolicyReportDecember2022.CentralBankofChile.3.Statisticalbulletin,IPC.INE4.IMFstaffconcludetheirvisittoChile.InternationalMonetaryFund.5.DiarioFinanciero,19ofAprilof2022.6.IMFExecutiveBoardConcludesReviewofChile’sFlexibleCreditLinePerformance7.HumanDevelopmentReport2021/2022.UnitedNationsDevelopmentProgramme8.WorldEconomicOutlookDatabase.October2022.InternationalMonetaryFund.9.Ibidem10.Estimatedvalue.WorldEconomicOutlookDatabase.October2022.InternationalMonetaryFund.11.Reserveassets.CentralBankofChile.12.Balanceofpayments.Internationalinvestmentpositionandexternaldebt.Resultsatthesecondtermof2022.CentralBankofChile.13.Ibidem14.FinanceMinistry.RepublicofChile.15.Ibidem16.Statisticalbulletin:quarterlyemployment.NationalInstituteofStatistics.17.Projectionsofpovertyandextremepoverty.SocialPanoramaofLatinAmerica.ECLAC.18.DireccióndelTrabajo.19.WorldEconomicOutlook,October2022,IMF20.MonetaryPolicyReportDecember2022.CentralBankofChile21.WorldEconomicOutlook,October2022,IMF22.IMACEC,February2023,CentralBankofChile23.NationalStatisticsInstitute(INE),December202224.NationalStatisticsInstitute(INE),PriceIndicesandInflation,December202225.MonetaryPolicyReportDecember2022.CentralBankofChile26.MultilateralexchangerateChile.CentralBankofChile.27.Nominalexchangerate(pesosperunitofforeigncurrency).CentralBankofChile.28.BudgetOffice(Dipres),PublicFinance29.Ibidem30.InvestChile,“Inversiónextranjeraanotaalzade12%en2022,alcanzandounmontodeUS$17.105millones”,February202331.IMACEC.CentralBankofChile.32.IMACECDecember2022.CentralBankofChile.33.Countrydebtrating(foreigncurrency,longterm).LatestinformationavailableasofFebruary2023.Expansion(Datosmacro.com).34.Descriptionofriskclassifications.Expansion(Datosmacro.com).1.Backgroundinformation2122Chile’sminingandmetalsinvestmentguide2023MininginChile232.1ImportanceofChile’sminingsector2.1.1ContributionofminingtotheChileancountry’sjobsand10.4%toChile’sGDPoverthelast10economyyears,withapositivegrowthtrendof~3%peryearsince2019andreachinghighsof14.6%in2021.MiningisakeyeconomicactivityinChileandoneofthemaindriversofthecountry’seconomicdevelopment.Mininghascontributedanaverageof10%oftheFigure10:Source:MiningCouncilbasedoninformationfromGDPoftheminingsectoranditsparticipationinthenationalGDPtheCentralBankofChile,2022.16,7%14,8%14,6%11,8%4.059MillionsofcurrentUS$(1)12,5%11,0%10,9%27.8923.9683.6763.3892.5808,6%9,7%8,9%1.9112.6392.89733.5352.0008,1%8,2%2.93329.6932.4342.54527.20525.86119.01517.73124.14223.39420.40026.90042.077Prom2011201220132014201520162017201820192020202106-10GDPOtherminingactivitiesMiningGDPShareCopperMiningGDP(1)The2018-2021ﬁgureswereupdatedaccordingtothecorrectionsmadebytheCentralBankofChile.24Chile’sminingandmetalsinvestmentguide2023Overthepasttwodecades,theminingindustryhas2.1.4Lithiumproductionaccountedforanaverageof56%ofChile’sexportrevenuesandhasbeentheeconomicsectorwiththeLithiumproductioninChilebeganinthe1980sandthelargestcontributiontofiscalrevenues,morethancountrysurpassedU.S.productionin1995,beingthedoublingtheaverageofthepreviousfiveyearsandlargestproduceruntil2010,whenAustraliatookthereachinganimpressive12%oftotalfiscalrevenuebylead.Chileholds36%oftheworld’slithiumreservesand2021.iscurrentlythesecondbiggestproducer,with25%ofglobalproduction.Chileisaveryattractiveminingdestinationduetoitsprivilegedmineralendowmentwithlargedeposits,oftenLithiumdemandhadaboostinthelastdecadeathighaltitudesandinisolatedlocations;itsinvestor-relatedtothelargerlithium-ionbatteriesusedinfriendlyregulationsandoveralleconomicandpoliticalelectricvehicles,whichcurrentlyuse41%ofalllithiumstability;itsmaturityasaminingjurisdictionwithproductionandisestimatedtogrow73%by2030.developedroadsandportinfrastructure,andqualifiedAccordingtoChile’sDepartmentofStudiesandPublichumanresources.Policy,lithiumproductioninChileisexpectedtohaveacomposedannualgrowthof21%until2030andInthelastdecade,miningwasresponsibleforan16%forglobalfigures.Thesameinstitutionforeseesaverageof16%ofinvestmentsinthecountryandisthethatlithiumdemandwillsurpassthesupplyin2027,economicsectorwiththelargeststockofforeigndirectgeneratingaproductiondeficit.investment(FDI):US$65bn.In2022,FDIaccountedfor50.3%ofChiles’mininginvestment.Thecurrentadministrationisfocusedonbuildinganinstitutionalframeworkaroundlithiumanddefininghow2.1.2Miningtraditionthepublicandprivatesectorswillcollaborateinthefuture.Chilehasalongminingtradition,withcoalandsilverminesdatingbacktothe18thcentury.Saltpeter(aset2.1.5OtherMiningactivitiesofnitrogen-containingcompounds,includingpotassiumnitrate)begantobeminedinthelate19thcentury,ChileisalsooneofthemainproducersofmolybdenumleadingtoChile’sfirstminingboom.Between1900(2ndintheworld)andsilver(4th).Thecountryalsohasand1920,saltpetercontributedabout30%ofthegoldandironoreproduction,buttheyarelessrelevantcountry’sGDP,andexportsrosefromUS$6.3millionwhencomparedtootherminerals.in1880toUS$70millionin1928.Chile’sfirstopen-pitcoppermines—ElTenienteandChuquicamata—beganMolybdenumisaby-productofcoppermining.Silveroperatingintheearly20thcenturyandarestillinandgoldarecontainedincopperoresaswellbutareoperation.alsominedseparately.2.1.3Coppermining2.1.6MiningcompaniesinChileCopperdrovethenextminingboominChileintheChile,oneofthemainmininglocations,hoststhe1990s,whenindustrializationandurbanization,mainlyoperationsoftheworld’slargestminers.TheseincludeinChina,ledtoasharpincreaseinitsdemand.ChinaAlbemarle,AngloAmerican,BarrickGold,BHPBilliton,accountedfor55%ofglobalcopperdemandin20221.FreeportMcMoRan,Glencore,KGHM,RioTintoandTeckChile’scopperproductionhassteadilyincreasedoverResources,amongothers.thelastdecades,butitsshareoftheglobalcoppermarkethasbeendeclining.Nevertheless,Chilehas•Chileanminingcompaniesbackedbynationalcapitalmaintaineditspositionastheworld’slargestproducer,areledbystate-ownedCodelco,whichistheworld’scontributing26%ofglobalcopperproductionin2021largestcopperproducer,accountingformorethanand2022.Cochilco’scopperproductionprojectionsfor30%ofChileancopperproductionandoneofthe2025arehigherthan6Mt,sinceitexpectsthat2023mainmolybdenumproducers,accountableforshouldrepresentarecoveryoftheproductioncycle43%ofChileanmolybdenumproduction.OtherthatwaslostasaconsequenceofCovidpandemic2.relevantcompaniesbackedbydomesticcapitalare:AntofagastaMinerals(AMSA):Chile’sfourth-largest2.MininginChile25copperproducer,withalmost15%ofChileancopper2.1.7Futureofminingsectorproduction.Chile’sminingsectorisexpectedtocontinuetoplayan•SociedadQuímicayMineradeChile(SQM)istheimportantroleinthecountry’seconomy,asdemandworld’ssecondlargestproducerofiodine,lithiumfromemergingeconomiesforbasemetals,suchascarbonate,andpotassiumnitrate,andisresponsiblecopper,isexpectedtoremainstrongfortheforeseeableforapproximatelyhalfofChile’slithiumproduction.future.Inaddition,thestrongtrendtoreduceGHGemissionandtheelectrificationofvehicles,whichwill•CompañíaMineradelPacífico(CMP)andotherrequireaboostincopperandlithiumproductioninminingoperationsofCompañíadeAcerosdelthenextdecadeswillfurtheritsdemand.Copperby-Pacífico(CAP)controlvirtuallyallofChile’sferrousproducts,suchasgold,silverandmolybdenum,willalsometalsproduction.contributetosupportgrowth,butwithlowerrelevance.Therearealsomanymedium-andsmall-scaleHowever,operatinginChilehasitsownchallenges.producersinChilethatrelyonthesupportoftheTheseincludelowergradesandhighproductioncosts.EmpresaNacionaldeMinería(ENAMI)tosmeltandsellSomeofthesechallengeswillbediscussedlaterinthistheirconcentrateproduction.Intotal,theyrepresentpaperexploringtherisksandopportunitiesforthelessthan15%ofthenationalcopperproduction.Chileanminingsector.2.2Chile’smaindepositsareinthenorth,wheremostofMiningpotentialitscopper,gold,silverandironoreminesarelocated.LithiumreservesareconcentratedintheAntofagasta2.2.1ReservesandproductionandAtacamaregionsandarefoundinbrinedepositsandcalichemineralscontainedinsaltflatsandaridChilenotonlyhasthelargestreservesofcopperzones,respectively.(190Mt,23%ofglobal)andlithium(9.3Mt,36%ofglobal)intheworld3,butalsosignificantdepositsofothercommodities.MineralRankinginworldShareinworldProductioninChileinShareinworldproductionproductionMetricTonsreservesCopper126%5.624millionsTM23%Lithium225%26millionsTM36%Molybdenum217%49.427TM9%Silver47%1.280,60TM5%Gold>151%34.3TM7%Iron>150,75%12millionsTMn.d.Source:MiningCouncilbasedoninformationfromtheUSGeologicalSurvey,fromSernageominandfromCochilco,2021.Participationofgoldreserves2017.26Chile’sminingandmetalsinvestmentguide2023Thecountryisbyfartheworld’slargestcoppersecondbiggestproducer,SQM(SociedadQuímicayproducer,with27%(5.6Mt)ofglobalproduction,MineradeChile),aprivateownedcompany.Salardefollowedbyitsneighbor,Peru,with10%ofglobalAtacamaishometoalmostaquarteroftheworld’sproduction.Chileishometothetwolargestminesincurrentlithiumsupplyandhasbeenoperatingsincethetheworld:Escondida(7%ofglobalproduction)and1980s5.Collahuasi(3%).Fiveotherminesareamongthetop15producers,accountingapproximatelyfor2%ofworld2.2.2Explorationprojectsproductioneach:ElTeniente(10th),Chuquicamata,LosBroncesandLosPelambres(tiedin11th)and,finally,TheriseinminingandmetalscommoditypricesRadomiroTomic(15th)4.experiencedin2020andrelativepricestabilityin2021,associatedwithsofterCOVID-19restrictions,motivatedBetween1995and2010,Chilewasthetoplithiumarecentglobalincreaseinthe2022explorationproducerandcurrentlyranksinsecondposition,withbudget,reachingUS$13bnglobally.Chileregistered25%(26kt)ofgloballithiumproduction,rightbehindanexplorationbudgetofUS$713M(5.5%oftheglobalAustralia(52%)andfollowedbyChina(13%).Albemarlebudget)in2022,ranking4thglobally,behindtheUS,Corporationistheworld’slargestlithiumproducerandCanada,andAustralia.ChileisthemainexplorationoperatesinthenorthofChileinpartnershipwiththedestinationinLATAM(21.9%oftheregionalbudget),followedbyMexico(19.4%)andPeru(16.3%).Figure11:ExplorationbudgetinLatinAmericaFigure12:accordingtoprogressstatusinUSDmillionExplorationbudgetcountryshare2022inLatinAmerica:USDmillion3,261.46000OthersMexico5000Colombia7,5%19,4%40004,0%3000Ecuador8,6%2000ArgetinaChile100011,8%21,9%0Brazil201010,4%20112012Peru201316,3%201420152016201720182019202020212022BasicAdvancedandFeasibilityMineSource:PreparedbyCOCHILCObasedonS&PGlobal2022data.Source:PreparedbyCOCHILCObasedonS&PGlobal2022data.2.MininginChile27Figure13:Source:PreparedbyCOCHILCObasedonS&PGlobal2022data.ExplorationbudgetinChile2010-20227,52%5,50%5,48%1.2001.0008,00%7,00%8006,00%6005,00%4004,00%2003,00%2,00%01,00%ChileBudget(USDmillion)0,00%2010201120122013201420152016201720182019202020212022WorldBudgetShare(%)ChileBudget(MMUS$)WorldBudgetShare(%)In2022,CoppercontinuedtobethemostrelevantUKbasedcompaniesrepresentedthehighestmineralwith74%oftheChileanexplorationbudget,investmentinexplorationsinChilein2022,accountingfollowedbygold(21.1%)andothermineralswiththefor33.2%oftheexplorationbudget,followedbyremaining4.9%.Canadiancompanies(24.4%)andlocalcompanies(16.2%).Figure14:Figure15:ShareoftheexploitationbudgetinChilebyExplorationbudgetinChilebycountryofcountryoforigin2010-2022origin2022inUSDmillion100%6,9%Others80%2,5%3,6%USA60%3,6%8,6%Japan16,2%SouthAfrica40%33,2%AustraliaChile20%Canada24,4%UK0%2010201105010015020025020122013201420152016201720182019202020212022Source:PreparedbyCOCHILCObasedonS&PGlobal2022data.Source:PreparedbyCOCHILCObasedonS&PGlobal2022data.28Chile’sminingandmetalsinvestmentguide2023AngloAmericanwasthecompanywiththehighestSource:PreparedbyCOCHILCObasedonS&PGlobal2022dataexplorationbudget(16,4%),followedbyAntofagastaMinerals(12,8%)andCODELCO(11,5%).AngloAmericanplcRegardingexplorationinitiatives,morethanhalf(52.5%)hadcopperasatargetmineral,followedbygold(28.1%)andlithium(9.7%)6.Figure16:ParticipationbyminingcompanyintheexplorationbudgetinChileUSDmillion713,2202217,5%Others38,1%16,4%31,7%2021AntofagastaUSDmillion548,1plc11,8%12,8%LundinMining2,1%2,3%5,3%11,5%11,1%CorporaciónCorporation2,2%2,7%5,2%Nacionaldel3,1%CobredeChileValeS.A.2,9%4,0%4,9%BHPGroup3,2%4,6%3,2%3,2%BarrickGoldCorporationRioTintoGroupYamanaGoldInc.GoldFieldsLimited2.MininginChile292.2.3ProjectsportfolioTheChileanminingprojectportfolioconsideringinitiativestobematerializedbetween2022and2031iscomposedby53initiativesvaluedatUS$74bn,55.6%greenfieldand44.4%brownfield.US$46bnoftheportfoliowillbeinvesteduntil2026when45/53projectswillbecommissionedandtheremainingUS$15bnwillbeinvestedbetween2027and2031.Themajorityoftheinvestmentsarebyprivatecompanies(US$54bn,73%)whilepubliccompaniesareinvesting27%(US$20bn).AlmosthalfofthefundscomefromChileanbasedcompanies,withCodelcoandAMSAresponsibleformostofthenationalinvestments.CanadiancompaniesTeck,CapstoneCopper,LosAndesCopperandKinrossareaccountablefor18.8%oftheinvestments.NewmontandFreeportMcMoRanarethemainU.S.investors,whointotalrepresent8.9%.Japanisthefourthlargestinvestorwith7.5%ofthefundscomingmainlyfromSumitomoMetalsandMitsubishiCorp.AngloAmericanplacestheUnitedKingdominfifthposition,with4.5%.Theremaining10.6%wasinvestedbycompaniesbasedinSwitzerland,Australia,Poland,SouthAfrica,Korea,andChina.Figure17:Totalinvestmentbycountryoforigin(USDmillion)Others20227.786UK10,6%3.3254,5%JapanChile5.53336.62049,7%7,5%USA6.5738,9%Canada13.81818,8%Source:COCHILCO()The"Others"groupcorrespondstoSwitzerland,Australia,Poland,SouthAfrica,Korea,andChina30Chile’sminingandmetalsinvestmentguide20232.3EYTop10risksandopportunities2023–ImplicationsforChileEY’sTop10MiningRisksandOpportunitiesreportisuncertaingeopoliticalenvironment.Theseissueswillanannualpublicationbasedonresearch,dataanalysis,toptheagendaforminingandmetalsleaders.Globalandexpertinterviews,whichprovidesinsightsintodisruptionwillalsoputadditionalpressureoncosts,industrytrendsandinformsstrategicdecision-makingproductivity,andworkforce,promptingcompaniestoforminingcompaniesandstakeholders.For2023,theexploreopportunitiestoreimaginebusinessmodelsandreportshowsrisingexpectationsaroundESG,climateaccelerateinnovation.changeandlicensetooperate,aswellasamoreFigure18:Source:EYTop10miningrisksandopportunities2023NewbusinessmodelsDigitalandinnovation10Capital979Workforce588Supplychaindisruption7Costsandproductivity65Licensetooperate104Climatechange33Geopolitics2241ESGUpfrom20222023Rankingin2022NewtotheradarDownfrom2022Sameas20222.MininginChile31Trend1:Environmental,socialandaccountfor68%ofnewwaterinflowsincoppermining.governanceThereare14desalinizationplantsandseawaterpipelinefacilitiesthatsupplytheminingsectorinChileand11TheESGscope,alreadyanintegralpartoftheadditionalprojectsareexpectedtobecommissionedcompanies’strategy,isexpanding,andthepressuretoby2027.Someofthemostimportantdesalinizationimprovereportingandtransparencyisgrowing.ESGplantsinoperationarethoseofBHPSpence´s(1,000+remainsthetopriskandopportunityforminingand600l/s)andAMSALosPelambres’(400l/s),bothbeingmetalscompaniesin2023.Theissueisnowfirmlyfairlynew.MostprominentprojectsareCodelco’s(850integratedwithincorporatestrategiesduetoitsimpact+1,956l/s),Collahuasi’s(525+1,050l/s)andTeckonalmosteveryaspectofoperations.QB2’s(850-1,200l/s).SomeofthemainareasforESGimprovementarenotTrend2:Geopoliticsnew:improvingdiversity,equityandinclusionremainsamajorchallenge,andmineclosuresandrehabilitationGlobalconflictandtradetensionshighlightrequireamorestrategicandlonger-termview.opportunitiestostrengthenrelationships.“Geopolitics”moveupintherankingasminersfeeltheimpactoftheFromtheChileanperspective,watermanagementandwarinUkraine,aswellasU.S.-Chinatensionsandrisingdecarbonizationarethecurrenthottopics.resourcenationalism.Geopoliticalriskshouldnowbeintegratedintobroaderstrategicplanning,withclearDespiteminingbeingresponsibleforonly4%ofwaterownershipofthisriskwithintheorganization.consumptioninChile,dealingwithcommunitiesneighboringminingoperationshasbeenaconstantGlobally,withthecurrentboominbatteryelectricchallenge,especiallybecausetheyareoftenlocatedinvehicles,Chileispositionedasoneoftheleadersinareaswithdroughtproblems.DecreasinginlandwaterminingandprocessingofBEVrequiredminerals.consumptionincoppermininginrecentyearshasbeenapredominanttrend,especiallyforsulphateore,withDomestically,thereareongoingdiscussionsaboutcontinentalwaterconsumptiondecreasingby46%perchangesintheminingroyaltyrules,inadditiontotheproducedcoppertonnagefrom2010to2021.Thenewconstitutionprocessthatstartedin2020andshareofseawaterusedincopperminingincreasedfromshouldendinDecember2023,generatinguncertainty2%to33%inthesameperiod.inChile’smaineconomicactivity.Thesetopicswillbedetailedinthefollowingchapters.Currently,73%ofwaterisrecycledintheminingprocessandby2032,itisestimatedthatseawaterwillFigure19:Source:IEAConcentrationofbatterymineralandprocessingRareearthCopperLithiumNickelCobaltMiningChileAustraliaIndonesiaDRCChinaPeruChilePhilippinesProcessingChinaChinaChinaChileChileIndonesiaChinaChina32Chile’sminingandmetalsinvestmentguide2023Domestically,thereareongoingdiscussionsaboutlixiviationplantsconsume39%oftheenergyusedbychangesintheminingroyaltyrules,inadditiontothethecopperminingsectorinChile(29%concentrationnewconstitutionprocessthatstartedin2020andand13%forLX/SX/EEW),being91%sourcedbyelectricshouldendinDecember2023,generatinguncertaintyenergyand9%byfossilfuels.CopperminingconsumesinChile’smaineconomicactivity.35%oftheelectricalenergyproducedinChileand55.6%oftheelectricalenergyproducedinChilecomesTrend3:Climatechangefromrenewablesources.Net-zeroreductiontargetshavealreadybeenset,butMoreover,open-pitminingconsumes39%oftheenergyachievingthemwillrequirearealisticandbalancedusedintheminingsectorinChile,93%ofwhichcomesstrategy.Anaccelerateddecarbonizationagenda,andfromfossilfuels.Fleetelectrificationisthesecondmoregreaterfocusonemissionsreporting,createsanewrelevantmeasuretoreducescope1&2emissions,buturgencyaroundbettermitigationofclimatechangetheavailabilityofenoughrenewablesourcedelectricrisk.energyisamajorrisktoeffectivelydecreaseemissions:accordingtoCochilco,electricityconsumptioncouldAnincreasingnumberofminingcompaniesaresettingalmostdoubleby2030ifcomparedto2020.Therenet-zeroambitions,butthepathwaystoachievearealsootherrisksassociatedtotheChileanfleetthisgoalaresometimesunclear.MostlargeminingelectrificationprogramsrelatedtosupplychainandcompaniesinChilehavenet-zeroemissionstargetslogistics,technologicalmaturity,infrastructure,andfor2040/2050,withintermediatemilestonessetforhumanresourceswhicharebecomingmoreevident20307.astheChileanminingcompaniesbegintodetailandimplementtheirelectrificationplans.ReplacingcurrentenergysourcesforrenewableonesistheactionwiththemostsignificantimpactinTrend4:Licensetooperate(LTO)decreasingscope1&2emissions.ConcentrationandFigure20:Source:Chile'sLong-TermClimateStrategy,2021.Participationofmininginthecountry'sgreenhousegasemissionsFugitiveEmissionsPoweerrationirect1,0%Ge3n0,0%indnsMininisgsioe2)proIndusDireectmmisisn7ioi,n0ngs%mport6c,e1s%setrsiale(sc1o0,0%ansp%2O0t,h0e%rsAgricultureTr25,011,0%Wa6s,t0e%ManCoInduufnstrsutrayctauring14,c0tionnd%En7e6rg,y9%Note:TheseindirectemissionsconsidertheemissionfactoroftheNationalElectricSystemandnottheindividualfactorsoftheminingcompaniesderivedfromsupplycontractswithrenewablesources.2.MininginChile33Anchoringthebrandtolong-termimpactcancontracting.WiththepandemicexposingweaknessesinstrengthenLTO.Minersfacenewexpectations,the“just-in-time”model,weexpecttoseeamixof“just-suchascontributingtolivabilityandprotectingin-case”and“just-in-time”supplystrategiesasminersculturalheritage.Long-standingchallenges,suchfindawaytobalancesupplychainresiliencewithcosts.asstrengtheningindigenoustrust,requireamoreconcertedeffort.OrganizationsmustgobeyondwhatTrend7:Workforceisrequiredbylawandmakearealcommitmenttopromotetruthandreconciliation.Purposefulbrandingandagreaterfocusonreskillingcanhelpovercomethetalentshortage.Ultimately,minersneedtoreframeLTOaroundlong-termvaluecreation,anchoringthebrandtothispositiveMiningandmetalscompaniesarefacingtheirbiggestimpact.talentshortageintheirhistoryfollowingamassivewaveofretirementsandresignations.ReplacingTrend5:Productivityandcoststheseworkersandfindingtalentwithcriticalskillswillrequirearadicalrethinkoftheindustry’sapproachtoChile’scopperproductioncost(237cUS$/lb)is16%attracting,retainingandnurturingtalent.Withyoungerhigherthanaverageglobalcost(204cUS$/lb).AsROMworkersdeterredbythemining’simage,companiesgradesdecreasedfrom1.1in2003to0.6in2021,mustdoubledownoneffortstobuildapurposefulcopperproductivityhasconstantlydecreasedfrom49brandthatalignswithtoday’svalues.to20tons/employeewhileaveragesalary(inUS$)hasincreased255%andenergycost(inUS$)hasmorethanHistoricalhighercomparativesalaries,alliedtothedoubled.recentinitiativesoftheChileanminingsectorongenderequityandlifebalance,arestrongargumentstoattractAccordingtotheWorldBank,in2022,Chilefacedtalent,especiallyfortheyoungones.Digitalinnovationitshighestannualinflationratesince2008drivenby(discussedontrend9)andESGrelatedmattersstrongdemandpressures,commoditypriceincreases,discussedinthefirsttrendsarealsovaluabletools.supplydisruptions,andthepesodepreciation,increasingproductioncostsevenmore.However,theWoman’sparticipationinChileanminingsectorhasChileancentralbankisforeseeingadecreaseininflationconstantlyincreasedsince2014from7.5%to11.8%inby2023,returningtothe3%goalfor2024,theaverage2020duetoaconsciouseffortofminingcompaniesinflationrateofthelast30years.toimprovegenderequity.AgoodexampleisBHPthatreached32%womenparticipationonitspayrollinWithcostslikelytoremainhigh,moreinnovative20228,withanevenhighershareinleadershiproles.approachestomanagingvariabilityareneeded.AMSA,reached17%in2022and25%inleadershipImprovedmodelinganddigitaltwinsforassetroles9.Codelcocurrentlyhas12%,butaimstoachievemanagementcanunlockrealproductivitygains.35%ofwomenparticipationby202710.Trend6:SupplychainMiningsectorinChilehassalariesthat,onaverage,morethandoublethenationalaverage.IthasthelowestRecentdisruptioncreatesnewurgencytoaccelerateaccidentrateinChile(62%lowerthanaverage)andasupplychaintransformation.constantdecreasingtrendinmortalityreaching0.02fatalitiespermillionhoursworked,an83%reductionSupplychaindisruptionisnewtotherankingsamidsince2010.recentpressures,butitisanissuethatminingandmetalscompanieshavelonggrappledwith.TheChileangovernmentispromotingagradualOrganizationsareintensifyingeffortstotransformreductioninweeklyworkedhoursfromthecurrent45supplychains,tobetterweathercurrentvolatilityandto40by2027,butthepublicminingcompanyCodelcofindnewopportunitiestoboostefficiency,resiliencehasalreadycommittedtoreducingthemevenfaster,11andtransparency.whileothercompaniesareproposingalowerreductioncompensatedwithmorevacationdays12.Minersareexploringmoreinnovative,sophisticatedapproachestomitigatesupplychainrisk,includingstrongerrelationshipswithsuppliersandcollaborative34Chile’sminingandmetalsinvestmentguide2023Trend8:Capitaloperatingforopenpitandundergroundequipment,placingChileinaprominentpositionintermsoftheuseChangingdemandandinvestorexpectationsareshiftingofthistechnology.Fleetelectrificationplans,discussedcapitalallocationstrategies.Minersaremaintainingintrend3,mightaccelerateAHSadoptioninChile.theirfocusoncapitaldisciplinebutarealsolookingatDigitalinnovationisalsolinkedtotrend7,workforce,howtoinvestingrowthandtransformation.Theenergysincenewwaysofminingwillrequirenewskillsandtransitionischangingdemandandcompaniesareimprovingworkersconditionswillhelptheminingsectorrespondingbydivestingcoalassetsandinvestingmoretoattracttalent.in“future-facing”commodities,suchascopperandlithium,makingChileaperfectplacetoland.Trend10:NewbusinessmodelsSuchdecisionsarenotonlymotivatedbyadesiretoWithincreasingdemandforcertaincommoditiesandadapttoanevolvingmarket,butalsotomeetinvestorthegrowingimportanceofsustainability,itistimeexpectationsaroundESGperformance.Organizations’fororganizationstorethinktheirbusinessmodels.accesstocapitalisincreasinglylinkedtotheirabilitytoWeseeminersanalyzingwhereoptimalvaluecanshowhowtheycreatevaluebeyondthebottomline.befoundandthendesigningtheirbusinessmodelstocaptureit.WhethercompaniesdecidetoreshapeTrend9:Digitalinnovationmodelstorationalize,growandtransform—orconsiderastrategiccombinationofallthree—thosethatactInvestmentindigitalinnovationleadstobetterandnowtofuture-prooftheirbusinesswillbestwithstandfasterdecisions.AccordingtoAltaLeycorporation,disruption,navigatechangingcommercialrelationshipsinChile,miningsuppliersaretheleadersindigitalandultimatelygaincompetitiveadvantage.maturity,themostadvancedintermsoforganizationalOnceagain,copperandlithiumplayakeyroleforchangeandrightbehindretailandtelecomintermsChile,whichshouldattractattentionofbatteryandofdigitaladoption.TheriseofremoteandintegratedBEVmanufactures,acquiringorpartneringwithlocallyoperationscentersandtheadoptionofautonomousoperatingminingcompanies.equipmentareproofofthis.1.CochilcoIn2019,BHPlauncheditsCIO(IntegratedOperations2.IdemCenter,fromSpanish)operatingEscondidaand3.MineralCommoditySumaries2023,USGSSpencefromitscorporateofficeinSantiago.In2020,4.Whichcountriesproducethemostcopper?Dec2022,WEFCodelcostartedoperationsofitsCIO-E(strategic5.Visualizing25YearsofLithiumProduction,byCountry,Dec23,2022,Visualintegratedoperationscenter,fromSpanish)inSantiago,supportingoperationsofAndina’sCIO-T(tacticalCapitalistintegratedoperationscenter,fromSpanish)launched6.Cochilcoin2010,locatedinLosAndesandElTeniente’s7.ConsejoMineroCIO-Tlaunchedin2014,locatedinRancagua.Later8.ConsejoMineroin2022,MinistroHalesandChuquicamataCIO-T,9.AMSA:Haciafinesdeesteaño,1decada5personasquetrabajeenelgrupominerooriginallyplacedinSantiago,wasrelocatedtoDMH’scivicdistrict,notexactlyinthecitybutalsonotinsideserámujer,March2022,MineríaChilenatheindustrialarea,asaninitialphaseoftheNorth10.Codelco,Nov.2022DistrictCIOprogramtobeplacedinCalamacorporate11.Codelco,Jan2023office,integratingwiththeremainingnorthdivisions12.“Jornadalaboralenmineríachilena:Presentanpropuestaparareduccióna40horas”,ofCodelco:RadomiroTomicandGabrielaMistral.In2021,AngloAmericanlauncheditsLosBroncesAug.,2023,TiempoMineroiROC(IntelligentRemoteOperationCenter)placedin13.EYChileMiningCenterofExcellenceanalysis.Santiago.In2022,AMSACentinelalauncheditsGIO(IntegratedOperationsManagement,fromspanish)placedinAntofagastacity13.AMSA,AngloAmerican,Codelco,CollahuasiandTeckalreadyhaveAHS(autonomoushaulagesystems)trucks2.MininginChile3536Chile’sminingandmetalsinvestmentguide2023MiningLegislation37Chile’slegalminingframeworkisbasedonthreepillars:•TheConstitution(1980)•TheOrganicConstitutionalLawonMiningConcessions(1982)•TheMiningCode(1983)TheChileanConstitutiongrantstheStateabsoluteandexclusiveownershipofallmines,includingguanodeposits,mineralsands,saltmines,coalandhydrocarbondeposits,andotherfossilsubstances,exceptforsurfaceclays.MiningconcessionsandactivitiesareregulatedbytheOrganicConstitutionalLawonMiningConcessions(1982)andtheMiningCode.Anyprivatepartyorlegalentitycanapplyandobtaintherighttoexploreandexploitmostmineralsubstances.However,liquidorgaseoushydrocarbons,lithiumordepositsofanykindinmaritimewatersundernationaljurisdictionordepositsofanykindentirelyorpartlylocatedinareaslegallyclassifiedasimportanttonationalsecurityareexcludedfromminingconcessions.MiningconcessionsaregrantedtoapplicantsbyaJudicialRulinginaCivilCourtandareregisteredinthePublicMines’Registry.Thereareexplorationconcessionsandexploitationconcessions.Itisnotnecessarytoholdanexplorationconcessionpriortoanexploitationone.Miningconcessionsarelegallyconsideredpropertyandareindependentfrompropertyrightsoversurfacetenements.Theholderofexplorationorexploitationconcessionshasexclusiverightstoexploreandexploitmineralswithinthelimitsoftheconcession.Miningconcessionsaregrantedona“firstcome,firstserved”basis.TheownerofaminingconcessionisentitledbytheMiningCodetousewaterfoundwithinthelimitsoftheconcession,aslongasthewaterisrequiredforexplorationand/orexploitationprocesses.38Chile’sminingandmetalsinvestmentguide20233.1SecurityoftenureThelegalpropertyrightsofatitleholderofaminingOneofthemainsubstantialchangesincorporatedconcessionareprotectedbytheconstitutionalbythenewregulationsistheincorporationoftheguaranteeofprivatepropertyrights.requirementofstarttheworkandcontinueit.Accordingly,anddifferenttotheexistingregimeinExploitationconcessionsareindefinite,providedthatChile,totheextentthattheminingconcessionsaretheholderpaysanannualfee(patent).beingexploitedorworkableinduecourse,noincreaseintheamountsoftheminingpatentswouldapply(bothExplorationconcessionsaregrantedfortwoyears,explorationandexploitationpatents).renewableforanothertwoyearsandarealsosubjecttothepaymentofanannualfee(patent).Inthecaseoftheexplorationconcession,theamountofsuchpatentforeachfullhectarewillbeequivalentOnFebruary4,2022,theLaw21,420waspublished,tothreefiftieths(3/50)ofamonthlytaxunit(circaUSDestablishingseveralchangesimpactingthemining4.68)foreachyeartheconcessionisineffect.sector.Later,onJanuary26,2023,Law21,536postponedsucheffectsuntilJanuary1,2024.Inthecaseoftheexploitationconcession,theamountofthepatentforeachhectareconsistsofaprogressiveMostofthemodificationswererelatedtothescalethatismodifiedaccordingtothecourseoftheincorporationofnewrequirementsforthefilingofnewyears,whichismaintainedduringthefirstfiveyearsofsitereports;thechangeofcoordinatestothegeodetictheconcessionandincreasesdependingonthetotalreferencesystemforChile(alsoknownas“SIRGAS”);numberofyearsofeachconcession.newinformationobligationsforminingconcessionaires;anincreaseinthetermofexplorationconcessionsBasedoncurrentlegislativediscussions,andthepublicandtheeliminationoftheirextension,amongotherinformationavailableinthemedia,itisexpectedthatchanges.additionalchangeswouldcomeintoforcewithin2023regardingtheamountofminingpatents.However,itisimportanttoemphasizethatoneofthechangesthatwasalsopostponedcorrespondstotheMiningcompaniesthathavebeengrantedwiththeincreaseintheamountsofthepatentsforexploration11terstabilityrightsrecognizedbytheDL600inandexploitationconcessionscontemplatedintheChile,willbeprotectedfromanychangestotheminingMiningCode.Thismeansthatwiththeapprovalofthispatentsassoonastherequirementstoinvokethe11terregulation,thepatentpaymentwillnotincreaseasfromstabilityrightsarefulfilled.February4,2023,asforeseen,butasfromJanuary1,2024.AsofJanuary1,2024,theexplorationconcessionwilllast4years,withoutrenewal.Andtheexploitationconcessionwillremainindefinite.3.TaxRegulation393.23.4MineralandSizeofsurfacelandconcessionownershiprightsAlthoughtheStatehasownershipofallmineralExplorationrightsaregrantedforaminimumof100resources,thetitleholdersofminingconcessionshavehectaresandamaximumof5,000hectaresperownershipoftheextractedmineralresources.concession.Exploitationrightsareforaminimumof1hectareandamaximumof10perconcession,withtheChileanLawdifferentiatesbetweensurfacetenementspossibilityoffilingnumerousconcessionapplicationsatandthenaturalresourcesbelowthesurface.Itisoftenthesametime.thecasethatthetitleholdersofminingconcessions(whohavetherighttoexploreandmineundergroundresources)arenottheownersofthesurfaceland.Thereareclearadministrativeprocedurestogainaccesstoprivatelyownedlandtoavoidpotentialconflicts.Miningconcessionholdershavepreferredrightstorequestminingeasementstogainaccessoversurfaceland.Theeasementscaneitherbenegotiatedandagreed-uponwiththesurfacelandownerorgrantedbyCourtifnoagreementisreached.TheCourtsgranttheeasementandsetthecompensationamount.3.3RighttotransferminingrightsMiningrightscanbefreelytransferredbytheirprivatetitleholders.Thetransactionmustbeperformedthroughapublicdeedandregisteredwiththepublicminingregister.40Chile’sminingandmetalsinvestmentguide20233.53.6GovernmentEnvironmentalpoliciesonthematterssaleofmineralproductsInrecentyears,Chilehasenactedanewregimeofenvironmentallaws,whichestablishesthemainThesaleofmineralproductsisunrestricted,bothenvironmentalguidelinesandprinciplesintheCountry.domesticallyandabroad.MineoperatorsarenotunderTheselawsandrelatedregulationssignificantlyanyobligationtosatisfytheinternalmarketbeforeincreasedthelevelofenvironmentalregulationandexportingminerals,noraretheyobligatedtosellthemestablishedseveralenvironmentalmanagementatofficialpricesorterms.standards,inadditiontoothersectorialregulationsandguidelinesrelatedtoenvironmentalaspectssuchasAllproducersandtradingcompaniesexportingcopperemissionofparticulatematterintheair,waterquality,fromChile,withoutdistinguishingbetweenpubliclyheldexploration,dischargeoftailingsandwater,sanitarianorprivatecompanies,arerequiredbylawtoprovideissues,nativeforestregulations,odorcontamination,informationinrespecttothecontractsandpricesofetc.copperanditsderivativesinChile.ThisinformationmustbeprovidedtotheComisiónChilenadelCobre(Cochilco)anddulyupdatedifthetermsofsaidagreementschangeintheduecourseoftheyear.3.TaxRegulation413.7benefitoftherespectiveconcession.TheserightsareinseparablefromtheminingconcessionandwillexpireWaterrightswithit.WaterisconsideredanationalgoodforpublicuseandInaddition,theMiningCodeestablishesthattheuseitsusagerightsaregrantedtoprivateindividualsbyofotherwatersnecessaryfortheexplorationandtheGeneralDirectorateofWater(DirecciónGeneraldeexploitationofmineralsubstances,willbesubjecttotheAguasorDGAinSpanish),fortitleholderstouse,enjoyprovisionsoftheWaterCodeandotherapplicableLaws,andhaveaccesstoconsumptiveandnon-consumptivebeingthegeneralregulationsapplicabletominingwaterrights,accordingtothecurrentlegalframework.companieswithoutaspecialtenure.TheseregulationsaremainlygovernedintheChileanWaterCode,whichgrantspermanentandtransferablewaterrightstoindividualstoachieveanefficientdistributionofwaterthroughoutthecountry.Waterrightscanbeusedforanyactivitytherightholderdetermines.TheDGAisthepublicagencywiththeoverallresponsibilityforuseplanning,protectionanddevelopmentofwaterresourcesandbasins.Amongotherthings,DGAisresponsibleforgrantingnewwaterrights(consumptiveandnon-consumptive)forthesupervisionofwaterusersandtheapprovalofallmajorhydraulicworks.After11yearsofdiscussioninCongress,awiderreformwasapprovedthroughLawN°21,425totheChileanWaterCode,enactedinChileonApril6th,2022.Withinthedifferentmodificationsincorporatedbythisnewregulation,itispossibletohighlightthefollowing:(a)reaffirmsthatwaterrightsarerealrights;(b)timelimitationforwaterrightsgrantedpostReform(30years);(c)conceptof“publicinterest”asarequirementforthegrantingofnewwaterrights;(d)allwaterrightsarenowsubjecttoterminationbyeffectivelackofuse;(e)priorityorpreferenceforwateruseforhumanconsumptionorpublichealth;(f)creationofnon-extractivewaterrightsforenvironmentalconservationorsustainablepurposes(whichwouldnotbesubjecttothenon-usetaxesframeworks);amongothers.Fromaminingperspective,theMiningCodestatesthattheminingconcessionholderhas,bythesoleoperationoftheLaw,therighttousethewatersfoundintheworkoftheconcession,totheextentthatsuchwatersarenecessaryfortheexploration,exploitation,and42Chile’sminingandmetalsinvestmentguide20233.8LithiumregulationsinChileChilehasoneofthelargestlithiumreservesintheworldexploitationbetweentheregionalauthoritiesanddirect(57%).From1979lithiumhasbeenconstitutionallypaymentstocommunities;(d)preferentialsalepriceofdeclaredasof“NationalInterest”andanon-lithiumforlocalproducersinrespecttothe25%oftheconcessionablemineralreservedprimarilyfortheState.totalexploitation;(e)directcontributionforR&DandThisnon-metallicmineralissubjecttoanexceptionalpublicprogramstopromoteproductivityinthecountry;regulation,differentfromtheoneapplicabletomostand(f)reportingobligationsregardingoperationalandmineralsinChile.financialinformationofthecompanies.LithiumregulationsarecontainedintheOrganicDuetothehighpriceoflithiumin2022,bothConstitutionalLawonMiningConcessions(1982),thecompanies,SQMandAlbemarle,paidroyaltiestotheDecreeLaw2,886andintheChileanMiningCodeStateofChileforanamountthatdoubledthetaxespaid(1983).byCodelco(thestate-ownedChileancoppercompany)totheTreasury.Asperthecurrentregulations,lithiumcanbeexploredorexploitedonlybytheState,directlyorthroughitsInordertodevelopChile’spotentialinlithiumandcompanies(i.e.,Codelco,Enami,CORFO,etc.)orbytopromotepublic-privatepartnershipsbetweentheciviliansornon-governmentalcompaniesintwocases:governmentoritscompanies(Codelco,CorfoandEnami)withprivatecompaniesthathavethecapabilitiesa)WhenanadministrativeconcessionoraSpecialtoexploreandexploitlithium,analternativeiscurrentlyOperationContract(“CEOL”foritsacronyminbeingconductedbyCORFOthatconsistsonatenderSpanish)hasbeengranted,subjecttorequirementstocallcompanies(whetherChileanorforeign)toandconditionstobedefined,ineachcase,inapromoteprivateinvestmentinlithiumprojectsandSupremeDecreeissuedbythePresidentofChile;or,developtheproductioninChileforlithiumvalue-addedproducts,generatequaliﬁedjobsandlocalvalue,withb)Whentheminingconcessionovertheareawheretheenvironmentalresponsibility,inexchangeforlithiumlithiumislocatedwasgrantedpriorto1979(periodsupplyatafavorableprice.ThetermforthetenderinwhichthelegalframeworkapplicabletolithiumistheperiodbetweenAugust31st,2022andAugustchangedinChile).31st,2023-subjecttolithiumproductavailability.AsideofthefactthatthepropertyisreservedfortheThetenderwasenvisagedinthecontextofaspecialStateofChile,currentlyCORFO(ChileanEconomicagreementbetweenCORFOandSQMSalarS.A.forDevelopmentAgency)istheagentinChilethathasthelithiumproductionatSalardeAtacamaandensurestheexclusiverighttoexploitthelithiumreservesexistinginsupplyoflithiumatafavorablepriceuntil2030.theterritory.AlloftheabovegoesalongsidewiththeproposalCurrently,twoprivatecompaniesareexploitinglithiumoftheGovernmentinChile,throughtheMinistryofinChileintheSalarofAtacama,SQMandAlbemarle.Mining,toincorporateapublic-privatepartnershipinTheseentitiesnegotiatedtheirmostrecentCEOLsintheexplorationandexploitationoflithiumthroughthe2016(Albemarle)and2018(SQM)andwhichmainincorporationofastate-ownedcompanyspecificallyelementsincludethefollowing:(a)obligationstodedicatedtotheexploitationoflithiumwithajoint-payavariableandprogressiveroyaltylinkedtotheventurewithprivatecompanies.TheGovernmenthaslithium’ssaleprice;(b)obligationfortheconstructionnotyetannouncedthedetailsofhowthisisexpectedtoofhighinvestmentplantsundercertainandspecificbeimplemented.characteristics;(c)equitablydistributionofincomefrom3.TaxRegulation4344Chile’sminingandmetalsinvestmentguide2023GeneralTaxSystem45Eventhoughtherearecertainspecificconsiderationsandrules(describedandnotedthroughoutthisdocument),miningactivityinChileissubjecttothegeneraltaxregimeapplicabletotaxpayersingeneral.However,miningcompaniesaresubjecttoaSpecificTaxonMiningOperations(asdescribedoverbelowsections)andotherspecificrulesconnectedtothecharacteristicsoftheminingindustry.Chilehasnospecialincentivesforspecificindustriesotherthanthoseavailableforalltaxpayers.However,miningcompanies,suchasexportersandfixed-assetinvestors,canapplyforspecialValueAddedTax(VAT)exemptions,earlyrecoverysystemsandbenefitfromtheaccelerateddepreciationmethod,whichcouldresultrelevantinannualtaxableincomedetermination.InChile,taxesaresetforthbylawandareregularlyimposedatnationallevel.Therearenoprovincial,regionalormunicipaltaxes,despitecertainexceptions.ThemostimportanttaxessetforthintheChileantaxsystemaretheIncomeTaxandtheValueAddedTax(VAT).46Chile’sminingandmetalsinvestmentguide20234.14.1.2CapitalGainsRegimeIncomeTaxInthecaseofcorporateincometaxpayers,capitalgainsareconsideredasanordinaryincomeandare4.1.1CorporateIncomeTax(CIT)RegimethereforesubjecttothecorrespondingCITrate(27%or25%dependingonthetaxpayerasnotedinthesectionIngeneral,aCITrateof27%isappliedtoannualnetabove)onannualaccruedbasis.incomeearned.UnderthePartiallyIntegratedRegime,shareholders,owners,orpartnersofentitiessubjectInthecaseofChileanresidentindividuals,asarule,toCITwillbetaxedonlyoneffectivedistributionofGITrates(i.e.,progressiveratesbetween0%and40%)dividendsorprofits.Suchshareholders,ownersorareappliedonanaccrualbasis.However,therearepartnerswillbesubjecttothefinaltaxes,i.e.,theexemptionrulesapplicabletocapitalgainsgeneratedAdditionalTax(AT),awithholdingtaxat35%rate,inbythedisposalofcertainassets(shares,socialrights,caseofforeignresidents;ortheGlobalIncomeTaxrealestates,amongothers)undercertainandspecific(GIT)atratesbetween0%and40%,incaseofChileanconditions.residentindividuals.Further,therearealsoexemptionalprovisionsThedistributionofdividendsorprofitsamongCITapplicabletocertainassetsundercapitalmarketrules.taxpayersisnotsubjecttoincrementalCIT.TheCITConsideringthis,thesaleofpubliclytradedsharesisregimeallowsshareholders,ownersandpartnerssubjecttoasole10%taxrate,fulfillingstrictconditions.subjecttoATorGITtousetheCITpaidbytheentitydistributingsuchdividendsorprofitsascreditintheATFinally,foreignresidentswhoobtainacapitalgainfromorGITdetermination.Ingeneral,65%oftheCITpaidbydisposalofChileanassets,whetherdirectorindirectly,theentitydistributingdividendsorprofitsmaybeusedareregularlysubjecttothe35%ATrate.CertaintaxasacredittooffsettheamountofAtorGITpayable.Astreatiesmayreducethisrate.aresult,thehigheroverallincometaxburdenwouldbe44.45%.4.1.3ExpensesInthecaseofforeignshareholders,ownersorpartners4.1.3.1GeneralConsiderationsresidentinacountrythathasadoubletaxationtreatyinforcewithChile(DTTCountry),100%oftheCITCITmustbedeclaredandpaidannuallybymeansofanpaidoverthedistributeddividendsorprofitswouldbeAnnualIncomeTaxReturntobefiledinAprileveryyear.availableasCITcreditif:(i)qualifiesasataxresidentinaDTTCountryandisabletoobtainataxresidenceTheAnnualTaxableIncomeorNetTaxableIncomecertificatefromthetaxauthorities;(ii)isnotconsidered(NTI)isdeterminedbythetaxpayer,basedonincomeafiscallytransparententity;and(iii)isthebeneficialobtainedinthecalendaryearpriortotheAnnualownerofthedividends.IncomeTaxReturn.However,underSMERegime,theCITrateis25%,whichNTIsubjecttoCITisdeterminedbasedonearnings,appliesinthecaseofsmallandmediumsizeentities,tocostsandexpensesrecordedinthefinancialstatementstheextenttheyfulfillstrictrequirements.Thesame25%ofthetaxpayerpreparedbyDecember31steachrateappliestonon-profitentities(e.g.,Foundations,year,plusseveraladjustmentsthatmustbemadetoUnions,etc.)suchincomeandexpenses/deductions,todeterminethebaseoverwhichtheCITwillbeapplied.These4.GeneralTaxSystem47adjustmentsareestablishedintheChileanIncomeTaxAccelerateddepreciationcanonlybeusedtoLaw(CITL).computethetaxableincomeforCITpurposes.Theexcessdepreciation,correspondingtothedifferenceThemainadjustmentstothefinancialresultsobtainedbetweentheaccelerateddepreciationallowancebyagiventaxpayerarethoseappliedtocertainandanotionalnormaldepreciationallowance,isrecognitionofincomefromsubsidiaries,depreciation,recapturedforpurposesofGITorATappliedtoamortization,provisions,recognitionofcertaindividendsorprofitspaidtoshareholders,owners,orpaymentstoforeignrelatedparties(whichcanbepartners.deductedonacashbasisandtotheextentthatthecorrespondingAThasbeendeclaredandpaid),amongstFixedassetsthatbecomeunusablebeforetheendofothers.Thosepositive/negativeadjustmentscouldtheirexpectedusefullifemaybedepreciatedtwiceasresultintemporaryorpermanentdifferencesbetweenfastasoriginallycontemplatedundertheirapplicablefinancialandincometaxresults.regime.Incaseofexpensededuction,CITLmandatestob)Taxlosses:Lossesderivedfromthecommercialrecognizethosethat:(i)havetheabilityorarecapableactivitiesoftheChileanentityintherelevanttogenerateincome,inthesameorfutureyears;(ii)arecommercialyear,maybedeductedasexpensefortaxconnectedtotheinterest,developmentormaintenancepurposes.ofthebusiness;(iii)havenotbeenpreviouslydeductedaspartofthedirectcostofgoodsorservicesrequiredAccumulatedtaxlosses,dulyadjustedbyinflation,toobtaintheincome;(iv)wereeffectivelypaidormaybecarriedforwardindefinitely.Ifthereisaindebted/owedwithinthecommercialyear,and(v)arequalifiedchangeofownership,theaccumulatedtaxdulyprovedtothetaxauthorities.lossesmaynotbedeductedfromincomegeneratedaftertheownershipchange.NoqualifiedchangeofSomeexpensesarealsosubjecttoasetofspecificownershipoccursbetweenentitiesbelongingtotherequirementsthatmustbefulfilled,asshowninthesameeconomicgroup.TheChileanIRSandSupremefollowingsection.CourtrulingshavealsoestablishedthattaxlossauditfacultiestobeexercisedbytheChileanIRSarenot4.1.3.2ParticularRequirementssubjecttoanystatuteoflimitation.TheChileanITLestablishesalistofspecialexpensesc)Interests:Interestsaredeductible,totheextentthatthatcanbedeductedassuch.ThemostrelevantaretheconditionssetforthintheCITLaremet.Relatedexplainedbelow:partyinterestisonlydeductibleoncashbasisandtotheextentthecorrespondingwithholdingtaxhasa)Depreciation:AyearlydepreciationquotafortheusebeendeclaredandpaidtotheChileanTreasury.oftangiblefixedassetsisallowedasadeductibleexpense.Thedepreciationpercentageisdeterminedd)CorporateSocialResponsibility:Disbursementsbyapplyingastraightlinemethodontheusefullifeincurredduetoenvironmentalrequirementsoftheassetswithoutconsideringaresidualvaluearedeductible.Likewise,theCITLestablishesanddeterminedbytheChileantaxofficeforeachtwoadditionalcasesthatincludesituationsofcategoryofassets.Oncefullydepreciated,assetsaredisbursementsassociatedtothesociallicensetorecordedatanominalvalueofCLP1.operate(goingbeyondenvironmentalmandatoryrequirements):AccordingtotheCITL,taxpayersareentitledtooptforanaccelerateddepreciationregime,understood•Thoseincurredbytheholderbyvirtueofastheestablishmentofausefullifeforneworenvironmentalcommitmentsincludedintheimportedfixedassets,equivalenttoonethird(1/3)ofstudyorintheenvironmentalimpactassessment,theusefullifeestablishedby“ServiciodeImpuestosregardingtoaprojectoractivitythathasormustInternos”,theChileanIRS.have,inagreementwiththecurrentenvironmentallegislation,aresolutionissuedbythecompetentauthorityapprovingsuchprojectoractivity.48Chile’sminingandmetalsinvestmentguide2023•Thosemadeforthebenefitofthecommunity,and•Infrastructureandconstructionwhichinvolveabenefitofapermanentnature,suchasexpensesassociatedwiththeconstructionTheconstructionofthemine,theprocessingplant,ofworksorinfrastructureforcommunityuse,andtheassociatedinfrastructuresuchaswatertheirequipmentorimprovement,thefinancingofsystems,concentratepipelinesandportsarethespecificeducationalorculturalprojectsandothermainexpendituresofthisstage.Thelatterwillcontributionsofasimilarnature.includemechanismsfortheprotectionofthearea’sbiodiversityandthemitigationoftheimpactoftheInbothcases,expenseswouldbedeductedtotheprojectontheenvironment.extentthat:(i)arepaidtononrelatedparties;(ii)havebeenagreedinacontractsignedwithastateMineinfrastructuredisbursementsshouldbeadministrationagencyorauthority;and(iii)tothetreatedasaninvestmentinfixedassetssubjecttoextentthelimitsincorporatedintheCITLarenotdepreciationaccordingtotherulescontainedintheexceeded.AnydisbursementsthatgobeyondtheseCITL,evenifexpendedbeforetheoperation.limitscannotbedeductedfortaxpurposes.Otherinfrastructuredisbursementsincurredinthird-Otherexpenditureslikeroyalties,scientificandpartypropertiesandaccordingtothetaxauthoritytechnologicalresearch,uncollectibleaccounts,instructions,shallbeconsideredincertaincasesasremunerations,andbenefitsgrantedtoemployees,organizationandstart-upexpenses,whichmaybeamongothers,alsohaveaspecialtreatmentfortaxamortizedinuptosixyearsstartingfromthedatepurposesthatmustbeconsidered.expenseswereincurredorwhentheminingcompanyearnsincomefromitsmainactivity,iflater.4.1.3.3MiningspecificexpendituresSpecialconsiderationshouldbegiventothetaxMiningcompaniesshouldfollowthesamegeneralandtreatmentapplicabletoEngineering,Procurement,specificrequirementstodeductexpensesfromataxandConstruction(EPC)andEngineering,perspective,howeveralistofspecialsituationscanProcurement,ConstructionandManagement(EPCM)occurforminingcompaniesdependingoneachstagecontracts,aswellastothedeductionofinterestsofthemininglifecycle.Themostrelevantfortheminingassociatedtothefinancingoftheinvestment.industrywillbeexplainedbelow.•Operation:ExploitationandExpansion•ProspectingandExplorationDuringthisstage,theprojectstartsoperatingandOneoftheobjectivesofthesestagesistoidentifygeneratingincomeassociatedtotheextraction,largetractsoflandwithminingpotential.Theaimisprocessingandcommercializationoftheminingalsotodefineandcharacterizethedeposit’spotentialproducts.byconductingstudiesofmineralresourcesandtheirquality.MachineryisacquiredandworkersandFromthisstageonwards,miningoperationsbeginsuppliersarehired.generatingtaxableincome.Thus,miningcompaniesstartdeterminingandpayingCITandSpecificTaxonAsarule,duringthisstageonlymininglicenseMiningIndustry(dependingontheoperatingprofitfeesandsometimeslandtaxesarepaid.Thesemarginofthecompany).disbursementsaredeductedfromaCITperspective.ExploitationdisbursementsassociatedtotheDisbursementsincurredduringthisphasemustpreparationoftheunitsorsectorthatwillbealwaysbeconsideredasorganizationandstartupexploited,alongsidethedirectcostsofexploitation,expense,whichmaybeamortizedinuptosixyears,suchasthedirectlaborspendings,rawmaterialsstartingfromthedateexpenseswereincurredorandsuppliesdirectlyrelatedtothegoods,shallbewhentheminingcompanyearnsincomefromitsconsideredaspartofthecostsofthemineralsundermainactivity,iflater.4.GeneralTaxSystem49thetermsregulatedintheCITL.Therefore,thecostwiththeclosureactivities.Therefore,anychangesinofthemineralswillhaveanimpactintheresultsoftheeffectivedisbursementsincurredorintheusefulthecompanyuponitssaleorexport.lifeoftheminecouldaffectandimpactthetaxresultsfinallydetermined.Regardingtopre-strippingcosts,theyshallbetreatedasorganizationandstart-upexpenses,whichThislawalsoallowstherecoveryoftheVATcreditmaybeamortizedinuptosixyearsstartingfromarisingfromacquiringgoodsandprovidingservicesthedateexpenseswereincurredorwhentheminingrelatedtotheclosureofthemine.companyearnsincomefromitsmainactivity,iflater.4.1.3.3.2DepletionofminingpropertiesExpansionprojectsmayarisealongsidetheexploitationphaseaimingtoexpandthemine’sIngeneralterms,theCITLstatesthatthecostoftheproductioncapacityandsometimesitsusefullife.extractedmineralmustincludepartoftheacquisitionExpendituresthatimproveinfrastructure,productioncostoftheminingpropertyinanamountequivalenttocapacityortheusefullifeoftheassets,couldbeseentheproportionthattheextractedmineralrepresentsinasinvestmentinfixedassetssubjecttodepreciationthetotalamountofmineralthathasbeentechnicallytaxrules.estimatedforsuchminingproperty.Inotherwords,apercentageoftheacquisitioncostoftheminingMaintenancedisbursementsshallbeconsideredaspropertyisincludedinthecostoftheextractedmineral.expensesoftheyearinwhichsuchdisbursementsoccurredandfollowingthegeneralrequirementsForthesepurposes,theacquisitioncostincludesforitsdeduction,fromataxperspective.Repairs,ifthepricepaidfortheminingproperty(orgroupoftheyextendthelifeoftherespectiveasset,shallbepropertiesthatconstituteasingleoredeposit)andtheconsideredasaninvestmentinfixedassetssubjecttointerestontheunpaidbalanceorloansassociatedwithdepreciationtaxrules.theacquisitionaccruedorpaiduntilexploitationofthemineisbroughtintooperation.4.1.3.3.1Closureofthemine4.1.4Withholdingtaxes(WHT)onpaymentsThisstageinvolvesmitigationmeasures,complianceabroadwithenvironmentalcommitments,theremovalofmachineryandinfrastructure,aswellastheAsageneralrule,crossborderpaymentsmadefromrehabilitationofthesiteinaccordancewithplansChilearesubjectto35%WHTrate,unlessisotherwiseapprovedbytheChileanminingauthorities.providedbytheCITLorDTTprovisions.Accordingly,theminingprojectstopsgeneratingItisrelevanttoconsiderthatpaymentsmadeuponincomeandfocusesoncomplyingwitharegulatedinterest,royalties,andservicestorelatedpartiescanprocessofmineclosure,thecostofwhichhasbeenonlybedeductedbytheChileantaxpayeriftheywerepreviouslyprovisionedduringthemine’slifeundertheeffectivelypaidandprovidedtheapplicableWHTisdulytermsofLaw20,551.declaredandpaid.AccordingtoLaw20,551,theamountthathasbeen4.1.4.1Dividendsguaranteedbeforetheminingauthoritiesfortheclosureplanoftheminingsite,couldbedeductedforIngeneral,a35%taxrateappliesoverthedistributiontaxpurposeswithinthelastthirdoflifeoftheminingofdividendsorprofitstoforeignshareholders,owners,project.orpartnersofChileanCITtaxpayerentities(AT).Thisisdifferenttothegeneraltaxdeductibilityrules,Asexplainedundersection(4.1.1.above),ingeneral,sinceLaw20,551authorizesthedeductionofa65%oftheCITpaidbytheentitydistributingdividendsrepresentativeamountofdisbursementsthattheorprofitsmaybeusedasacredittooffsettheamountminingcompanywillmakeinthefuture,inconnection50Chile’sminingandmetalsinvestmentguide2023ofpayableAT.Asaresult,totaltaxburdenwouldbe44.45%.Inturn,foreignshareholders,owners,orpartnersresidentinaDTTCountrymayclaimascredit100%oftheCITpaidoverthedistributeddividendsorprofits,totheextentthat:(i)qualifiesasataxresidentinaDTTcountryandisabletoobtainataxresidencecertificatefromtheTaxAuthorities;(ii)isnotconsideredafiscallytransparententity;and(iii)isthebeneficialownerofthedividends.4.1.4.2InterestsIngeneral,interestpaidabroadaresubjecttoa35%WHTonthegrossamount.However,theCITLestablishesareducedrateof4%oninterestpaymentswherethecreditor(amongotherspecificcases)isaforeignbankorfinancialinstitution.Likewise,reducedtaxratesmayapplyincaseofinterestspaidtoDTTCountryresidents.Inthecaseofinterestpaidtoforeignrelatedparties,thincapitalizationrulesareapplicable.Undersuch,interestandotherdisbursementspaidabroadatreducedtaxrates(4%orasestablishedbyaDTT),willbesubjecttoa35%penaltytax,incasetheChileancompanybreachestheexcessindebtednessratio(3:1).Reducedwithholdingtaxpaidmaybedeductedfromthe35%penaltytax.Alldebtandliabilitiesshallbeconsideredforcomputingthedebtfigure.Thisincludesforeignandlocaldebtaswellasrelatedandthird-partydebt.Onlyshort-termdebt(i.e.,<90days)withthird-partyisexcludedfromthedebtcomputation.The3:1ratioshallbemeasuredattheendofeveryyearinwhichinterestispaid.ChileanITLlistsseveralcaseswherearelationshipexists,startingfromthemostobviouscases(i.e.,whenbothpartiesarepartofthesamebusinessgrouporwhenoneofthemhasanownershipinterestintheother)tomoresophisticateddeemedrelationshiprules.4.1.4.3RoyaltiesRoyaltiesaregenerallysubjecttoWHTat30%rate.Suchrateisreducedto15%incaseofuse,benefit,orexploitationofsoftware.However,standardsoftwareinwhichtherightstransferredarelimitedtothosenecessarytoallowtheuseofsuchsoftware,but4.GeneralTaxSystem51notitscommercialexploitationoritsreproductionaffected;primaryactivitiesareexemptingeneral(thoseormodification,areexemptfromWHT.IncaseofareexpresslydefinedbytheLaw).paymentstoentitieslocatedinpreferentialtaxregimejurisdictions,theWHTturnsinto30%.UndercertainTherateisappliedinrangesbetween0.25%and0.5%DTTs,themaximumrateforroyaltiesis10%or15%.overthecompany’sTaxEquity(company’sassetsattaxvaluelessliabilitiesattaxvalue).SuchTaxEquity4.1.4.4TechnicalorengineeringworkorprofessionalisalsoadjustedbydeductingallinvestmentsinotherservicescompaniesthatpayMunicipalTax.TechnicalorengineeringworkorprofessionalservicesTheamountofMunicipalTaxrangeisbetween1UTMaresubjecttoa15%WHTrate.Incaseofpaymentsto(circaUSD77)and8,000UTM(circaUSDk$617)perentitieslocatedinpreferentialtaxregimejurisdictionsyear.MunicipalTaxisusuallypaidintwoinstallments,theWHTturnsinto20%.ReducedratesmayapplyonepayableduringJulyandtheotherduringJanuary.underDTTprovisions.Miningcompanies(andotherentitiesdeveloping4.1.4.5Otherservicesprimaryactivities)areliablefortheMunicipalTaxoncethemineralstartstobesold.Thegeneralruleisthatservicesrenderedabroadaresubjecttoa35%WHTrate.UndercertainDTT,services4.1.7PropertyTaxareusuallycoveredbyArticleNo.7andthusconsideredBusinessProfits,exemptfromWTH.UnderLaw17,235,aPropertyTax,ataraterangingfrom1%to1.4%onyearlybasis,isappliedtorealestate4.1.5StampTax(ST)property.Theratetobeimposeddependsontherealestate’squalificationasagriculturalornonagricultural.Ingeneralterms,alldocumentsevidencingmonetaryThisrateiscalculatedonthefiscalvalueoftherealcreditoperationsaresubjecttoSTatthetimeofitsestate.issuance.Monetarycreditoperationsconsistinthedeliveryorcommitmenttodeliveranamountofcash,ThePropertyTaxLawprovidesthefollowingsurtaxes:andthecommitmentbytherecipienttoreimburseitatadifferenttime.Foreignmonetarycreditoperations,•Globalsurtax:Applicableoverthesumoffiscalevenifthereisnodocument,aresubjecttoST.valuesofalltherealestatesownedbythesametaxpayerandcorrespondtoprogressiveratesSTisleviedontheprincipalamountestablishedintherangingbetween0%(tooverallfiscalvaluelowerthancorrespondingdocuments.Theratesare:(i)0.066%USD616k)to0.425%(tooverallfiscalvalueequaloroftheprincipalforeachmonthorfractionthereofhigherthanUSD1.3m).betweentheissuanceoftheloananditsmaturity,cappedat0.8%;(ii)0.332%ontheprincipalincase•Nonagriculturalrealestatesurtax:Applicabletoofloansrepayableondemandorwithoutaspecificnonagriculturalrealestates,totheextentthattheymaturitydate.STispaidonceperloan,ingeneral.arelocatedinurbanterritoryandareundevelopedorabandonedorcorrespondtoballastwells.StampTaxisanallowedexpenseforCITpurposes.ChileanLawgrantscertaintaxpayerstheopportunityto4.1.6MunicipalTaxusethesumspaidonaccountofPropertyTaxascreditagainsttheCIT.IftheconditionssetforthbytheLawUnderLawDecree3,063theMunicipalTaxcorrespondstousethePropertyTaxascreditarenotmet,suchtaxtoanannualtaxtobepaidtotheMunicipalityofthemaybedeductedforincometaxpurposes.territoryinwhichacommercial-businessactivityisperformed.SecondaryandtertiaryactivitiesareOntheotherhand,therearebenefitsandexemptionsavailableforqualifiedtaxpayersorrealestate.52Chile’sminingandmetalsinvestmentguide20234.1.8ContributionforRegionalDevelopmentestateassets(excludingland),servicesregardlessoftheirrecurrence,importsandothertransactions,withaLaw21,210establishesaContributionfortheRegional19%rate.Development(CRD),whichhasarateof1%andisappliedontheacquisitionvalueofallthephysicalgoodsIncaseofservices,arecenttaxreform,inforcesinceofthefixedassetsinthepartthatexceedstheamountJanuary1st,2023,onwards,modifiedtheVATsystemofUSD10million.applicabletoservices,byincludingallkindofserviceswithinVATscope(unlessexpresslyexempt).ItappliestoCITtaxpayerswhoaretaxedbasedoneffectiveincome,determinedaccordingtofullTheVATleviedontheacquisitionofgoodsorservicesaccountingrecords,whomadeinvestmentsinprojects:andimportsgivestheacquirer/recipienttherightforVATcredit,aslongasthetaxpayerisengagedinthea)Thatcomprisetheacquisition,construction,orsaleofgoodortheprovisionofservicessubjecttoVAT.importationofphysicalgoodsofthefixedassetsforatotalvalueequaltoorgreaterthanUSD10million;VATcreditequalstheVATchargedintheinvoicesandsupportingacquisitionsofgoods,utilizationofservices,importorotheroperationssubjecttoVAT.b)Thatmustbesubmittedtotheenvironmentalimpactassessmentsystemaccordingtoarticle10oftheLawWhensaidtaxpayersellsgoodsorrendersservices19,300.subjecttoVAT,theVATsochargedbecomesaVATdebit,whichmaybeoffsetwiththecarried-forwardVATThecontributionisaccruedfromthefirstfiscalyearcredit.inwhichtheprojectgeneratesoperationalincome,providedthatthedefinitivereceptionofworkhasbeenAsperVATmethodology,theVATcreditsoffsettheVATobtainedbytherespectiveMunicipalWorksDirectorate,debits,beingthepositivedifference,theVATowed.IforifthereferredreceptionisnotapplicabletotheVATcreditsremainafteroffsettingtheVATdebits,thisproject,thattheSuperintendenceoftheEnvironmentbalancecouldbecarriedforwardindefinitely.hasbeeninformedbythemanagement.Ingeneral,exportationofgoodsperformedbyChileanTheCRDmustbedeclaredandpaidtotheChileantaxpayersareexemptfromVAT.However,exportersTreasury,inAprilofthefollowingyearoftheaccrualofarespeciallyallowedtorecoveranyVATpaidrelatedthecontribution,or,inupto5annualinstalmentsfromtotheirexportactivities.SpecificVATcreditrecoverythetimeofitsaccrual.mechanismsareavailable,preandposexports.4.1.9GeneralAnti-AvoidanceRules(GAAR)Inaddition,VATtaxpayersthatmaintainVATcreditforatleast2months,arisingfromtheacquisitionoffixedSubstanceoverformrulesiscurrentlyundereffect.assetsorservicesconsideredtobepartofthecostofTheserulesempowerthetaxauthoritytochallengesuchfixedassets,caneitherbeoffsetagainstanytaxtransactionsperformedunderabuseofjuridicalformsliabilityorrequestitscashrefund.orsimulationandtorequestpaymentoftherelevanttaxesthatwouldhaveapplied.GAARrulesdonot4.1.11SpecificTaxonFuelspreventtheIRSfromexercisingcriminalactions.Law18.502regulatesthespecifictaxonfuels.TherateThereisapresumptionofgoodfaithonbehalfofofthistaxcorrespondstoaBaseComponentplusataxpayersandthetaxauthoritymustprovetheirVariableComponent.arguments(burdenofproof),inTaxCourts.Thus,theBaseComponentofthetaxisestablishedin4.1.10ValueAddedTaxMonthlyTaxUnits,convertedtoUSDasfollows:Ingeneral,theVATisleviedupontherecurrentsale•Motorgasoline:USD470perm3ofmovableproperty,certainfixedassets,orevenreal•Dieseloil:USD115perm3•Compressednaturalgas:USD150per1,000m34.GeneralTaxSystem53•Liquefiedpetroleumgas:USD110perm3Toproceedwithanabatementproject,anapplicationmustbefiledwiththeMinistryoftheEnvironment.Inturn,theVariableComponentconsistsofaInaddition,toaccreditthereductionofemissions,mechanismintegratedbyspecificvariableratetaxestheprojectsmustbecertifiedbyanexternalauditorortaxcreditsthatwillincreaseordecreasetheBaseauthorizedbytheSuperintendencyoftheEnvironment.Componentand,therefore,theapplicablespecifictax.WithintheVariableComponentistheso-calledThistaxisaccruedannuallyandmustbepaidinChileanMechanismfortheStabilizationofFuelSalesPricespesosinAprilofeachyear.(MEPCO)thatseekstostabilizethefluctuationsinthevalueoffuel.InthecaseofPM,NOXandSO2emissions,thetaxwillbeequivalentto0.1pereachtonemittedbasedonThistaxisaccruedatthetimeofthefirstsaleoraformula,orthecorrespondingproportion,ofsuchimportationoftheproductsindicatedintheLawandpollutants,multipliedbytheamountresultingfromtheshallaffecttheproducerorimporterthereof.Producersapplicationofamathematicalformulathatincludesmustpaythistaxwithinthefirst10workingdaysthesocialcostofpollutionpercapitaconsideringthefollowingtheweekinwhichthetransfersweremade,amountofpopulationofthecorrespondingMunicipality.andimportersbeforethewithdrawalofthegoodsfromCustomsandasapriorconditionforthispurpose.Regardingthesesamepollutants,iftheestablishmentislocatedwithinaMunicipalitythatisalsopartofaAccordingtothecurrentrules,certainVATtaxpayerszonedeclaredas“saturatedzone”or“latentzone”andexporters(asthecaseofminingcompanies)mayduetoconcentrationofPM,NOxorSO2intheair,anrecoverupto100%ofthistax,totheextentthatitisadditionalfactorconsistingoftheairqualitycoefficientnotusedinvehiclesdestinedtotransitbyroad.willbeappliedtothetaxratepertonofpollutant.4.1.12GreenTaxonFixedSourcesInthecaseofCO2emissions,thetaxwillbeequivalenttoUSD5foreachtonofCO2emitted.However,thetaxAsofJanuary1st,2023,theGreenTaxonFixedonCO2emissionswillnotapplytoemittingsourcesthatSourceswillbeleviedonParticularMatter(PM),NOx,operatebasedonnon-conventionalrenewablemeansSO2andCO2emissionsintotheairproducedbyofgenerationwhoseprimaryenergysourceisbiomassestablishmentswhoseemittingsources,individuallyorenergy.collectivelyor,emit100ormoretonsofPMperyear,or25,000ormoretonsofCO2peryear.ExcludedfromInDecember2022,theMinistryofFinanceinChiletheapplicationofthetaxareemissionsassociatedwithannouncedapublicconsultationprocesstocollecthotwaterboilersusedinserviceslinkedexclusivelytoinformationthatwillbeusedforthepurposesofpersonnelandgeneratorswithapoweroflessthan500submittingataxreformbilltoCongressincorporatingkWt.newcorrectivetaxesandmakechangestothecurrentgreentaxonfixedsources.ThistaxreformbillisFromFebruary25th,2023,taxpayerssubjecttotheexpectedtobesubmittedbeforetheCongressinMarch-greentaxonfixedsources,mayoffsetallorpartofApril2023.theirtaxableemissionsforpurposesofdeterminingtheamountoftaxpayablethroughtheimplementationofprojectstoreduceemissionsofthesamepollutant(orcomparablyknownas“offsets”),subjecttosuchreductionsbeingadditional,measurable,ascertainableandpermanent.Itshouldbenotedthatthereductionprojectsoroffsettingmustbeadditionaltotheobligationsimposedbypreventionordecontaminationplans,emissionstandards,environmentalqualificationresolutionsoranyotherlegalobligation.54Chile’sminingandmetalsinvestmentguide20234.2County-by-Country(CbC)regulationshavebeeninforceTransferPricinginChilesince2017.4.2.1GeneralConsiderationsInaddition,CbC,MasterFileandLocalFileSwornStatementsmustbesubmittedtotheChileantaxofficeChileantransferpricing(TP)regulationsareinlineifcertainconditionsaremet.withtheOrganisationforEconomicCo-operationandDevelopment(OECD)TPguidelines.4.2.2MiningIndustryAcceptabletransfer-pricingmethodsincludetheMiningindustryhasbeentraditionallyoneofthemostfollowing:auditedindustriesinChilefortransferpricingmatters.Thetypeoftransactionsunderscrutinyareusuallysale•Comparableuncontrolledpriceorpurchaseofproductsthat,dependingonthecase,havepublicpricereferencesinthemarkets(national•Resalepriceorinternational);intercompanyservicesreceivedandfinancialintercompanytransactionslikeloansorsimilar•Cost-plusareusuallyauditedtoo.•Profit-splitForthatreason,manyplayersofthisindustryareveryinterestedinsigningAdvancePricingAgreements•Transactionalnetmargin(APAs)withthetaxadministration,togaincertaintyfortheirintercompanytransactions.TherearecurrentlyAnyothermethodmaybeusedifnoneoftheabovecansomeAPAssignedwithentitiesbelongingtothisbeappliedtothetransactionunderanalysis.Themostindustryanditisexpectedthattherewillbemanymoresuitablemethodshouldbeused,consideringthefactscasesinthenearfuture.andcircumstancesofeachrelated-partytransactionunderanalysis.Currently,ChileistheleadingcountryregardingsignedAPAswithintheSouthAmericanregion.TheTaxpayersmustfileannualswornstatementstaxadministration,aswelltheCustomsAgencyhaveidentifyingrelatedpartytransactionsandtransfer-specificteamsdedicatedtoAPAprocessesandMutualpricingmethodsandprovidingotherinformationAgreementProcedures(MAP).requestedbytheChileanIRSthroughitsregulations.Inaddition,taxpayersmustkeepallrelevantinformationsupportingcompliancewiththetransfer-pricingrules.4.GeneralTaxSystem554.3TaxessolelyappliedtotheminingindustryinChileNotwithstandingthegeneraltaxregulationsapplicable4.3.2.SpecificTaxonMiningOperationtoallbusinessactivitiesinChile,therearesomespecialtaxregulationsfortheminingindustryderivedfromitsTheSpecificTaxonMiningOperationisleviedonminingparticularcharacteristics.exploiters.Itisappliedovertheoperationalminingincomeofthetaxpayer.4.3.1MiningPatentsRatevariesdependingontheamountoftheannualAnannualfeeisrequiredtokeeptheminingpropertiessalesandtheminingoperationalmarginofthetaxpayer.ingoodstanding.Inthecasesofminesinoperation,theMiningPatentcorrespondstoatenthofamonthlya)Ifannualsalesarelessthantheequivalentof12,000taxunit(circaUSD7.87)pereachcompletehectarerefinedcoppertons:exempt.includedintheproperty.b)IfannualsalesaresuperiortotheequivalentofAsofJanuary1st,2024,inthecaseofexploration12,000butlessthantheequivalentof50,000concessions,theamountofsuchpatentforeachfullrefinedcoppertons:from0.5to4.5%;andhectarewillbeequivalenttothreefiftieths(3/50)ofamonthlytaxunit(circaUSD4.7)foreachyearthec)Ifannualsalesexceedtheequivalentof50,000concessionisgranted.refinedcoppertons:effectiveratevariesfrom5to14%dependingontheminingoperationalmargin.Inthecaseoftheexploitationconcession,theamountMiningoperationalmarginisdefinedastheratioofthepatentforeachhectareconsistsofaprogressiveofthenetoperatingminingincomedividedbythescalethatincreasesaccordingtothecourseoftheminingrevenues.yearsoftheconcession.Itstartswithfourthtenths(4/10)ofamonthlytaxunit,andgoesuptotwelve(12)Todeterminethetaxrate,itisimportanttoconsidermonthlytaxunit(circaUSD936).thatsalesmadebyrelatedentitiesareattributedtothetaxpayer.Thosepropertiesthathavebeguntheworkandcontinueit,orthathavenotbeguntoworkbuthaveTherefinedcoppertonvalueisinformedonayearlyreceivedanenvironmentallicense(“RCA”)orhavebasisbytheChileanCopperCommission.initiatedanenvironmentalimpactassessment,willbesubjecttoaspecificrateperfullhectareitcomprises.Thistaxmustbefiledandpaidannually,althoughprovisionalmonthlypaymentsapplicabletowardtheWhentheexploitationoftheminebegins,Miningannualtaxliabilitymustbemadeata0.3%rateoverPatentsarenotdeductiblefortaxpurposesbutcanbemonthlysalesoftheminingproduct.Theadvancetreatedasmonthlyprovisionaltaxpayments(i.e.,asapaymentratemaybeadjustedyeartoyeartoconsidercredit),andalsocanbeimputedagainstsomespecifictheactualannualtaxliability.taxobligations,providedthatsomelegalrequirementsaremet.Additionally,theSpecificTaxonMiningOperationisadeductibleexpenseforCITpurposes.56Chile’sminingandmetalsinvestmentguide2023ThenetoperationalminingincomeisdeterminedontheDuetothemodificationsintroducedbyLaw20,469inbasisofthenettaxableincomeofthecompanyforCITOctober2010,holdersofanystabilityregimereflectedpurposeswiththefollowingadjustments:aboveweregiventheoptiontowaivethatstabilityregimeandelectanewonethatwouldimplyahigherDeductionsspecifictaxratefor2010–12(ratesrangingfrom4%to9%)butwouldprovideforanextendedstabilityperiod•Revenuenotrelatedtothesaleofminingproductsofsixyearsunderthenewrates(5%to14%)fromthemomentthattheoriginalstabilityregimewouldhave•Depreciationquotaunderthenormaldepreciationbeenconsideredended.methodAccordingtopublicinformationavailableandgiventhe•Start–upexpensesquotaunderasix-yearrespectivestabilitytermsincludedintherespectiveamortizationmethodagreementsbetweenprivatecompaniesandtheStateofChile,upto70%oftheprivateminingproduction•Additionscompanieswilllosetheirstabilityregimesduring2023.•ExpensesandcostsassociatedwithrevenuenotDuetothemodificationsincludedbyLaw21,591ofrelatedtothesaleofminingproducts2023,theSpecificTaxonMiningOperationwillberepealedasofJanuary1,2024.•InterestsBasedonthesenewregulations,anewMiningRoyalty•Netoperatinglosseswillbeappliedtotheminingindustryfromthesamedate.FurtherdetailsofthisnewMiningRoyaltyare•Depreciationquotasundertheacceleratedincludedinsection4.3.3.depreciationmethod4.3.3Miningroyaltybill•Start-upexpensesamortizedinlessthansixyearsInaccordancewithLaw21,591,asfromJanuary1,•Paymentsmadefortherighttoexploitthemining2024,anewMiningRoyaltywillbeappliedtothepropertyownedbyathirdpartyandroyaltyorminingindustry.smelterrightspaidinconnectiontotheacquisitionoftheminingoperation.Inthisregard,Law21,591establishesthatminingexploitersshallbesubjecttoaminingroyaltythatHoldersofaForeignInvestmentContractasofwillhavetwocomponents,anad-valoremcomponentDecember1st,2004,protectedbyageneraltaxandalsoanoperatingmargincomponent,thatwillbestabilityand/orataxstabilityunderArticle11bisdeterminedbasedonthelevelofsalesandthemineralsoftheForeignInvestmentStatute(orDL600)wereexploited.notaffectedbythisspecificminingtaxwhenitwasintroducedin2006.•Ad-valoremcomponent.Anad-valoremrateof1%willbeapplicabletominingexploiterswhoseannualHowever,mostofthelargestminingcompaniesthathadtaxstabilityregimeschosetowaivethisrightandelectfortheArticle11andbecomesubjecttotheSpecialTaxonMiningActivityata4%ratefor12years.4.GeneralTaxSystem57salesofcopperarehigherthantheequivalentof50,000tonsoffinecopper.Thiscomponentwouldapply,only,totherevenuesassociatedtothesalesofcopperexcludingotherminerals.Wheninacommercialexercisethe“AdjustedMiningOperationalTaxableIncome”(RIOMA)isnegative,thead-valoremcomponenttobepaidshallcorrespondtothepositiveamountresultingfromsubtractingfromthead-valoremcomponentthenegativeamountoftheRIOMA.•Operatingmargincomponent.Themargincomponentwillbedifferentiateddependingonsaleslevels.1.Miningoperatorswhichincomederivesin50%ormorefromcoppersalesandsalesareequivalenttomorethan50,000tonsoffinecopper,willpayataxratethatfluctuatesbetween8%and26%.ThiswillbedeterminedbasedontheMiningOperatingMargin(MOM).However,thiscomponentshallnotbeapplicableincasetheRIOMAisnegative.2.Miningoperatorswhichincomederiveslessthan50%fromcoppersales,willbesubjecttothefollowingtaxratesbasedontheirannualsales:•Lessthanequivalentof12,000tonsoffinecopper:Exempt•Morethantheequivalentof12,000tonsoffinecopperbutlessthan50,000:Taxratefluctuatesbetween0.4%and4.4%.•Morethantheequivalentof50,000tonsoffinecopper:Progressivetaxratesrangingbetween5%and14%thatdependsontheMOM.MiningexploitersshallapplytherespectivetaxratesovertheRIOMA,whichconsiderstheCIT’staxablebaseofthetaxpayersubjecttocertainadjustmentsincludedintheLaw21,591.Ontheotherhand,thelawincorporatesa“maximumpotentialtaxburden”.ThismaximumlimitappliestothecombinedtaxationoftheMiningRoyalty,CITandfinaltaxes.Thisoveralltaxburdenissetat46,5%,whileforthoseproducersoflessthan80,000tonsoffinecopperthelimitissetto45,5%.EntryintoforceoftheMiningRoyaltyAccordingtotheLaw21,591,publishedonAugust10of2023,theMiningRoyaltywillbeappliedtotheminingindustryfromJanuary1st,2024.58Chile’sminingandmetalsinvestmentguide20234.4correspondtoactivitiescarriedoutwithinthenationalterritory.IncentivesAnexceptionalpre-stepapprovalprocessisrecognizedTherearenospecialtaxincentivesfortheminingintheLawthroughwhichtaxpayerscanfileanaffidavitindustry.However,therearesomebenefitsgenerallybeforeCORFOinformingthattheyarekeentofileaR&Destablishedforalltaxpayers.Forinstance,VATrefundsproject.Accordingtothisprocedure,taxpayerswouldforexporters,taxincentivesforinvestmentandbeabletoprepareaprojectthatmustbefiledwithindevelopment,amongothers.18months.Assoonascertainformalandsubstantialrequirementsaremet,alldisbursementsincurredInthisregard,Law20,241that“EstablishesaTaxfromthedateinwhichtheaffidavitwasfiled,wouldbeIncentiveforPrivateInvestmentinResearchandcountedforthetaxincentives.Development”(R&DLaw),establishesataxincentiveforprivateinvestmentinR&DthatcanbeusedbyTaxincentivesareclaimedannuallythroughtheannualCITtaxpayersthatdeclaretheireffectiveincometaxfilingsofthecompany.Thisformmustbecompleteddeterminedaccordingtofullaccountingrecords.inApriloftheyearfollowingtheyearwhenthedisbursementtookplace,totheextenttherespectiveThemodalitiesofthistaxincentivecouldbe:(a)R&DresolutionfromCORFOisissued.certifiedcontractswitharegisteredresearchcenter;and(b)R&Din-houseactivities.Currently,thereisadraftbillunderdiscussionatCongressthatproposesthefollowingchangestotheThisbenefitisineffectuntil2025andhasthefollowingR&DLaw:characteristics:•Makesthetaxincentivespermanent(currentlyuntila)TaxcreditimputabletotheCIT,correspondingto2025).35%ofthetotaldisbursementsinR&DprojectsdulycertifiedbyCORFO(in-house)orforpaymentsto•Increasethecapoftheamountofthistaxcreditfromcertifiedresearchcenters.Themaximumamountof15,000to45,000UTM(approx.USD3.5million).thecredit,peryearandpereachlegalpersonortaxID,cannotexceed15,000monthlytaxunits(approx.•Eliminatesthecertifiedresearchcenters.USD1.2million).Thistaxcreditisnon-refundable.However,itcanbecarry-forwardindefinitely.•AllowsSmallandMediumEnterprises(SME)togetarefundofthetaxcreditincertaincases.b)Deductionasataxexpenseoftheremaining65%oftheR&DdisbursementscertifiedbyCORFOfor•Increasesthepercentageofthecreditfrom35%toin-houseactivitiesorassociatedwithR&Dcertified50%incasetheR&Dprojectshaveagreenpositivecontractsenteredwitharegisteredresearchcenter,impactorinvolveadvancedhumancapital(i.e.,PhD).evenifsuchdisbursementsarenotnecessarytoproduceincomefortherespectivebusiness(deductibleinupto10years).ItshouldbenotedthatR&Dprojectsmaybecarriedoutbytaxpayerswiththeirinternalcapacitiesorwiththirdpartiesbeingabletoassociateforthepresentationofsuchprojects(subcontractingthirdpartiestoconducttheR&D).However,accordingtotheLaw,theonlyrestrictionisthatatleast50%oftheseexpensesmust4.GeneralTaxSystem594.5ForeignInvestmentStatutes4.5.1DL600anynaturalorlegalpersonincorporatedoverseas,notresidingordomiciledinChile,whoseinvestmentisequalTheregulatoryframeworkforforeigninvestmentintoorgreaterthanUSD5million,ortheequivalenttoChilehasbeensubjecttodifferentchangeswithinthesaidsuminotherforeigncurrencies.lastyears.Inthisregard,uptoDecember31st,2015,theDecreeLaw600(DL600)wasthemainlegalbodyTheapplicationoftherightsgrantedtoforeignforforeigninvestments’protectioninChile.investorsbythisframeworkrequiresfortheinvestmenttobemadeinaChileancompany,grantingtheinvestorLaw20,780repealedtheForeignInvestmentStatutewiththedirectorindirectcontrolover,atleast,10%regulatedbytheDL600asofJanuary1st,2016.ofthecompany’svotingsharesoranequivalentSaidstatuteallowedforeigninvestorstosubscribepercentageinthecorporateequity,ifitisnotastock-investmentcontractswiththeStateofChileensuringbasedcompanyorintheassetsoftherespectiveentity.foracertainperiodasetofrightsrelatedwiththeirinvestment,includingtaxstability.Toqualifyasaforeigninvestorandaccesstherightsavailableunderthisframework,itisnecessarytoTheDL600establishedaforeigninvestmentregimenrequestacertificatebeforetheAgencyforthethatprovidedaccesstotheofficialforeignexchangePromotionofForeignInvestments.marketandoffered,amongothers,thefollowingbenefits:Accordingtotheabove,theLawprovidesalistofgrantedrightstotheforeigninvestors,whichcanbe•Differenttypeoftaxstabilities.describedasfollows:•Nondiscriminationunderarticles9and10ofthe•Overseasrepatriation,atanytime,oftheinvestedDL600.capitalandnetprofitsoncetheapplicabletaxobligationshavebeenfulfilled.•Alternativemechanismofcalculatingthetaxbasisincaseofcapitalgainsassociatedtoforeign•AccesstotheFormalExchangeMarkettoliquidateinvestmentsinChile.currenciesthatcomprisetheinvestmentandtoacquirethenecessarycurrenciestorepatriatethe•Accesstotheformalexchangemarket.investedcapitalandnetprofits.•Amongothers.•Non-discriminationright,whetherdirectlyorindirectly,accordingtothelegalregimethatisNotwithstandingthisregimewasrepealed,someoftheapplicabletolocalinvestors.rightsgrantedbyDL600contacts(includingthetaxstabilityforminingtaxes)arestillclaimable.Thetax•RighttoVATexemptionintheimportofcapitalstabilityprotectionofmanyminingcompanieswillendassets,iftheycomplywithcertainspecialin2023accordingtothepublicinformationavailable.requirementsandprocedures.4.5.2NewForeignInvestmentRegime(LawItisrelevanttoconsiderthattheseregulationsdonot20,848)setforththepossibilitythatforeigninvestmentscanbegrantedwithataxstabilityregime,aswasthecaseofTheLaw20,848waspublishedintheOfficialGazettethepreviousforeigninvestmentregimeestablishedbyonJune25,2015,andregulatesinvestmentsmadebytheDL600.60Chile’sminingandmetalsinvestmentguide20234.5.3ForeignExchangeRegulationsoftheCentralBankofChileUndertheprovisionsofChapterXIVoftheCompendiumofForeignExchangeRegulationsoftheCentralBankofChile(ChapterXIV),foreigninvestorsmaybringcapitalintoChileunderthetermsandconsiderationsapplicabletoforeignloans,deposits,investments,andcapitalcontributionsforatotalamountequalorhigherthanUSD10,000thatistransferredintoChilefromabroad.Tothatend,pursuanttothecurrentforeignexchangeregulations,alltransferoffundsintoChilefromabroadmustbebroughtthroughtheFormalExchangeMarketiftheamountinvolvedintheoperationisoverUSD10,000andbeinformedtotheCentralBankofChile.Mostofthereportingobligationsarecarried-outbythebankorfinancialcompanyassistinginthetransferoffundsthroughtheFormalExchangeMarket.4.GeneralTaxSystem6162Chile’sminingandmetalsinvestmentguide2023BusinessLegislation635.1StartingabusinessinChileTypesofcompaniesPubliclyheldcorporationsarethosethathavevoluntarilyormandatorilyregisteredtheirsharesintheForeigninvestorscandobusinessinChileasindividualssecuritiesregistrykeptbytheCMF.orthroughentitiesgovernedbythecorporateandcommerciallaws.Theseentitiesinclude:Thecorporationsthatareobligedtoregistertheirsharesarethosethathaveoneormoreofthefollowing•Corporations(sociedadanónimaorSA)attributes:•Limitedliabilitycompany(sociedadde•Theyoffertheirsharestothepublic;responsabilidadlimitadaorSRL)•Theyhave500ormoreshareholders;or•Branchofaforeigncorporation(agencia)•Atleast10%oftheirsubscribedsharecapitalis•Limitedliabilityorsilentcompany(asociaciónorheldbyaminimumof100shareholders(excludingcuentasenparticipaciónorsociedadencomanditaindividualshareholdersthatdirectlyorindirectlysimpleorsociedadencomanditaporacciones)exceedthatpercentage).•Limitedliabilityindividualcompany(empresaSpecialcorporationsarethosethat,whethertheyofferindividualderesponsibilidadlimitadaorEIRL)theirsharestothepublicornotandregardlessofthenumberofshareholders,aresubjecttothesupervision•Stockcorporation(sociedadporaccionesorSpA)oftheCMFbecauseoftheparticularpurposeoftheirbusinesses.Examplesofspecialcorporationsare•Contractualminingpartnership(sociedadcontractualinsurancecompaniesandmutualfunds,amongothers.mineraorSCM)Privatelyheldcorporationsarenotsubjectto•Legalminingpartnership(sociedadlegalmineraorsupervisionbytheCMF.SLM).ThefollowingarethemaincharacteristicsofaprivatelyForeigninvestorsgenerallyconductbusinessactivitiesheldcorporation.usingthefollowingtypesofentities.5.1.1.1Numberofmembers5.1.1Corporations(sociedadesanónimasorSA)Themembersorownersofacorporationareshareholders,andacorporationmusthaveatleasttwoCorporationsarecompanieswithalegalpersonalityofthem.separatefromthatofitsowners,whichmaybeofthreetypes:privatelyheld,publiclyheldorspecial.5.1.1.2ContributionsCorporationsareruledbyLaw18,046oncorporations(theCorporationsLaw)andbyDecree702oftheContributionsmadebyeachshareholdertotheMinistryofFinance(2012)oncorporations.corporationarerepresentedbyshares,whicharefreelytransferable.PubliclyheldandspecialcorporationsaresubjecttomoreregulationthanprivatelyheldcorporationsandHowever,thebylawsofaprivatelyheldcorporationareunderthesupervisionoftheFinancialsMarketsmayestablishrestrictionsonthetransferofshares.Commission,knownas“ComisiónparaelMercadoFinanciero”(CMF).64Chile’sminingandmetalsinvestmentguide2023Theserestrictionsareusuallyestablishedinprivateagreementsbetweentwoormoreshareholders.Shareholders’contributionsmaybeincashorothertypesoftangibleorintangibleassets.Anycontributionsotherthancashmustbevaluedbyanexpertunlesstheshareholdersunanimouslyagreeuponitsvalue.Contributionsmaynotconsistofashareholder’sservicesorlabor.5.1.1.3SharecapitalThebylawsmustestablishthespecificamountofthecompany’ssharecapital(itmaynotbevariableorimprecise).Chileanlawsdonotrequireaminimumsharecapitalforthecompanytobeincorporated,norisitrequiredtobetotallyorpartiallypaidbeforethecompanybeginsoperations.However,theoriginalsharecapitalmustbefullypaidwithinthreeyearsoftheincorporationofthecompany.Otherwise,thesharecapitalisreducedtotheamountactuallypaid.5.1.1.4ShareholderliabilityShareholdersareonlyliableuptotheamountofthecontributionscommittedbyeachofthemtothecorporation.Shareholdersarenotliableforthecorporation’sliabilities,withsomeexceptions,suchasthoseestablishedinLaw20,393onliabilityoflegalentitieswithrespecttothecrimesofmoneylaundering,financingofterrorism,andbribery.5.BusinessLegislation655.1.1.5AdministrationCorporationsarerepresented,managedandadministratedbyaboardofdirectorswhosemembersmustbeappointedbytheshareholdersinthefirstboardmeeting(interimdirectorsmaybeappointedinthebylawsontheincorporation).TheCorporationsLawgrantstheboardofdirectorstheadministrativeauthoritynecessarytodevelopthecompany’sbusiness.Theonlylimitationsarethosestipulatedinthecompany’sbylaws,whicharedrawnupbytheshareholders.TheboardofdirectorsmayonlyactthroughmeetingsheldinaccordancewiththeCorporationsLaw.However,theboardmaydelegatesomeofitsauthoritytoseniorexecutives,managersorlawyersofthecompany,tooneormoredirectorsand,inthecaseofspecificpurposes,toothers.Thenumberofboardmembersdependsonthebylaws.However,aprivatelyheldcorporationmusthaveaminimumofthreeboardmembers.Thebylawsmustestablishthetermthatthedirectorsserve,whichmaynotbelongerthanthreeyears,afterwhichthewholeboardmustbereelected.Boardmemberscanbereelectedindefinitely.However,boardmemberscanberemovedatanytimebytheshareholders(theonlyrestrictionisthatthewholeboardberemoved,notjustcertaindirectors).Boardmembersmayormaynotbecompensatedfortheirduties,dependingonthebylaws.Theamountofthecompensationmustbedecidedannuallyattheordinaryshareholders’meeting.5.1.1.6IncorporationCorporationsareincorporatedbymeansofapublicdeedsignedbytheoriginalshareholdersbeforeanotarypublic.Thedeedmustcontainthebylaws.AsummaryofthedeedmustberegisteredintheRegistryofCommercewherethecompanyisdomiciledandpublishedintheofficialgazettewithin60daysofsigningthedeed.5.1.1.7Amendmentofthecompany’sbylawsAnyamendmenttothecompany’sbylawsmustbeapprovedbyaspecialshareholders’meetingheldbeforeanotarypublic.Theminutesofthismeeting66Chile’sminingandmetalsinvestmentguide2023mustbetranscribedinapublicdeedandasummary5.1.2.1MembersmustberegisteredintheRegistryofCommerceandpublishedintheofficialgazettewithin60days.ThemembersorownersofaSpAarecalledshareholdersanditmayhavejustoneshareholder5.1.1.8Dissolutionandliquidationormore.However,ifformorethan90consecutivedays,thecompanyhas500ormoreshareholdersAprivatelyheldcorporationisdissolvedby:or,ifatleast10%ofitssubscribedsharecapitalisheldbyaminimumof100shareholders(excluding•Expirationofthetermofthecompanyindividualshareholdersexceedingthatpercentage),itautomaticallybecomesapubliccorporation.•Thepossessionofallthecompanysharesbyoneshareholderformorethan10days5.1.2.2Contributionsandsharecapital•AnagreementataspecialshareholdersmeetingContributionsmadebyeachshareholdertotheSpAarerepresentedbyshares,whicharefreelytransferable.•Acourtjudgment,ifitisrequestedbyshareholdersHowever,thebylawsmayestablishrestrictionsontherepresentingatleast20%ofthecompany’ssharetransferofshares.TheSpA’sbylawsmayestablishcapital;theshareholdersmustprovetheexistenceamaximumorminimumamountorpercentageofofa“seriouscause”fordissolvingthecompany;thisthesharecapitalthatmaybedirectlyorindirectlycouldbeaviolationofthelawthatcausesdamagetocontrolledbyoneormoreshareholders.thecompanyoritsshareholders,bankruptcyofthecompanyorfraudulentadministrationShareholdercontributionsfollowthesameprovisionsasaprivatelyheldcorporation,unlesstheSpA’sbylaws•Othercausesestablishedinthebylawsstateotherwise.AdissolvedcorporationsubsistsasalegalentityduringAswithcorporations,thebylawsmustestablishtheitsliquidation,butonlyforthepurposeofconductingspecificamountofthecompany’ssharecapital(itmaytheliquidation,withallitsbylawsremaininginforce.notbevariableorimprecise),aminimumsharecapitalThewords“enliquidación”(inliquidation)mustbeisnotrequiredforthecompanytobeincorporated,noraddedtothecompany’snameduringthisperiodandisitrequiredtobetotallyorpartiallypaidbeforethetheentityismanagedbyaliquidationcommitteeorbyacompanybeginsitsoperations.solepersonactingastheliquidator.However,itmustbefullypaidwithin5years,orthe5.1.2Stockcorporations(“Sociedadesporlessertimeframeestablishedinthebylaws,ortheshareacciones”orSpA)capitalwillbereducedtotheamountactuallypaid.StockcorporationsorSpAarecompanieswithalegal5.1.2.3Shareholderliabilitypersonalityseparatefromthatofitsowners.SpAsareruledbyArticlesNo.424toNo.446oftheCodeofShareholdersareonlyliableuptotheamountoftheCommerceandbytheSpA’sownbylaws.contributionscommittedbyeachofthemtotheSpA.Onallmattersnotexpresslyregulatedbythose,SpAShareholdersarenotliablefortheSpA’sliabilities,aregovernedbytherulesapplicabletoprivatelyheldwithsomeexceptionssuchasthoseestablishedinLawcorporations.20,393onliabilityoflegalentitieswithrespecttothecrimesofmoneylaundering,financingofterrorismandTheadvantageoftheSpAisthatitoffersgreatbribery.flexibilityinthedeterminationofitscorporatestructure,sinceitisprimarilyruledbyitsbylaws,whichmaybedraftedtomeettheparticularneedsofthecompany’sowners.Inaddition,SpAsaretheonlylegalentitiesinChilethatmaybeincorporatedandexistwithasingleshareholder.ThefollowingarethemaincharacteristicsofaSpA.5.BusinessLegislation675.1.2.4Administration30daysfollowingthedateofthepublicdeedoroftheregistrationoftheprivatedeedinthenotarypublic’sTheownersmayfreelychoosetheSpA’sadministrationrecord.system.Forinstance,theadministrationmaycorrespondtooneormoremanagers,withorwithoutaboardof5.1.2.7DissolutionandliquidationofaSpAdirectors,withsimultaneousorsubsidiaryadministratorsThesamerulesforthedissolutionandliquidationofaormanagers.TheonlyrequirementisthattheprivatelyheldcorporationapplytotheSpA,unlesstheadministrationsystembeestablishedinthecompany’sbylawsstatesomethingdifferent.Theonlyexceptionbylaws.Otherwise,thecompanybydefaulthasthesameisthatSpAsarenotdissolvedwhenalloftheirsharesadministrationasaprivatelyheldcorporation.areheldbyonlyoneshareholder,unlessotherwiseisestablishedbythebylaws.5.1.2.5IncorporationAsfortheliquidationofthecompany,theshareholdersarefreetoruleinthebylawsthesystemofliquidationSpAsmaybeincorporatedineitherofthefollowingtheydeemappropriate.ways:5.1.3Limitedliabilitycompanies(“Sociedad•ThroughapublicdeedagreeduponbytheoriginaldeResponsabilidadLimitada,SRL”)shareholdersbeforeanotarypublic,whichmustcontainthebylawsofthecompany;orLimitedliabilitycompaniesorSRLsarecompanieswithalegalstructureseparatefromthatofitsowners,•ThroughaprivateinstrumentagreeduponbyandtheyareregulatedbyLaw3,918andbysometheoriginalshareholders,whosesignaturesbeprovisionsinthecodeofcommerceandtheChileancivilauthorizedbyanotarypublic.code.Thisprivateinstrumentmustcontainthecompany’s5.1.3.1NumberofmembersbylawsandberegisteredinthepublicrecordoftheTheSRLmembersarecalledpartners,whichmustbeatsamenotarypublicthatauthorizedthesignaturesofleast2andamaximumof50.theoriginalshareholders.5.1.3.2EquitycapitalandcontributionsWithin30daysfollowingthedateofthepublicdeedorPartners’contributionsmaybeincash,assetsoroftheregistrationoftheprivatedeedinthenotary’sservices.Contributionsotherthancashmustbevaluedpublicrecord,asapplicable,anauthorizedabstractandagreeduponunanimouslybythepartners.mustberecordedintheRegistryofCommerceApartner’sownershipisrepresentedbyequityrights,correspondingtothecompany’sdomicileandpublishedwhichmayonlybetransferredthroughanamendmentintheofficialgazette.ofthecompany’sbylawsandapprovedbythetotalityofthepartners.5.1.2.6Amendmentofthecompany’sbylaws5.1.3.3Partners’liabilityAnyamendmenttotheSpA’sbylawsmustbeapprovedPartnersareonlyliableuptotheamountoftheatashareholder’smeeting.TheminuteofthismeetingcontributionscommittedbyeachofthemtotheSRL.mustbereducedintoapublicdeedorregisteredinInthisrespect,thegeneralprincipleisthatpartnersanotary’spublicrecord.Itisnotnecessarytoholdashareholdersmeeting,ifthetotalityoftheshareholdersagreeupontheamendmentanditisdocumentedinapublicdeedoraprivateinstrument,inwhichthesignaturesoftheshareholdersareauthorizedbyanotarypublic,registeredinanotary’spublicrecord.AnauthorizedabstractofthedeedorinstrumentwiththeamendmentmustberegisteredintheRegistryofCommerceandpublishedintheofficialgazettewithin68Chile’sminingandmetalsinvestmentguide2023arenotliableforthecompany’sliabilities,withsome5.1.3.8DissolutionandliquidationofanSRLexceptionssuchastheonesestablishedinLaw20,393onliabilityoflegalentitieswithrespecttothecrimesofAnSRLisdissolvedbythefollowingevents:moneylaundering,financingofterrorismandbribery.•Expirationofthetermofthecompany5.1.3.4Transferofequityrights•ConclusionofthebusinessforwhichthecompanyThepartners’ownershipinanSRLisrepresentedbywasincorporatedequityrightsorinterestsequivalenttopercentagesofthecompany’sequitycapital.Theserightsarenotfreely•Declarationofbankruptcytransferablebyeachpartner,sincethesemayonlybetransferredthroughanamendmentofthecompany’s•Agreementofallthecompany’spartnersbylaws,whichrequirestheunanimousconsentofthecompany’spartners.•Possessionofallthecompany’srightsinoneperson5.1.3.5Administration•Anyothereventestablishedinthecompany’sbylawsThepartnersmayfreelychoosehowtheadministrationAdissolvedSRLsubsistsasalegalentityduringitsisorganized.Forinstance,thecompany’sadministrationliquidation,butonlyforthepurposeofconductingcouldbegiventooneormoremanagers(whocouldbetheliquidation.Duringthisperiodalltheapplicablepartnersorthirdparties,individualsorlegalentities)provisionsofthebylawsremaininforce.ortoaboardofdirectors.Theonlyrequirementisthatthesystemofadministrationbeestablishedinthe5.1.4Branchesofforeigncorporationscompany’sbylaws.TheincorporationofaChileanbranchofaforeignExceptforsomespecificactivities,themanagerorcorporationisregulatedbytheChileanCorporationadministrativebodywillonlyhavethespecificauthorityLaw,whereastheincorporationofaChileanbranchgrantedbythebylaws.Themanageroradministrativeofaforeigncompanyorlegalentity,differentthanabodymaydelegateitspowertoactonbehalfofthecorporation,isregulatedbytheCodeofCommerce.companytooneormoreattorneys.Bothstatutesestablishverysimilarrules.5.1.3.6IncorporationWhenconsideringwhethertoincorporateabranch,itmustbenotedthatunlikecompanies(suchasaSRLsareincorporatedbymeansofapublicdeedcorporation,anSRLoraSpA),branchesofforeignagreeduponbytheoriginalpartnersbeforeanotarycompaniesarenotconsideredadifferententityfrompublic,whichmustcontainthebylawsofthecompany.theforeigncompanythatownstherelevantbranch.Therefore,theforeignentityisfullyresponsibleforallWithinthe60daysfollowingthedateofthepublicdeed,theactsperformedbyitsChileanbranch;itmaynotanauthorizedabstractofthispublicdeedmustbecontractwiththebranch,andthebranchmaynotberecordedintheRegistryofCommercecorrespondingmerged,spun-off,etc.tothecompany’sdomicileandpublishedintheofficialgazette.5.1.4.1Establishmentofabranch5.1.3.7Amendmentofthecompany’sbylawsAccordingtotheforeignbranchregulations,inorderforaforeigncompanyorlegalentity(the“parentAnyamendmenttoanSRL’sbylawsshallbemadebycompany”)toestablishanagencyinChile,itsagentormeansofapublicdeedexecutedbyallthecompany’srepresentative(the“agent”)mustregisterinthepublicpartners.AnabstractmustberegisteredintheRegistryrecordkeptbyanotaryofthesamedomicilethattheofCommerceandpublishedintheofficialgazettewithinbranchwillhaveinChile,bothinSpanishandinthe60daysofthedateofthepublicdeed.officiallanguageofthecountryoftheparentcompany,thefollowinglegalizeddocuments:5.BusinessLegislation69•Articlesofassociationoftheparentcompany,togetherwithacertificateofgoodstanding.•Authorizedcopyoftheupdatedbylawsoftheparentcompany.•Generalpowerofattorneygrantedbytheparentcompanytotheagentthroughpublicdeedgrantedonthesamedateandbeforethesamenotarythatregisteredtheabovedocumentsintheirpublicrecord.Theagentshoulddeclareonbehalfoftheparentcompany,thefollowing:–Thenameandbusinesspurposeofthebranch–ThattheparentcompanyknowstheChileanlegislationandregulationthatwillapplytoitandtoitsbranch,actions,agreementsandobligations–Thattheparentcompany’sassetswillbesubjecttoChileanLawstofulfilltheobligationsforwhichitisliableinChile–ThattheparentcompanyassumestheobligationofkeepinginChileassetsthatcanbeeasilyconvertedintocash,tofulfilltheobligationsforwhichitisliableinChile–TheamountofcapitalthatitwillkeepinChileforthedevelopmentofitsbusinesspurpose,andthedateandwayinwhichthiscapitalwillbecontributedtothebranch–Thebranch’sdomicileinChile.Withinthefollowing60days,anauthorizedabstractofboththeparentcompany’sdocumentsthatwereregisteredinthenotary’spublicrecordandthereferredpublicdeed,shallberegisteredintheRegistryofCommerceofthebranch’sdomicileandpublishedintheofficialgazette.Toamendanyoftheabovedocumentsorstatements,theagentwillhavetofollowthesamestepspreviouslydescribed.5.1.4.2AdministrationThebranchismanagedbytheagent.Suchagentisobligedtopublishtheannualfinancialstatementsofthebranchinanewspaperofthebranch’sdomicile,withinfourmonthsofitsfinancialyear-end.70Chile’sminingandmetalsinvestmentguide20235.2SpeciallegalvehiclesforminingFortheexplorationorexploitationofmineralresources,Thecapitalisdividedinto100shares,allocatedinthethepartiesmayestablishcompaniesandlegalentitiesproportioninwhichtheminingrightsareheld.Theofthosetreatedandregulatedinothercodesorspecialsharescanbefreelytraded.ThepartnersareliableLaws,astheonesmentionedbefore,ortheymayalsofortheamountoftheircorrespondingcontribution.constituteminingcompaniesasreferredtointheMiningItisadministratedbyapartnershipboard(“juntadeCode(Law18,248of1983),whicharedividedinto:socios”)andanadministrator.•Legalminingpartnerships:creatednotbythe5.2.2Contractualminingpartnershipagreementofthepartiesbutwhenspecificfactual(“SociedadContractualMinera”orSCM)circumstancesaremetIfthepartiesdonotregistertheirminingrights•Contractualminingpartnerships:createdbecauseofatogether,theycanformanSCM.Insuchacase,theycontractmustalsocomplywithsomeformalities,suchasapublicdeed,whoseabstractmustbeenrolledinthe5.2.1Legalminingpartnership(“SociedadPublicMineRegister.LegalMinera”,orSLM)Theircapitalisdividedintoshares.AnSLMisalegalvehicleconceivedtograntlegalpersonalitytominingrightsregisteredbymorethanRegardingthirdparties,partnersareliablefortheoneperson.amountoftheircorrespondingcontribution,buttheywillrespondwiththeirownassetsforthecontributionsTheSLMiscreatedbyitsenrollmentinthePublicMinetheyagreeduponinthebylaws.AdministrationisfreelyRegister,followingtheinscriptionofthe“Conservadordeterminedbythepartners,anditisusuallyorganizeddeMinas”.asacorporation.TherulesofthelegalminingpartnershipshallapplytothosemattersnotcoveredbyThecompany’sequitycorrespondstotheminingrightsthebylaws.registeredunderitsname(althoughitcanbeincreasedlateron).5.BusinessLegislation715.35.5JointventuresCustomsDutiesChileanLawdoesnotcategorizejointventures.They5.5.1Valuationandratesareequivalenttodefactoassociationsofindividualsorentities.Importedgoodsaresubjecttocustomsduties,expressedaspercentagesoftheircostinsurancefreight5.4(CIF)value,ortoadvaloremcustomstaxes.SpecificStructuresdutiesexpressedinUSdollarsperunitofweightormostoftenmeasuresareleviedoncertaingoods.usedbyforeigninvestorsThegeneralrateofcustomsdutiesis6%.However,giventhenumberofcommercialagreementscurrentlyThestructuresmostoftenusedbyforeigninvestorsinforce(withmorethan60nations)theeffectiveincludecorporations,whollyownedstockcorporationscustomrateisunder1%.andlimitedliabilitycompanies.AbranchisgenerallynotusedbecauseaforeignThepaymentofcustomsdutiesmaybedeferredupcompanyremainsliableforthedebtsofitsChileantosevenyearsonimportedcapitalgoodsintendedbranch.toproduceexportgoods,iftheimportersignsapromissorynotethatguaranteespaymentofthecustomsduties.Inaddition,somecapitalgoodsarealsoexemptedfromcustomsduties.5.5.2Free-tradezonesChilehasfree-tradezones,whichprovidecertainbenefitsasdescribedbelow.Since1975,free-tradezoneshavebeensetupandoperateinthenorthandsouthofthecountry(IquiqueandPuntaArenas,respectively).Whileimportedmerchandiseremainsinthefree-tradezones,noVATorcustomsdutiesareapplicable.Free-tradezonescanbeusedfordifferentpurposessuchasstorage,samplingorexhibition,packing,sales,manufacturingandassembling.Salesandservicesprovidedinfree-tradezonesareexemptfromVATandprofitsareexemptfromtheFirstCategoryTax(FCT).Thereisnoreductionorexemptionforthecaseofthefinaltaxes.Someofthefree-tradezonebenefitshavebeenextendedtothecitiesofAricaandTocopilla,inthenorthofChile.72Chile’sminingandmetalsinvestmentguide20235.5.3Temporaryadmissionandbonded•ChileisassociatedwiththeCommonMarketofthewarehousesSouth(MercadoComúndelSurorMercosur).Temporaryadmissionofcertaingoods,including•Chilehassubscribedanassociationagreementwithforeignvehicles,machines,containersandcinematheEuropeanUnion.Also,asofJanuary1st,2021,andtelevisionfilms,isallowedsubjecttotermsandthereisanassociationagreementwiththeUnitedconditionsdeterminedbythecustomsauthorities.AKingdom.Thepurposeofthisconventionistoobtainguaranteeforthecorrespondingcustomsdutiesisbenefitsfromthefinancialenvironment,which,innormallyrequired.generalterms,translatesinplacing90%ofChileanexportstotheEuropeanmarketatzeroratesineightForeigngoodsmaybestoredinbondedwarehousesyearsattheutmost.Inadditiontoprogressivelywithoutpayingcustomsdutiesuntiltheirformalimport.openingthecountry’seconomicrelationsbymeansThecustomsauthoritiescontrolthebondedwarehousesofafree-tradezoneforindustrialandagriculturalandmayalsodesignateanationalfactoryoranproducts,aninvestmentagreement,competitionindustrialestablishmentasabondedwarehouseforrawrules,industrialproperty,etc.materialsandcomponentsformanufacturing.•ChilehasanassociationagreementaspartofP45.5.4Internationaltradeagreementsgroup,formedbyNewZealand,SingaporeandBruneiDarussalam.ThemainagreementsexecutedbytheChileanStateinordertogainaccesstointernationalmarketsarethe•ChilesignedanFTAwithSouthKoreain2003byfollowing:eliminatingcustomsdutiesonvehicles,televisionsets,cellularphones,computersmanufacturedin•AndeanCommunity(CAN):ChilebenefitsfromtheSouthKorea.Likewise,thetariffsaffectingpartsandfree-tradezoneestablishedbythisagreementforsparepartsofvehicleswillalsobeeliminatedwithinitsmembercountries(Bolivia,Peru,Colombiaandfiveyears.Ecuador).•ChilesignedanFTAwiththeUSinJanuary2004,•ChileisamemberoftheLatinAmericanIntegrationallowingfor87%ofthenationalproductstoreachAssociation(ALADI),whichpromotestheeconomicthatcountryatzerorates.andsocialdevelopmentoftheregionwithaviewtowardestablishingaLatinAmericancommon•AnFTAwassignedwithmainlandChinain2005,withmarket.TheALADIhaspreferentialregionaltariffs,1-,5-and10-yeartermstoeliminatecustomtariffsonregionalagreementsandagreementsbetweenmanyproductsthatthiscountryexportstoChile.particularmembercountries.OthermembersoftheAlso,manyChileanexportstomainlandChinahaveALADIincludeArgentina,Bolivia,Brazil,Colombia,termsof1,2,5and10yearstoeliminatetariffs.Ecuador,México,Paraguay,Peru,UruguayandVenezuela.•AnFTAwassubscribedwithJapanin2007thateliminated90%oftariffsofbilateralcommerce•TheEuropeanFreeTradeAssociation(EFTA):Inbetweenbothnations.2004,Chilesignedafree-tradeagreement(FTA)withthisassociationconstitutedbyNorway,Switzerland,ChilealsohasFTAswiththefollowingplaces:HongLichtensteinandIceland.Kong,Vietnam,Malaysia,Turkey,Australia,Panama,Japan,mainlandChina,Canada,Mexico,SouthKorea,•In1976,ChilewithdrewfromtheCartagenaCentralAmerica(CostaRica,Salvador,Guatemala,Hon-Agreement(AndeanPact),butitcontinuestocomplyduras,Nicaragua),Peru,Colombia,Argentina,Uruguaywithcertaindecisionsofthepact.andBrazil.•ChileisamemberoftheGeneralAgreementonTariffsandTrade(GATT)andtheAsiaPacificEconomyCooperative(APEC).5.BusinessLegislation735.6LaborLegislation5.6.1ChileanlaborcontractingsystemyearandexceptionallytwoyearsformanagersorpeoplewhohaveaprofessionalortechnicaldegreeInChile,laborrelationsbetweenemployeesandgrantedbyahighereducationinstitution.ThefixedemployersaregovernedbyChileanlaborlaws,mainlytermcontractcanberenewedforasingletime.IncasecontainedintheLaborCode,whichregulatestheitisrenewedforasecondtime,itwillbeautomaticallyemploymentrelationshipbetweenworkerandemployer,transformedintoanindefinitecontract.Thesametheemploymentcontract,thevarioustypesofapplieswhentheworker,withtheknowledgeofthecontracts,andtherightsandobligationsthatemanateemployer,continuestoprovideservicesafterthefromtheemploymentrelationshipforbothparties,expirationoftheagreedtermorinthecasewhentheamongothers.workerhasprovideddiscontinuousservicesundermorethantwotermcontracts,fortwelvemonthsormore,inArticle7ofthisCodedefinestheindividualemploymentaperiodoffifteenmonthsfromthefirsthiring.contractas“anagreementbywhichtheemployerandtheemployeereciprocallycommitthelatterto5.6.2.3ContractforaSpecificWorkorChorerenderpersonalservicesunderthedependenceandsubordinationoftheformer,andtheformertopayaInthiscasethedurationofthecontractwilldependdeterminedremunerationfortheseservices.”onthenatureoftheservicesforwhichtheworkerwashiredandnotonatermestablishedbytheparties.5.6.2Systemapplicabletoallemployees,Itischaracterizedbyitsshortduration.ExamplesofwhethernationalorforeignthesetypesofcontractsarethoseinwhichtheworkerundertakestoexecuteaspecificanddeterminedEmploymentcontractscanbeclassifiedbasedontheirmaterialorintellectualwork,whosevalidityislimitedortemporality.Inthissense,therearethreetypesoflimitedtothedurationofsaidwork.employmentcontracts:Asregardsthenatureoftheservicesprovidedbythe5.6.2.1IndefiniteContractworker,nationallegislationprovidesforothertypesofemploymentcontracts,so-called“special”,inadditionItisonewhosetermhasnotbeenpreviouslyfixedbytoregulatingtheoutsourcingoflaborandcollectivetheparties,beingthistypeofcontractingthegenerallaborrelations(tradeunionsandcollectivebargaining).ruleinthiscountry.Inthistypeofcontract,acertaindateortermofdurationisnotestablished,andtheTheLaborCodeestablishesthattheemploymentemploymentrelationshipcanonlybeterminatedbythecontractisofaconsensualnature,sufficingonlythewillapplicationofcertaincausescontainedintheLaborofthepartsforimprovement.Code,generatingrelativestabilityfortheemployment.Thus,wheninarelationshiptheconstituentelements5.6.2.2FixedTermContractoftheemploymentcontractconcur,thatis,theprovisionofpersonalservicesundersubordinationandItisonewheretheworkerandemployerenterandependence,saidrelationshipwillbeofanemploymentemploymentcontractforacertaintime,withaprecisenature.terminationdate.IthasamaximumdurationofoneNotwithstandingtheforegoing,thelawsetsadeadlineforthecertificationoftheemploymentcontract,aterm74Chile’sminingandmetalsinvestmentguide2023thatwilldependonthedurationofthecontract.Inthisregard,itshouldbenotedthatthecertificationofthecontractisaformalitythatallowstoprovetheclausesagreedbythepartiesandconstitutesanobligationoftheemployersanctionedwithadministrativefines,withoutprejudicetowhichthecontractmaintainsitsconsensualnature.5.6.3PrinciplesgoverningemploymentInChile,employeesdependentonanemployerareentitled,amongothers,tothefollowingmandatoryandnon-waivableemploymentbenefits:•Holidaysorvacation:Employeeswithmorethanoneyearofserviceareentitled,asarule,toanannualholidayoffifteenworkingdayswithfullremuneration.•Distributionofprofitsinfavorofemployeesorgratuities:Companiesthatinaccordancewiththelawmustgrantgratification,mustdistributeapercentageoftheirprofitsamongalltheiremployees.Theemployer,inordertocomplywiththisobligation,maychoosebetweentwoalternativescontemplatedbylaw:a)distributeamongtheemployees30%oftheliquidprofitsofthecompany,withsomeadjustments,orb)paytheemployees25%oftheirremunerationaccruedintherespectivebusinessyear,withamaximumlimitof4.75minimummonthlywagesperworker,independentoftheliquidprofitsobtained.Likewise,thepartiescouldagreeorimplementcontractualsystemsofgratification,onlyiftheyaremorefavorablethantheminimumestablishedinthelaw.•Socialsecurity:AccordingtotheChileansocialsecuritysystem,alldependentemployeeshavetheobligationtocontributetothesocialsecuritysystem.TheChileanpensionsystemincludesmandatorycontributionsof7%ofthemonthlyremunerationfor5.BusinessLegislation75healthinsurance(ISAPREorFONASA)and10%ofassetslocatedinChileorfromactivitiescarriedoutinthemonthlyremunerationforthepensionfund(AFP)thecountry.includingacommissionthatvariesaccordingtoeachadministrator.AccordingtotheChileanTaxCode,aresidentisapersonwhoremainsinthecountry,uninterruptedorFor2022and2023,bothcontributionshaveamonthlynot,foraperiodorperiodsthatintotalexceed183remunerationofCLF81.6asataxablelimit,whichisdays(about6months),withinanyperiodoftwelvereadjustedannuallyaccordingtothevariationofthemonths.realremunerationindex.Foritspart,theconceptofdomicileisdefinedinarticleAdditionally,thereisacompulsorycontributionfor59oftheCivilCode,whichestablishesthatthisis“thetheinvalidityandsurvivors’insuranceofemployees,residence,accompaniedbytheintentiontoremaininequivalentto1.55%ofthetaxableremuneration;theit”.Therearecertainfactsthatallowtopresumethecontributionforinsuranceagainstaccidentsatworkabove,suchasbeinghiredbyaChileancompanyorandoccupationaldiseases,whosebasicrateis0.90%residinginChilewiththefamily,whichisanalyzedonandwhichcanbeincreasedupto3.4%dependingonacase-by-casebasisbytheInternalRevenueServicetheriskoftheactivitiescarriedoutbythecompany,and(“SII”).thecontributionforinsurancefortheaccompanimentofchildren,alsocalled“SANNALaw”,whichis0.03%.AllTheremunerationreceivedbyadomiciledortaxthesecontributionsarebornebytheemployerandhaveresidentfortheprovisionoftheirservicesinChileisasataxablelimitamonthlyremunerationofCLF81.6.classifiedas“incomefromdependentwork”andisaffectedbytheSecondCategorySingleTax(“IUSC”),Therearealsocontributionsforunemploymentonamonthlybasis,whichisestablishedinprogressiveinsurance,underwhichtheworkercontributes0.6%ratespertrancherangingfrom0%to40%.ofthegrossmonthlyremunerationandtheemployercontributes2.4%ofit.Fortheyears2022and2023,TheincomereceivedbytaxpayerswithoutdomicileorthegrossmonthlyremunerationthatservesastheresidenceinChilewillbeaffectedbytheAdditionalTax,basisforthesecontributionshasamonthlylimitofCLFasasingleone,whosegeneralrateis35%,applying122.6.lowerratesinspecialcircumstancesthatareregulatedincurrentnationalregulations.ThistaxdoesnotallowItshouldbenotedthatthedistributionindicatedonlydeductions.appliesincaseswheretheemploymentcontractisindefinite,varyinginthecaseofcontractssubjectto5.6.5Workinghoursterm.Thegeneralruleisthatemployeesshouldnotwork5.6.4Taxesleviedonwagesmorethan45hoursaweek.Underexceptionalcircumstances,itispossibletoagreeonovertime,ThegeneralruleonthetaxationinChileofpersonalwhichcannotexceed2hoursperdayandmustbeincomeiscontainedinArticle3oftheIncomeTaxLaw,authorizedbytheemployeronlyfortheattendancewhichstatesthat“(...)Unlessotherwiseprovidedinthisoftemporarysituationsinthecompany.Theovertimelaw,anypersondomiciledorresidentinChileshallpayhoursmustbepaidattheregularhourlyrate,withataxontheirincomeofanyorigin,whetherthesource50%increase.ofentryislocatedwithinthecountryoroutsideit,andpersonsnotresidentinChileshallbesubjecttotaxesTheweeklyworkschedulemustbedistributedinnoontheirincomewhosesourceiswithinthecountry.”lessthan5days,notmorethan6.ThenormalworkingNotwithstandingtheforegoing,duringthefirstthreedayshallbecontinuousandshallnotexceed10hours.yearsofstayinthecountry,foreignindividualsareonlyEmployeesareentitledtoatleasthalf-an-hourbreaktaxedontheirincomefromChileansources,consideringduringtheirworkingday.incomefromChileansourcesthatwhichisderivedfromTherearesomeemployeesthatareexemptedfromthemaximumweeklyhourslimitmentionedabove;76Chile’sminingandmetalsinvestmentguide2023forexample,employeesthatrenderservicesformorethanoneemployer,managers,administrators,representativeswithmanagementattributions,andallemployeesthatworkwithoutimmediatemonitoringbyasuperior,salespersons,insuranceagents,etc.Sundaysandholidaysarerestdays,exceptforcertainactivitiesinwhichworkingschedulemayincludethosedaysaslongastheyarecompensatedaccordingtospecialrulesestablishedintheChileanLaborCode.Additionally,giventhenatureoftheservicesprovided(e.g.,miningactivities),therearesomeexceptionalworkingschedulesthatrequiresauthorizationbytheChileanLaborAuthoritytobeimplemented.Theseexceptionsmayinclude7x7,4x4and4x3workshifts.5.6.6LaborunionsLaborunionswillexistinaprivatesectorcompanywhentheyarecreatedbyvirtueofavoluntaryactoftheemployees(members)inaccordancewiththeformalities,proceduresandquorumsrequiredbylaw.Ingeneralterms,legallyconstitutedunionshavethepowertobargaincollectivelyaccordingtocertainprocedurerules.Iftheunionstartsthistypeofcollectivebargaining,theemployerwouldbeobligedtoengageinthatbargaining.Notwithstandingthat,collectivebargainingcouldalsobevoluntaryinitiatedbetweenoneormoreemployersandoneormoreunionsatanytimeandwithoutrestrictionsofanynature.AccordingtotheChileanLaborCode,acollectivebargainingagreementisacontractbetweenemployersandemployeestoestablishcommonworkingconditionsandremuneration(orotherbenefitsinkindorinmoney)foracertainperiodoftimeinaccordancewiththerulesprovidedintheLaborCode.Partiesarefreetoagreeontheconditionstheyfreelydecide,providedthattherightsandobligationsestablishedbylaborlegislationarenotinfringed.Finally,itisimportanttonotestrikesarecommonandallowedbyChileanlaw;however,theexerciseoftherighttostrikeisexpresslyregulatedandsubjecttocertainrequirementsandconditions.5.BusinessLegislation775.6.7SubcontractingandTransitoryServicegeneral,anyconductthatmayrepresentanintentionalProvidersviolationorseriousbreachofemploymentobligations.InChilethereisaspecificlegalframeworkmainlyHowever,whentheemploymentcontractendswhiletheprovidedbytheLaw20,123thatregulatesthelaborworkerhasaccruedlegalholidaysofwhichhehasnotaspectsofthetwotypesofoutsourcingregimesthatmadeuse,suchaholidaymustbecompensatedbytheexistinthecountry:a)Subcontractingregime,andb)employer,regardlessofthecauseoftermination.transitoryservicesregime.•CausesforterminationoftheemploymentcontractAsubcontractingregimeconsistsofacompanythatgeneratetherighttoaseverancepaymentand(contractor)thatrendersserviceswithitsowncompensationinlieuofpriornotice:Theemployeremployeesatitsownexpenseandrisk,ataclient’smayunilaterallyterminatelaborrelations,basedonpremises,workoroperation.Eventhoughthereistheneedsofthecompany,suchasthosederivedfromnolaborrelationshipbetweentheclient(principaltheupgradingofservices,adecreaseinproductivity,company)andthecontractor’spersonnel,thefirstchangesintheeconomyorinmarketconditionsthatonewillbejointlyandseverallyliableforanyandallmaygeneratetheneedforareductioninthenumberunpaidlaborandsocialsecurityobligationsoftheofemployees.Inthecaseofemployeeswhohavethecontractor,unlessitexercisescertainrightsaccordingpowertorepresenttheemployer,suchasmanagerstotheChileanLaborCode(“righttoinformation”andoragentswithgeneralmanagementpowers,the“withholdingright”).employmentcontractmaybeterminatedwithouttheneedtoinvokeanycause.Regardingthetransitoryservicesregime,itisimportanttonotethatpersonnelsupplyisnotallowedundertheAdditionally,thereiscompensationfordismissalandChileanlaborlaws,unlesstheusercompany(client)removalofimmunityforasituationaffectingtheengageswithalegalentitydulyregisteredwiththeemployer,establishedinarticle163bisoftheLaborLaborAuthorityasa“TransitoryServiceProvider”Code,onbankruptcyliquidationproceedings.(alsoknownasEST)andonlyinexceptionaltime-boundcircumstancesthatareestablishedbytheLaborCode.Asforcompensationforyearsofservice,theconditionsforitspaymentarethattheemploymentcontracthas5.6.8Expirationorterminationofthebeeninforceformorethanoneyearandtheemployeremploymentrelationshipterminatesitbyapplicationoftheaforementionedgrounds.TheemployermustpayamonetaryInChile,theemploymentsystemgivesrelativestabilitycompensationtotheworker,equivalentto30daysregardingtheterminationofemploymentcontracts.ofthelastmonthlyremunerationoftheworker,withThismeansthattoterminateanemploymentcontractalimitofCLF90foreachyearofserviceorfractiontheremustbealegalcauseforit.Thegroundsaregreaterthansixmonths,withamaximumof330daysgroupedintotwomaingroups:thosethatgenerateaor11months.mandatoryseverancepaymentandthosethatdonot:Inaddition,whentheemployerterminatesthe•Causesforterminationoftheemploymentcontractemploymentcontractinvokingcompanyneedsorthatdonotgeneratetherightofamandatoryeviction,itrequiresgivingpriorwrittennoticetotheseverancepayment:Theyderivefromthedecisionworkeratleast30daysinadvance.Ifnoticeisnotofthepartiesorbynaturalcauses,suchasmutualgiven,theemployermustpayasubstituteindemnityagreement,deathoftheemployee,expirationoftheforthepriornotice,equivalentto30daysofthelasttermofthecontractorresignationoftheemployees.remuneration,withinthelimitsandconditionsdescribedabove.Othergroundsforterminationthatdonotgiverisetotheobligationofseverancepaymentincludeemployeemisconduct,suchaslackofprobity,sexualharassment,immoralconduct,incompatiblenegotiations,and,in78Chile’sminingandmetalsinvestmentguide20235.6.9Legalconsiderationsregardingforeignagreementswiththefollowingcountries:Argentina,employeesAustralia,Austria,Belgium,Brazil,Canada,Colombia,CzechRepublic,Denmark,Ecuador,Finland,France,WhenestablishinganemploymentrelationshipwithaGermany,Luxembourg,Norway,Paraguay,Peru,foreignemployee,thefollowingshouldbeconsidered:Portugal,Quebec,RepublicofKorea,Spain,Sweden,Switzerland,UnitedKingdom,Uruguay,inaddition5.6.9.1QuotastotheexistenceofanIbero-AmericanMultilateralAgreement.Atleast85%ofemployeesservingthesameemployermustbeChileannationals.Employerswithnomore5.6.10Immigrationregulationsthan25employeesareexemptfromthisprovision.Forthepurposesofthispercentage,thefollowingrulesIntheareaofmigration,itshouldbenotedthattheLawwillbefollowed:(1)thetotalnumberofemployees21,325ofMigrationandAliens,regulatestheentry,thatanemployerutilizeswithinthenationalterritorystay,residenceandexitofforeignersfromthecountry,willbetakenintoaccountandnotthatofthedifferentaswellastheexerciseofrightsandduties,withoutbranchesseparately;(2)thespecialisttechnicalstaffisprejudicetothosecontainedinotherlegalregulations.excluded(itmustbeprovenbytheemployerbeforeapossibleinspection);(3)aforeignerwhosespouse,civilUndertheapplicableimmigrationregulations,everypartnerorchildrenareChileanorwhoisawidowerofforeignworkerrequiresaspecialworkpermitorvisaaChileanspouseshallbecountedasChileanand;(4)tocarryoutremuneratedactivitiesinthecountry.foreignersresidingformorethan5yearsinthecountryThisimplieshavingapermitgrantedbythecompetentwillbeconsideredasChilean.authority,stampedonavalidpassport,andthatauthorizesitsbearertoenterthecountryandstayin5.6.9.2SocialSecurityitforthetimedeterminedandwiththecorrespondingconditionsaccordingtotherespectivevisa.TheLaw18,156allowsforeigntechnicalemployeestoexemptthemselvesfromcontributingtoChilefortheRegardingtherightsandobligationsofforeigners,coverageofpensionandhealthfunds(maintaininginequalrightsandobligationsareenshrined.ItisalsoanycasetheirobligationtocontributetounemploymentstipulatedthattheStateshallpromotedueprotectioninsurance,occupationalaccidentinsuranceandSANNAagainstdiscriminationandshallensurecompliancewithLaw),providedthatthefollowingrequirementsaremet,theobligationsstatedinthePoliticalConstitutionofthecopulatively:Republic.•TheforeignworkermustholdthestatusofThelawanditsregulationsdeterminetheprocedurefor“technician”,atleast.accessingresidenceorpermanencepermits,includingdata,documentsanddeadlinesinwhichtheymust•Theforeignworkermustbeaffiliatedtoasocialbesubmitted,aswellasthespecificrequirementsforsecurityorsocialsecuritysystemoutsideChile,obtainingthem.Thenormestablishesthefollowingwhichgrantsbenefitsatleastincasesofillness,migratorycategories:disability,oldageanddeath.5.6.10.1Temporarypermanence•Theemploymentcontractmustcontainaclauserelatingtothemaintenanceoftheworker’saffiliationItisthepermitgrantedbytheNationalMigrationtothesocialsecuritysystemoutsideChile.Servicetoforeignerswhoenterthecountrywithoutintentionofsettlinginit,whichauthorizesthemtoItshouldbenotedthatforeignemployeescouldalsoremaininnationalterritoryforalimitedperiodof90choosetoavailbythesocialsecurityagreementsthatdays,extendableforthesameperiodonlyonce,exceptareapplicablebetweenChile,theworker’scountrycasesofforcemajeure.Foreignerswithtemporaryoforiginand/orthecountryofprovisionofservices.permanencewillnotbeabletocarryoutremuneratedCurrently,Chilemaintainsinternationalsocialsecurityactivitiesinthecountry,exceptinqualifiedcases.5.BusinessLegislation795.6.10.2OfficialResidenceItistheresidencepermitgrantedtoforeignerswhoareonanofficialmissionrecognizedbyChile,andtotheirdependents.ThegrantingandrejectionofthisresidencepermitshallbetheresponsibilityoftheMinistryofForeignAffairs.5.6.10.3TemporaryresidenceItistheresidencepermitgrantedbytheNationalMigrationServicetoforeignerswhointendtosettleinChileforalimitedtime,andwhichenablesthemtocarryoutremuneratedactivitiesinthecountry.Thispermitisvalidforupto2years,exceptinthecaseofseasonalemployees,inwhichcaseitmaybevalidforupto5yearswhenlimitedannualstayperiodsareestablished.Thispermitmaybeextendedforuptotwoadditionalyears.5.6.10.4DefinitiveresidenceItisthepermissiontosettleindefinitelyinChile,whichauthorizestodevelopanylawfulactivity,withoutotherlimitationsthanthoseestablishedbythelegalandregulatoryprovisions.Permanentresidencemayonlybegrantedtoforeignersholdingatemporaryresidencepermitthatexpresslyadmitstoapplyingforitandthatcomplieswiththerequirementsofthelaw,regulation,andsupremedecreethatestablishesthesubcategories.Holdersofadefinitiveresidencepermitwillnotrequirepriorauthorizationorvisatoenterthecountry.ItshouldbenotedthatwithineachmigratorycategorytherearesubcategorieswhichdeterminethespecificreasonwhyaforeignerwillenterandremaininChile.Finally,itisimportanttonotethatemployersmayonlyhireforeignerswhohavearesidenceorpermanencepermitthatallowsthemtoworkorwhoaredulyauthorizedtodosoinaccordancewiththelaw.5.6.11LawonRemoteWorkandTeleworkOnApril1st,2020,Law21,220becameeffective.It“amendstheLaborCodeonRemoteWorking,”regulatingitsdefinition,workinghours,restperiods,meansandprotection.80Chile’sminingandmetalsinvestmentguide2023Accordingtothislaw,remoteworkingisworkinwhichservicesareprovided,eithertotallyorpartially,fromtheemployee’shomeoranotherplaceorplacesotherthanthecompany’spremises.ItwillbecalledTeleworkingiftheservicesareprovidedbytheuseoftechnological,ITortelecommunicationmeansorifsuchservicesaretobereportedthroughthesemeans.Asarule,remoteworkingissubjecttospecificworkinghours.However,theregulationsallowformoreflexibleworkinghoursoreventheexclusionoftheworkingdaylimitinthecaseofteleworking.Insuchcases,theemployeewillhavetherighttodisconnectfromworkforatleasttwelvecontinuoushoursinatwenty-four-hourperiod,amongotherbenefits.ThepartiesmustagreeonRemoteWorkingorTeleworkingintheemploymentcontractorannextothesame,includingspecialclausesrequiredbythesameregulation.Theemployerwillprovidetheequipment,toolsandmaterialsforRemoteWorkingorTeleworkingtotheemployee.Likewise,thecostsofoperation,functioning,maintenanceandrepairofequipmentshallalsobepaidbytheemployer.ThespecificsafetyandhealthconditionstowhichemployeesgovernedbythemodalityofremoteworkandteleworkmustbesubjectareestablishedbytheRegulationsoftheMinistryofLaborandSocialWelfarecontainedintheDecreeNo18,publishedinJuly2020,andinaccordancewithit,itistheemployerwhomustcommunicatethesesafetyandhealthconditionstoemployees,ensuringcompliance.5.6.12LawonModernizationoftheLaborOfficeOnApril30,2021,Law21,327waspublishedintheOfficialGazette,whichaimstomodernizetheLaborOffice(DT)throughtheincorporationofnewtechnologiesanddigitizationofprocedures.OneofitsmostimportantpointsistheElectronicLaborRegistry,throughwhichemployersmustregisterontheDTwebsiteallemploymentcontracts,terminationsofemploymentcontractsandalldocumentationthatisrequestedinitsregulation-suchasannexesofemploymentcontracts,remuneration,InternalRegulationsofOrder,HygieneandSafety,sanctions5.BusinessLegislation81againstemployees,collectiveinstruments,amongofsaidcertificationservicemaybesubject,toothers.guaranteesecurityintheiruse.Thisinformationwillbeusedfortheexerciseofthee)Electroniclabordocumentslaw:GrantsvalidityandlegalpowersoftheLaborOffice,suchasaudits,regulatesthesubscriptionofthelaborsettlement,conciliations,mediationsandratificationofsettlements.theresignationoftheworkerandthemutualItmayalsobeusedforstatistical,researchandagreementofthepartiesthroughelectronicmeans.disseminationpurposescarriedoutbytheInternalRevenueService.f)Lawthatestablishesthemodalityofremoteworkorteleworkforthecareofchildrenandpeople5.6.13Otherrecentlaborregulationswithdisabilities,inthecasesindicated:ThelawestablishesthepossibilitythattheworkerwhohasThereareothermattersthathaverecentlybeeninhisorherpersonalcareachildinthepreschoolintroducedormodifiedintheChileanlaborlegislation,stage,achildunder12yearsofagebeforetheamongwhicharethefollowing:closureofabasiceducationestablishment,orpeoplewithdisabilities,maypactwiththeiremployertoa)Lawthatreadjuststheamountoftheminimumteleworkundercertainconditions.monthlyincome:Themonthlyminimumwageforemployeesbetween18and65yearsisCLP$g)Lawthatcreatesaworkpermitsothateveryworker410,000,anditcouldbeadjustedinMay2023.canbevaccinated,inthecasesindicated:Thelawestablishesthatanyworkerwhoiswithintheb)UniversalGuaranteedPensionLaw:Thelawtargetpopulationofpublicimmunizationcampaignsestablishesaguaranteedpensiontowhichpeoplethroughvaccinesorothermeans,forthecontrolandwhoare65yearsofageoroldermayaccess,ifpreventionofcommunicablediseases,willbeentitledtheymeettheotherlegalrequirements,regardlesstohalfadayofworkleaveforvaccination.ofwhethertheyareentitledtoapensionorevenwhethertheyhaveretiredornot.Theamountofthish)LawthatabolishestheagerangetoexercisethebenefitwillamounttoamaximumofCLP$185,000.half-dayworkpermitsothattheworker,onceayearandduringtheemploymentrelationship,canc)Lawprohibitingemploymentdiscriminationagainstundergomammographyandprostateexaminations,mutationsoralterationsofgeneticmaterialorrespectively,andmayincludeotherpreventivegenetictests:Thelawestablishesthatnoemployermedicinebenefits,suchasthePapsmear,inthemayconditionthehiringofemployees,theircorrespondingpublicorprivatehealthinstitutions.permanenceortherenewaloftheircontract,theirpromotionormobilityintheiremployment,tothei)Lawregulatingpaidleavefordeathsofrelatives:absenceofmutationsoralterationsintheirgenomeThelawestablishesthatintheeventofthedeathofthatcauseapredispositionorahighrisktoaachild,everyworkerwillbeentitledtotencalendarpathologythatmaymanifestitselfduringthecoursedaysofpaidleave.Intheeventofthedeathoftheoftheemploymentrelationship,norrequireforthesespouseorcivilpartner,everyworkershallbeentitledpurposesanycertificateorexaminationthatallowstoasimilarleaveforsevencalendardays.Thesametoverifythattheworkerdoesnothaveinhishumanleaveshallapply,forsevenworkingdays,inthecasegenomemutationsoralterationsofgeneticmaterialofthedeathofachildinthegestationperiod,andforthatmayleadtothedevelopmentormanifestinathreeworkingdays,intheeventofthedeathofthediseaseorphysicalormentalanomalyinthefuture.worker’sfatherormother.d)Lawonelectronicdocuments:Thenormregulatesj)Lawthatestablishesoccupationalhealthsecurityelectronicdocumentsandtheirlegaleffects,theprotocolforthegradualandsafereturntoworkuseofelectronicsignaturesinthem,theprovisionwithintheframeworkofthehealthalertdecreedofcertificationservicesofthesesignaturesandontheoccasionoftheCovid-19disease:ThetheaccreditationproceduretowhichtheprovidersnormregulatestheimplementationofCovid-19OccupationalHealthSafetyProtocolsandestablishesthecreationofMandatoryIndividualHealthInsurance82Chile’sminingandmetalsinvestmentguide2023associatedwithsaiddisease.Italsoestablishestheobligationfortheemployertoimplementtheteleworkingmodalitywithcertainemployees,withoutreductionofremuneration,totheextentthatthenatureoftheservicesallowsitandthattheworkerconsentstoit.5.6.14SubjectscurrentlyunderdiscussionThereareotheraspectsoflaborlegislationthatarecurrentlyunderdiscussionintheChileanCongress,andthatcouldleadtofuturelegalmodifications.Amongthesesubjectsarethefollowing:a)Draftlawaimedatreducingtheweeklymaximumlimitonworkinghours.b)DraftlawthatamendstheLaborCodebyestablishinganewsystemoflegalprofitsharing.c)Possiblemodificationtothepensionfundsystem.Thisprojectincludes,amongotheraspects,thecreationofnewpensioncontributionsandnewpossibilitiesofadministrationanddestinationforthese.d)DraftLawonCompensationforYearsofService:Thebillseekstoremovethe11-yearcaponcompensationforyearsofservice.5.BusinessLegislation8384Chile’sminingandmetalsinvestmentguide2023Accountingstandards856.1IFRSstandardsinChileTheadoptionofIFRSinChileisafactforallprocessthatbeganin2009andendedin2015withsmallercompanies.Themainchallengespostitsimplementationaregivenbythepermanentneedtoreconciletherequirementsofthelocalregulator—CMF—meantforthelocalreality,withthedefinitionsoftheInternationalAccountingStandardsBoard(IASB).AnexampleofthisistheissuanceofCircularLetter856of2014whichinstructstheauditeesthat“differencesinassetsandliabilitiesfordeferredtaxesarisingasadirecteffectoftheincreaseinthetaxrateforcorporatetaxintroducedbyLaw20,780,willberegisteredintherespectiveyearagainstequity,”changinginfacttheframeunderwhichthefinancialinformationwaspreparedandpresentedsofarbeforethesincetheInternationalFinancialReportingStandards(IFRS)needtobetakeninfull,explicitandunreservedmanner.Inpractice,thismeantthatthefinancialstatementsissuedto31December2014werepreparedinaccordancewithguidelinesandstandardsforthepreparationandpresentationoffinancialinformationissuedbytheCMF.6.2IFRSforminingentitiesAlthoughthefollowingisnotacomprehensivelistoftheissuesinminingentities,itshouldcontributetotheunderstandingofthemainaccountingtopicsimpactingthefinancialstatementsoftheminingentities.86Chile’sminingandmetalsinvestmentguide20236.3ExplorationandevaluationThereisdiversityinacceptableaccountingtreatments.Someentitiescapitalizeexplorationandevaluationcosts,whileothersrecordthemasexpenseswhenincurred.6.4StrippingcostsTheinterpretationoftheIFRIC20addressesthe“AccountingforWasteRemovalCosts”.AccordingtoIFRIC20:•Costsincurredinundertakingstrippingactivitiesareconsideredtocreatetwopossiblebenefits:theproductionofinventoryinthecurrentperiod,and/orimprovedaccesstooretobeminedinafutureperiod.•Productionstrippingcostsaretobecapitalizedaspartofanasset,ifanentitycandemonstratethateconomicbenefitswillberealizedinaprobablefuture,thecostscanbereliablymeasured,andtheentitycanidentifythecomponentofanorebodyforwhichaccesshasbeenimproved.Theassetiscalledthe“strippingactivityasset.”6.Accountingstandards876.56.6DepreciationofImpairmentofproperty,plantassetsandequipment•Itisperformedatthecashgeneratingunit(CGU)•Assetsmustbedepreciatedusingacomponentslevel.approach.•IFRScontainsspecificrulesforthecalculationof•Therearepotentialrisksinconnectionwiththethevalueinuserelatedtokeyassumptionssuchasaccountingtreatmentofmajormaintenances.prices,discountrate,exchangeratesandcapitalexpenditures.•Companiesneedtoconsidertheuseoftheunitsofproductionmethodtodepreciateoramortizetheir•IFRSrequiresthereversalofimpairmentlossesassets,insteadofusingthestraight-linemethod.recordedinprioryearsforassetssubjecttodepreciationandamortization.•IFRSrequirestheestimationoftheresidualvalueofthefixedassetinordertodeterminethedepreciable•IFRSrequirestheperformanceofanannualamountimpairmenttestforassetsnotsubjecttodepreciationandamortization(forexample,goodwill),independentlyoftheexistenceornotofimpairmentindicators.88Chile’sminingandmetalsinvestmentguide20236.9DecommissioningliabilitiesNormally,jointventureagreementscontainclausesthatgrantoptionstoincreaseordecreaseparticipation,whichcanhaveasignificantaccountingimpact.6.76.10FunctionalFinancingcostscurrency•IFRSrequiresanentitytocapitalizeborrowingcostsManycompanieskeeptheiraccountingrecordsinthethataredirectlyattributabletotheacquisition,localcurrencyandnotinthefunctionalcurrency.construction,orproductionofaqualifyingassetaspartofthecostofthatasset.Anentityshallrecognizeotherborrowingcostsasanexpenseintheperiodinwhichitincursthem.•Theremaybedifficultiesindeterminingtheborrowingcoststobecapitalized,specificallytheexchangedifferencethatisregardedasanadjustmenttointerestcosts.6.86.11JointventuresInventoriesNormally,jointventureagreementscontainclausesCriticalsparepartsaretobeclassifiedasproperty,thatgrantoptionstoincreaseordecreaseparticipation,plantandequipmentandnotasinventories.Thesewhichcanhaveasignificantaccountingimpact.itemsaresubjecttodepreciation.6.Accountingstandards8990Chile’sminingandmetalsinvestmentguide2023Appendix917.1MiningsectorregulatorsandstakeholdersRegulatorsNationalGeologyandMiningService–Sernageominsernageomin.clMinistryofMiningSernageominprovidesgeologicalinformationandminmineria.gob.cltechnicalassistancetogovernment,publicandprivateTheMinistryofMiningleads,formulatesandassessesinterests;itsprincipaldutiesareto:nationalpoliciesinordertoincreasetheminingsector’s•Maintaintheregistryofminingconcessionscontributiontonationaldevelopment,bydiversifying•Monitorcompliancewithsafetyregulationsandmakingminingactivitiessustainableandefficient.•EvaluateandapprovetheconstructionandoperationMinistryofEnvironmentofwastedumpsandtailingsfacilitiesmma.gob.cl•ApprovemineclosureplansTheMinistryofEnvironmentcarriesoutthefollowing•Maintainregistryoftailingsdepositsresponsibilities:•Contributetogovernmentprogramsandthe•Designsandimplementspolicies,plansandprogramsdevelopmentofminingandgeologypoliciesrelatedtoenvironmentalmatters•Protectsandpreservesbiodiversity,naturalChileancoppercommission-Cochilcocochilco.clresourcesandwaterThedutiesofthisspecializedtechnicalagencyforthe•PromotessustainabledevelopmentandtheintegrityChileanGovernmentareto:•Publishstatisticsonmineralproduction,projectsandofenvironmentalpoliciesandregulation•Overseesenvironmentalevaluationsystemandinvestment•ConductresearchandproducesreportsandstudiesenvironmentalwatchdogontheminingindustryMinistryofEnergy•Adviseontheproductionofcopperandcopperenergia.gob.clTheMinistryofEnergydesignsandcoordinatesplans,byproducts,andmetalsandindustrialmineralspoliciesandregulationsfortheproperfunctioningand(exceptcoalandfuels).developmentofthesector,advisingtheGovernmentonallmattersrelatedtoenergy.92Chile’sminingandmetalsinvestmentguide2023EnviromentalEvaluationService–SEAInternalRevenueService–SIIsea.gob.clsii.clSEAperformsthefollowingdutiesfortheChileanSIIisthepublicentityinchargeoftaxcollectionandGovernment:inchargeofsupervisingandauditingthecorrect•Evaluatestheenvironmentalimpactofprojectsapplicationofthetaxregulations,aswellasproviding•Managescivilparticipationintheevaluationoftheadministrativeinterpretationofalltax-relatedlaws.projectsStakeholders•RespondstocivilobservationsandcomplaintsNationalMiningSociety–SONAMISuperintendencyoftheEnviroment–SMAsonami.clportal.sma.gob.clSONAMIrepresentsmetallicandnonmetallicsmall,TheSMAperformsthefollowingactivities:medium-andlarge-scaleminingactivitiesinChile.•SupervisescompliancewithenvironmentalMiningCouncilregulations(land,airandwater)consejominero.cl•IssuesfinesfornoncomplianceTheMiningCouncilrepresentsanassociationofthelargestminingcompaniesoperatinginChile,includingFinancialMarketCommission(CMF)nationalandforeigncompanies,bothprivateandstatecmfchile.clowned.TheFinancialMarketCommission(CMF)isapublicinstitutionofatechnicalnature.ItsmainobjectivesCenterforCopperandMiningStudies–Cescoincludesafeguardingthecorrectfunctioning,cesco.cldevelopmentandstabilityofthefinancialmarket,Cescoisanindependentnonprofitthinktankthatfacilitatingtheparticipationofmarketagents,andcontributestopublicpoliciestopromotemininganditspromotingtheprotectionofpublictrust.roleineconomicdevelopment,particularlyinChile.TheCMFisresponsibleforensuringthatsupervisedpersonsorentitiescomplywithlaws,regulations,bylawsandotherprovisionsthatgovernthemfromtheirinceptiontotheirwinding-up.Tothisend,itmayexercisethebroadestsupervisionoveralltheiroperations.7.Appendix93MiningCommissioncomisionminera.clTheMiningCommissionhasbeeninvolvedinthefollowingactivities:•CreationofastandardforpublicreportingofmineralresourcesandreservesinChile•Implementationoftheconceptofthecompetentpersonsandtherequirementsforthequalification•RegulationandmanagementoftheregistryofcompetentpersonsMiningCompetenciesCouncilccm.clThisentityprovidesinformationonprojectedhumancapitalrequirementsintheminingsectorinChile.Italsodrawsuptechnicalprofiles,trainingprogramsandcertificationsystem.InvestChileinvestchile.gob.clThegovernmentagencyresponsibleforpromotingChileintheglobalmarketasadestinationforforeigndirectinvestment,servingasabridgebetweentheinterestsofoverseasinvestorsandthebusinessopportunitiesthecountryoffers.94Chile’sminingandmetalsinvestmentguide20237.2WhyEYinMining&MetalsAtEY,ourpurposeisBuildingabetterworking365,000+world.Theinsightsandqualityservicesweprovidehelpbuildtrustandconfidenceinthecapitalpeoplemarketsandineconomiestheworldover.Wedevelopoutstandingleaderswhoteamtodeliveronour150+promisestoallourstakeholderscountriesWeliveinaneraoftransformation.Rapidlyadvancingtechnology,globalization,theriseofemergingmarkets,700+andchangingdemographicsaretransformingbusinessandsocietyfasterthanever.Traditionalbusinessofficesmodelsarechanging,industriesareconverging,theworkforceisintransition,andtheglobaleconomy$40.4bisbecomingincreasinglycomplex.Disruptionisthenewnormal,andcompaniesaredisruptingorbeingrevenue(USD)disrupted.AsofJune30,2022Throughonestopshopapproach(Assurance,Consulting,StrategyandTransactions,Tax)andourdeepknowledgeofthesector,wehelpourclientscapitalizeonnewopportunitiesandassessandmanagerisktoachieveresponsiblegrowth.Ourhigh-performing,multidisciplinaryteamshelpthemmeetregulatoryrequirements,keepinvestorsinformed,andmeetstakeholderneeds.Source:FY22globalreview7.Appendix95WhyEY?+80BecauseweareaglobaltrustedpartnertosupportyearsinChileyouateverystageorchallengeofyourbusiness4Ourindustryexperience,globalintegrationandonestopshopapproachallowsustoaccesstherightcitiesinChilepeopleandresources,makequickdecisions,executethestrategy,anddeliverexceptionalservicetoour+2,000customers.clientsinChileWecreatelong-termvalueforpeople,customersandsociety,helpingthemtoprotect,grow,transformandoperateinamoreeffectiveway.Ourclienteshaveaccessto:GlobalintegrationIndustryexperienceWorkingtogethergloballyallowsustoofferourclientsaccesstonetworksandcommunities,worldclassOurexpertiseintheminingindustry,localandresources,connectwithexpertteamsaroundtheworldinternationalresourcesandcomprehensivevisionandbringbroadknowledge,insights,experiences,ofthebusiness,allowsustodeeplyunderstandthetrendsandnewapproachesinrealtime.ecosystem,ourcustomersandtheirspecificneeds.Thisinturnhelpsustoidentifyopportunities,newComprehensiveadvisordevelopments,possiblethreatsandcreatevaluequickly.Auniqueonestopshopadvisorforallassurance,legal,tax,labor,financial,technology,operationsandInnovationandtechnologystrategicaspectsofyourbusiness.WehelpyousolvethechallengesandrequirementsofmanagementandWehelpbusinessesconstantlythriveandrenew,thoseoftheboard.experimentwithnewideas,seizeopportunities,andmitigatetherisksthattransformationcreates.Ourproprietarymethodologies,platformsandapproachesallowustobringinsightsandrespondquicklytodifferentchallenges.96Chile’sminingandmetalsinvestmentguide2023EYChileOfficesSantiagoTelephone:+56(2)26761000Avda.PresidenteRiesco5435,4thfloor,LasCondesConcepciónTelephone:+56(41)2467000ArturoPrat199,TowerA,5thfloor,Office509PuertoMonttTelephone:+56(65)2285700Concepción120,Office906ViñadelMarTelephone:+56(32)2690707Fax:+56(32)2690999Libertad1405,Office2002ey.com/es_cl7.Appendix97ContactsMatíasMorosoV.EYChile’sMining&MetalsTax&LegalSeniorManager-AttorneyTaxConsultingAliciaDominguezV.+56981567077matias.moroso@cl.ey.comPartner-AttorneyEnergy&MiningLeadingPartnerandTaxConsultingPartner+56226761288alicia.dominguez@cl.ey.comEYChile’sMining&MetalsCenterofExcellenceinMining(CoE)FabioFortesLuisFelipeMorenoAssociatePartnerAssociateDirectorCenterofExcellenceinCenterofExcellenceinMiningChileMiningChileMining&MetalsMining&Metals+56985337236+56984488723fabio.fortes@cl.ey.comluis.moreno@cl.ey.comAsiaDesk&InternationalTaxEYChile’sDesk(HongKong)LeadingPartnerPatricioVelascoJaniceSteinV.Manager-AttorneyLeadPartnerEYChile’sDeskinHongKongTransferPricingand+85264764105InternationalTaxpatricio.a.velasco@hk.ey.com+56226761334janice.stein@cl.ey.comCoreAsiaDeskTeam(OP)RuthWangLongyanShenAssistantDirectorEYLATAMAsiaDeskChileAssociateDirector+56981567077EYLATAMAsiaDeskChileruth.wang@cl.ey.com+56226761000longyan.shen@cl.ey.com98Chile’sminingandmetalsinvestmentguide2023EYConstruyendounmejormundodenegociosEYexisteparaconstruirunmejormundodenegocios,ayudandoacrearvaloralargoplazoparalosclientes,laspersonasylasociedad,yconstruirconfianzaenlosmercadosdecapital.Medianteelusodelosdatosylatecnología,losdiversosequiposdeEYenmásde150paísesbrindanconfianzaatravésdelaseguridadyayudanalosclientesacrecer,transformarseyoperar.Trabajandoenauditoría,consultoría,leyes,estrategia,impuestosytransacciones,losequiposdeEYformulanmejorespreguntasparaencontrarnuevasrespuestasaloscomplejosproblemasqueenfrentanuestromundohoy.EYhacereferenciaalaorganizacióninternacionalypodríareferirseaunaovariasdelasempresasdeErnst&YoungGlobalLimitedycadaunadeellasesunapersonajurídicaindependiente.Ernst&YoungGlobalLimitedesunasociedadbritánicaderesponsabilidadlimitada(companylimitedbyguarantee)ynoprestaserviciosaclientes.LainformaciónsobrecómoEYrecopilayutilizalosdatospersonalesyunadescripcióndelosderechosquetienenlaspersonassegúnlalegislacióndeproteccióndedatosestándisponibleseney.com/privacy.LasfirmasmiembrodeEYnoejercenlaabogacíadondeloprohíbanlasleyeslocales.Paraobtenermásinformaciónsobrenuestraorganización,visiteey.com.©2023EYServiciosProfesionalesdeAuditoríayAsesoríaLimitada.Todoslosderechosreservados.EDNoneEstematerialsehapreparadoúnicamenteconfinesinformativosgeneralesynodebeconsiderarsecomoasesoramientocontable,fiscal,legaloprofesional.Consulteasusasesoresparaobtenerconsejosespecíficos.

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