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Chilean copper miners are currently pleading with the government to soften a tax proposal the industry believes would increase costs, thereby making them less competitive in world markets, according to Bloomberg. The tax proposal, which congress is currently debating, includes an ad valorem sales tax ranging from 1% to 7% depending on copper prices and production volume. One mining tax consultant quoted by Bloomberg on Wednesday proclaimed the ‘ad valorem’ sales tax does not consider the producer’s profitability, making the tax especially burdensome for miners with high costs and low margins. Industry participants have also warned that the taxes could discourage investment in new copper mines. |
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As Chile is the world’s largest copper miner, reducing supply from the country could put upward pressure on prices. End-users such as a home builder might consider applying simple hedges that provide upside price protection, such as buying swaps or call options, both of which would establish a maximum price. Such positions are basic for end-user hedging; however, they can result in opportunity costs or cash costs if metal prices decrease. Please contact AEGIS for specific strategies that fit your operations. (8/12/2022) |
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Note: Clients with AEGIS Platform access can see this and other research, plus hedge portfolio reporting and tools here. |
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AEGIS Insights |
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08/10/2022: AEGIS Factor Matrices: Most important variables affecting metals prices 08/09/2022: Aluminum prices are finding support: Consumers can lock in lower costs in 2023 and beyond 08/02/2022: Russia Finds New Alumina Supply 07/27/2022: American Automotive Production is on the Rebound |
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| Important Headlines | ||
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8/11/2022: Cobalt metal prices hover at low levels despite talk of Chinese stockpiling 8/11/2022: China's construction steel demand likely to remain low for rest of 2022 8/9/2022: Aluminium foundry fights for survival in European gas crisis 8/9/2022: Column: Glencore's smelter warning galvanises the zinc price 8/8/2022: Energy industry bright spot for NorthAm steel 8/7/2022: US Senate passes landmark bill to tackle climate 8/5/2022: US imports of unalloyed aluminum continue to rise loosening supply further 8/5/2022: FUTURES WRAP: LME scrap contract reaches all-time daily trading volume high |
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Important Disclosure: Indicative prices are provided for information purposes only, and do not represent a commitment from AEGIS Hedging Solutions LLC ("Aegis") to assist any client to transact at those prices, or at any price, in the future. Aegis makes no guarantee to the accuracy or completeness of such information. Aegis and/or its trading principals do not offer a trading program to clients, nor do they propose guiding or directing a commodity interest account for any client based on any such trading program. Certain information in this presentation may constitute forward-looking statements, which can be identified by the use of forward-looking terminology such as “edge,” “advantage,” “opportunity,” “believe” or other variations thereon or comparable terminology. Such statements are not guarantees of future performance or activities.
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