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The legislation replaces a 1958 law, modified during the dictatorship of Augusto Pinochet, that required Codelco to turn over 10 percent of its export sales to the military.
Chilean lawmakers passed a measure on Wednesday abolishing an antiquated, decades-old law under which state-run Codelco COBRE.UL, the world’s largest copper miner, helped foot the bill for the country’s military.
The bill establishes a dedicated fund to finance the Chilean armed forces, and beefs up congressional oversight of the use of those funds, according to a statement from Chile’s Congress. Codelco’s payments to Chilean state coffers will be phased out over a period lasting more than a decade.
The legislation replaces a 1958 law, modified during the dictatorship of Augusto Pinochet, that required Codelco to turn over 10 percent of its export sales to the military, which has been embroiled in several high profile corruption cases.
Right-wing President Sebastian Pinera, who spearheaded the bill and is expected to sign it into law, had said it was “absurd” that the strategic spending of Chile’s armed forces was affected by a fluctuating copper price.
Codelco Chief Executive Nelson Pizarro has said the state miner would be better off without the military funding requirement.
The top copper producer, which turns over all its profits to the state, needs to invest nearly US$40 billion over 10 years to keep the output of the red metal flowing from its aging mines.
Codelco did not immediately comment on the passage of the law.
The law requires the miner to continue paying the 10 percent tax to state coffers “for a period of nine years, gradually falling by 2.5 percent per year beginning year 10,” the congressional statement said.