Mining economic freedom at risk: A review of state intervention in copper and nickel
By Patricio Faúndez, Practice Leader of Economics at GEM Mining Consulting
Over the past decade, states have expanded their control over mining through new taxes, environmental rules, nationalizations, and trade restrictions, reshaping investment and competitiveness. This study reviews copper and nickel to ask a central question: is mining freer today than ten years ago? The debate is relevant, as rising demand for these metals will test how government policies shape both national competitiveness and global supply.
Copper
Over the past decade, copper mining in Chile, the DRC, and Peru (main producers) has experienced different forms of state intervention. Chile, while still the world’s top producer, lost long-term tax stability with the repeal of DL 600, introduced a progressive royalty under Law 21.591, and struggles with slow permitting. The DRC tripled output through Chinese investment but under a statist framework with higher royalties, a 50% windfall tax, export bans, and mandatory state participation via Gécamines, all in a high-risk environment. Peru preserved a stable tax regime and private ownership, but competitiveness has been weakened by political instability and social conflict. Table below summarizes the main milestones in these countries, with colors indicating their impact: red for measures that increase state intervention and green for those that reinforce economic freedom.
| YEAR/COUNTRY | CHILE | DRC | PERU |
| 2015 | Repeal of DL600 (tax invariability) | ||
| 2016 | |||
| 2017 | |||
| 2018 | Introduction of new Mining Royalty bill | Mining Code review, significantly increasing state intervention | |
| 2019 | Concentrate export ban remains in force (with exemptions, since 2013) | ||
| 2020 | |||
| 2021 | House of Representatives approves Mining Royalty bill | Proposal for greater fiscal intervention (failed) | |
| 2022 | Statist-oriented constitutional proposal rejected | ||
| 2023 | Enactment of Law 21.591 on Mining Royalty | ||
| 2024 | Government announces agenda to streamline environmental permits | Extraordinary profits provisions enter into force |
Nickel (main producers)
Over the past decade, nickel mining in Indonesia, the Philippines, and Russia has been shaped by distinct paths of state intervention. Indonesia transformed itself into the world’s processing hub by banning ore exports, attracting Chinese investment in smelters and HPAL projects, and consolidating over 50% of global refined output under a tightly controlled, vertically integrated model. The Philippines took the opposite route: exports surged after Indonesia’s ban but collapsed with mass mine suspensions in 2016, followed by reopening in 2020 and a partial revival under EO 130 in 2021, leaving output volatile and dependent on an unstable regulatory framework. Russia, led by Nornickel, saw stable production until new fiscal measures in 2021–22—including export duties and a reformed Mineral Extraction Tax—boosted state revenues but reduced competitiveness under growing geopolitical risk. Table below summarizes these milestones, with colors showing their impact: red for stronger state control, green for greater economic freedom, and orange for measures with mixed or uncertain effects.
| YEAR/COUNTRY | INDONESIA | PHILIPPINES | RUSSIA | ||
| 2016 | DENR suspends more than half of mines for environmental violations | Closure of Nornickel smelter due to environmental requirements | |||
| 2017 | Regulation 1/2017 eases export ban (Law No. 4/2009 of 2014) with smelter requirements | National ban on new open-pit mining | |||
| 2018 | |||||
| 2019 | |||||
| 2020 | Law No. 3/2020 (amendment to Law No. 4/2009): total ban on nickel ore exports; strengthened state control | DENR authorizes reopening of previously closed mines | |||
| 2021 | EO 130 lifts moratorium in force since 2012; AO 2021-25 regulates approval of new projects | 15% export duty on metals | |||
| 2022 | Increase in Mineral Extraction Tax (MET) | ||||
| 2023 | Trade Regulation 22/2023: enforces export ban without exceptions at customs | DAO 2023-05 adopts international reporting standards (PMRC 2020) | |||
| 2024 | Regulation 25/2024 requires IUP licenses and 51% domestic ownership | Digital permitting platform; progress in fiscal reform with operating margin royalties | |||
Conclusions
Global mining has become less free over the past decade, with the Fraser Institute’s Economic Freedom of the World Index recording consecutive declines since 2020, erasing years of progress. State intervention has taken different forms: in the DRC, the government increased its stake and imposed a 50% super-profits tax; Indonesia banned exports and forced domestic processing; and Russia raised taxes and duties in the context of sanctions. In Latin America, Chile added fiscal pressure with a new royalty, while Peru maintained stable rules but faced paralyzing social unrest. Across cases, the pattern is consistent: as production rises, governments seek to capture more rents, often extending beyond fiscal motives to ideological ones.
Indonesia now produces 60% of global nickel, consolidating supply but deepening reliance on China and exposing the sector to geopolitical risk. Price volatility adds further uncertainty, with nickel falling from pandemic highs of USD 34,000 per tonne to less than half, forcing operations like BHP’s (nickel) in Australia to suspend. Copper faces a different challenge: a looming structural deficit amid scarce new discoveries, which makes it attractive despite heavier intervention. Ultimately, the conclusion is clear: geology alone does not secure competitiveness. Institutional quality, along with social license, infrastructure, and access to capital, remains essential for the future of mining.
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