VALPARAISO, Chile – The Chilean Congress has approved a new tax, or “royalty” fee, on the largest mining firms to help cover reconstruction costs after a massive earthquake earlier this year.

The legislation pushes the highest royalty rate to 9 percent initially. Starting in 2017, royalties will range from 5 percent for companies with an operating margin equal to or less than 35 percent up to 14 percent when a firm’s operating margin climbs to as high as 85 percent.

The current royalty rate is between 4 percent and 5 percent.

The bill was passed in the Senate on Tuesday and in the lower house Wednesday after a political accord was reached last week between the government and opposition senators.

Agreement was also reached on the creation of a development fund for Chile’s regions that will receive $100 million in annual contributions over the next four years.

With the new regime, Chile – the world’s No. 1 copper producer – will become a country that is in the “upper range” in terms of mining taxation, Finance Minister Felipe Larrain said after the vote in Congress.

He said that with the bill “more than $1 billion will be raised” over the next three years to finance reconstruction efforts following the Feb. 27, magnitude-8.8 earthquake, adding that the funds will be directed to health and education programs and the country’s regions.

On July 8, a committee of lawmakers from the Senate and lower house rejected a government proposal for a flat tax on big mining firms to partially finance reconstruction following the temblor and ensuing tsunami.

In the first three years after the law goes into effect, the changes will raise at least $1 billion over and above what the mining companies currently pay depending on their tax bracket. EFE