ARGENTINA: Major investments in the pipeline. Mining Journal, Andean Mining Supplement. 2004.
By George Sanders and Nivaldo Rojas
ARGENTINA is recovering from a devastating three years of deep recession, civil unrest, devaluation and default. The economy grew by 8.7% in 2003 and is projected to grow by between 5.5% and 7% this year, in contrast to 2002 when the economy shrank by 10.9%.
The big question for the international mining industry is whether the current government will honour the commitment to tax stability for new mines made in the early 1990s, which led to the mining boom of the past decade. By all accounts, the answer to this question is a resounding ‘yes’, mining being one of the few bright spots in the national economy. President Nestor Kirchner, in office since May 2003, has made formal promises to the mining sector that the national government will strongly support sustainable growth of mining. However, the reality is that new mining projects face a tax regime far less favourable than that of the 1990s.
The biggest mining news of the year was Barrick Gold Corp’s announcement of its decision to proceed with the US$460 million Veladero project, scheduled to begin producing 550,000 oz/y of gold in late 2005. Other new projects moved towards feasibility studies and, ultimately, production. The government estimates that US$5-7 billion will be spent during the decade on about two dozen projects with estimated reserves worth some US$50 billion. This compares favourably with the US$7 billion invested in mining in the 1990s.