Country Profile: Argentina. Global Mining Finance 2011

Country Profile: Argentina. Global Mining Finance 2011

In this article, Paola Rojas, Business Development Manager of Rojas & Asociados, was interviewed about Argenina´Provincial Legislation. See below an excerpt of the article or see the full story here >>

Country Profile: Argentina

Neighbouring one of the world’s great mining heavy weights, Argentina is a relative new comer to the stage. Although hampered in areas by legacy legislation, the country looks on course to make up for lost time and become a mining nation worthy of its potential.

Provincial Legislation
The provinces of Santa Cruz, Catamarca, San Juan, Salta, Jujuy, and most recently La Rioja are Argentina’s best places to mine. Whereas Mendoza, Chubut, and La Pampa have gone so far in implementing an anti-mining agenda that they have banned open-pit mining and cyanide usage. Buenos-Aires based mining consultant Paola Rojas says, “Miners need to analyze the risks and opportunities in the province where they want to operate. Sometimes there are risks, but the country’s unexplored and attractive mineral potential can justify those.”
Some foreign miners operating in difficult jurisdictions hope such regulations will be lifted soon. “We expect that [Chubut’s] provincial government will change the mining law and will follow the example of Santa Cruz, which restricts mining within the Andes mountain range and along the coast, but allows responsible miners into Patagonia’s central area,” states U308 Corporation CEO Richard Spencer, whose Canadian uranium junior firm is close to releasing a resource estimate of its advanced Laguna Salada exploration project.
Chubut is also home to mining titan Panamerican Silver’s Navidad project, which is expected to become one of the world’s largest primary silver
mines, and create 1,500 direct jobs during construction and another 500 in its operational phase. “Although the current mining law in Chubut province still forbids open pit mining, Pan American continues to believe that the provincial government will introduce an amendment to the law, which would allow a responsible development of Navidad,” comments President and CEO Geoff Burns. Navidad expects to invest no less than $760 million in capital and preproduction expenditures.
Miners expectations are not unrealistic; the formerly anti-mining province of La Rioja, which banned cyanide usage in 2006 as a result of political turmoil, lifted its prohibition two years ago. “La Rioja reversed the cyanide restriction and is gaining interest from foreign investors. Australia’s GoldEnergy signed an agreement last week [December 2010], and a Chinese firm did the same two months ago [October 2010] The
province’s mining potential is huge,” assures Rojas.

Mendoza, for its part, continues on a long siesta, preferring to cultivate grapes over exploiting its mineral riches. “We sadly see little hope for Mendoza mining projects. The province’s wine lobby is far too powerful and can play the environment card successfully from now until Greenpeace rules the world. It is strongly suspected that the real reason they don’t want mining in the region is that mining companies will vacuum away the cheap labor they exploit to the vendange,” observed Ecclestone. However, Latin American mining experts now believe that Mendoza is changing, and will shift its mining laws toward a more friendly approach. Indeed, one of the firms that left Mendoza, Extorre Limited, which moved its operations to pro-mining Santa Cruz province, filed a suit in the Mendoza Supreme Court to have this anti-mining legislation declared unconstitutional. Meanwhile, its advanced exploration Don Sixto Gold Project remains on hold.
On the bright side, San Juan hosts Barrick Gold’s Pascua Lama gold project, which shares its mineral riches with neighbouring Chile. The project has an estimated investment of $3 billion and expects to create 5,500 new jobs in Argentina, according to Mining Secretary Jorge Mayoral. Santa Cruz, for its part, protects its glaciers but backs metallic mining otherwise. Other favourable jurisdictions are Catamarca and Salta.
The latter is rich in lithium, which is used to make batteries for electric vehicles. “Argentina owns 22% of global lithium reserves and jointly with Chile and Bolivia controls 90% of the world’s supply.” said President Fernandez at a mining event in December.
Argentina’s complex web of provincial mining legislation has made several analysts and miners feel that they are being treated unfairly by the Fraser Institute’s Annual Survey of Mining Companies. The Canada-based think tank evaluates the country as a whole, ranking Argentina 30th among 51 analyzed jurisdictions on its 2010 midyear report, an improvement compared to its rank of 40 in the 2009-2010 survey.
“Fraser’s indexes should be elaborated province by province. Argentina is in a similar situation as Canada,” criticizes Rojas. The conservative think tank cannot guarantee it will implement such an analysis any time soon, but, Fraser Vice President of Research Fred McMahon says it is a possibility.

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Latin America_Country Profile_ Argentina_Global Mining Finance 2011