Alberto Fernández meets miners to ease investment fears

After three years of changes in Argentine mining regulations, companies could face another new scenario after the October presidential elections.

Leading candidate Alberto Fernández (pictured) held a meeting recently with executives from 24 mining companies with projects in Santa Cruz and Catamarca provinces to fill them in on his plans regarding the economic, business and investment direction of the country in order to provide more certainty for the lithium industry.

Fernández told mining executives from Glencore, Neo Lithium, Posco and Newmont Goldcorp, among others, that he would support the free flow of profits to improve the country's economy. Also, his economic agenda includes a 10-year growth plan for the mining industry with an emphasis on lithium, but maintaining local regulations as well. During the meeting, the first round election winner also pointed to the need to have a sustainable mining industry.

According to an Inter-American Development Bank (IDB) report on lithium in Argentina, the country has 13% of global reserves, while annual production currently stands at 30,400t. Argentina is the third biggest lithium producer in the world and hosts 25% of the resources in the so-called lithium triangle (Chile, Bolivia and Argentina).

Argentina has three lithium projects consolidated and in production: Salar Hombre Muerto and Cauchari-Olaroz in Catamarca province and Salar de Olaroz in Jujuy. A further 23 exploration projects are advancing to production.

Ahead of the presidential election, one of the biggest concerns for mining executives is the possibility of a return to export taxes of more than 5% and measures to block the free flow of profits out of the country, both of which were applied during Cristina Fernández de Kirchner's government (2007-15). President Mauricio Macri, who took office in 2015, revoked the measures in order to reconnect the country with the rest of the world.

Argentina is divided into 23 provinces and all of them used to have sovereignty over mining policies, but in 2017 Macri unified the mining regulations of 20 of the provinces under a federal agreement, to allow mining companies to operate throughout the country with no risk of regulatory changes once they invest their capital. The agreement includes a tax on mining production of no more than 3% in royalties and a 1.5% tax for environmental remediation work.

Data from the Argentine mining executives chamber (Cámara Argentina de Empresarios Mineros – CAEM) shows the sector as the sixth biggest in the country, with exports generating more than US$29mn a year.

Recently, the members of the chamber signed a document in which they asked both presidential candidates to reinforce institutions to protect constitutional rights, in order to generate confidence and sustainable growth. The document says that they are open to collaborate with whoever wins this year.

Picture credit: Alejandro Pagni/AFP