Chileans eyeing mining opportunities

Chile's mining sector has shown a great deal of interest in investing and participating in the development of Argentina's mining industry, which is still for the most part in its infancy, Rolando Dávila, general manager of the Chilean-Argentina chamber of commerce in Chilean capital Santiago told BNamericas. "We want to take advantage of Chile's mining experience and know-how [to develop Argentina's mining industry]," he said, adding that while Argentina has a mining industry, it does not yet have a mining culture. Despite economic setbacks in the past few years, Argentina remains the most important investment destination for Chilean capital. Chilean businesses invested around US$1.8bn in Argentina during 2004, with the mining, forestry, agricultural and tourism sectors accounting for the biggest shares. Dávila added that trade between the two neighbors was worth US$4.3bn in 2004, and is set to grow to US$4.5bn-4.6bn this year. Chile's state minerals company Enami, which, among other things, refines and smelts copper from other miners, was Chile's biggest exporter to Argentina last year. EXPLORATION POTENTIAL According to Dávila, Argentina is still mostly unexplored, including as much as two-thirds of its Andean region, which forms the border with Chile. This is the most interesting from the mining industry's point of view. The Chile-Argentina mining treaty, formally promulgated in February 2001, has been a vehicle for development in this mineral-rich zone, Dávila said. The treaty has helped with the development of Toronto-based miner Barrick Gold's Pascua-Lama gold project, which straddles both countries, as well as Canadian Noranda's El Pachón copper project in the Andean highlands of Argentina's San Juan province. These two projects alone represent some US$2bn in investments. The Mining Integration and Complementation Treaty, to give it its full title, was hailed as a breakthrough in Chilean-Argentine relations, which have not always been smooth, and held up as a model document for similar mining industry cooperation among other neighboring countries. When it was promulgated, Chilean papers cited the potential for more than US$20bn in new investment between 2001-2011, with some 370 mineral projects set to benefit from the legislation. The treaty deals with such issues as access of personnel and capital goods, customs issues, taxation and environmental regulations related to mining and exploration projects. INFRASTRUCTURE PROJECTS The burgeoning trade between Chile and Argentina is putting pressure on governments to develop transport infrastructure to facilitate the movement of goods and people from one side of the Andes to the other, as well as from the Pacific to the Atlantic coasts. Projects such as the Trasandino del Sur railroad, which would unite the southern Chilean port of Talcahuano with the town of Cutral Co in Argentina's Neuquén province, where it would join up with an existing railroad to the port of Bahia Blanca in Buenos Aires province, have the Chamber's support, and would help the development of resource projects in both countries' southern reaches. Initial works on the Argentine side began in December 2004. Further north, the Aguas Negras traffic tunnel, still in the study phase, would improve access to the mining zones under development in Chile's Region IV and Argentina's San Juan province, such as the large-scale Pascua Lama, El Pachon and Barrick's Veladero gold project. Expansions to Chile's Pacific coast ports in the center and north should also consider mineral products from Argentina's growing mining industry, Dávila added. CHALLENGES Yet there are still some issues hindering further Chilean participation in Argentina's mining industry, both for companies and individuals. Argentina's domestic debt and problems in accessing capital remain barriers to investments, as do its shortage of energy generation and gas production infrastructure, Dávila said. For individuals, the process for Chileans working in Argentina to take out moneys invested in Argentina-based pension funds remains long and complicated, he added. The problem provides a disincentive for professionals to work there for much time.