Argentina’s Chubut province repeals new open-pit mining law after protests

Argentina’s Chubut province has reversed a decision to allow open pit mining in certain zones of the province following protests against the law. 

On December 15, the province approved a legislative bill — which was promulgated into a law the next day — that would have modified a 19-year-old law against open pit mining in certain regions of the departments of Gastre and Telsen in the province’s north.  

This led to protests in Rawson, the province’s capital, with a number of people hospitalized due to injuries caused by rubber bullets, according to media reports.  

The province’s governor Mariano Arcioni, on December 20, signed a decree to repeal the law.  

“I signed the bill to repeal Law XVII No. 149 on Sustainable Metal Mining Industrial Development of the province of Chubut,” Arcioni said on Twitter.  

“I deeply respect those who have demonstrated peacefully these days,” he said.  

He further said that the province would open a “social dialogue” with groups who are for and against the project.  

Pan American Silver (TSX: PAAS; NASDAQ: PAAS), which owns the Navidad silver project in northern Chubut and would have benefitted from a change in the law, confirmed that a decree had been signed to repeal the law. 

“Pan American Silver believes that properly permitted and regulated mining activity with sustainable mining practices, both environmental and social, could benefit the people of Chubut,” the company stated in a December 21 news release.  

Set on the vast plains between the Atlantic Ocean and the Andes Mountains in southern Argentina, Chubut passed a law in 2003 that prohibits open pit mining in the province.   

Analysts believe that a change in the law could attract global mining companies to the province, which is believed to contain some of the world’s largest undeveloped silver deposits.  

BMO analyst Ryan Thompson, who follows Pan American Silver, termed the “quick reversal of the new bill” as disappointing, but noted that it didn’t change his valuation on the company.   

“As we noted in our flash last week, we had several outstanding questions on Navidad’s future,” Thompson wrote in a research note to clients. “Although today’s news is disappointing, it doesn’t change our valuation and we are not surprised to see PAAS shares trade roughly in line with the group in early trading this morning.”  

At presstime in Toronto, Pan American shares were trading at $31.49within a 52-week trading range of $50.70 and $27.65.