Argentina seeks US$10 billion in mining exports by 2030

Argentina’s government is increasing efforts to attract foreign investor to its mining sector and boost the country’s metals and minerals output as a March deadline to restructure billions of dollars in debt with the International Monetary Fund (IMF) looms.

The South American nation, which is again at risk of being cut off by global financial institutions and retreating into isolation, is launching a set of fresh incentives to attract foreign capital to its mining industry.

Export taxes, reduced from 12% to 8% in October 2020, will be cut further, the left wing government said this week, without providing specifics.

“The tax burden [in Argentina] is still higher than in countries that it competes with in terms of mining production,” Luciano Berenstein, executive director of the Argentine Chamber of Mining Entrepreneurs (CAEM) said in an emailed statement.

The sector is calling on the government to further reduce withholding taxes taken from employees’ wages, speed up Value-Added Tax (VAT) refunds and increase access to the foreign exchange market.

The goal is to increase mining exports income to more than US$10 billion over the next decade, a figure that seems attainable given the US$25 billion in investments expected to come from the 34 projects currently at an advanced stage, according to the government.

Mining investment announcements hit US$9.3 billion in 2020 and 2021 combined, with 94.5% of the projects focused on expansion and construction, official data shows.

Authorities says the country needs US$22.2 billion to develop identified copper assets and US$7.3 billion to tap into its lithium deposits.

Investments needed for gold are pegged at US$1.65 billion and those for silver at US$1.11 billion. 

Leading projects

The government of Peronist Alberto Fernández welcomed last year some major announcements. Canada’s Lundin Mining committed US$4.2 billion to bring the recently acquired Josemaria copper, gold and silver project in San Juan province into production. According to company estimates, it will generate 2,500 jobs and US$1.7 billion in annual exports. The mine, scheduled to begin operations in 2026, has a mine life of up to 19 years.

Gold giants Barrick (TSX: ABX; NYSE: GOLD) and venture partner Shandong Gold announced investments to extend the life of Veladero – Argentina’s largest gold mine – to 2030.

Pan American Silver (TSX: PAAS; NASDAQ: PAAS) also hit the headlines after receiving approval for its US$1 billion Navidad silver mine.

Most of deals of 2021, which totalled US$5.3 billion, were in the lithium sector.

There were announcements to expand lithium extraction at existing projects run by Orocobre–Toyota, an Australian and Japanese partnership, and by U.S. company Livent. Lithium Americas (TSX: LAC; NYSE: LAC) and JV partner Ganfeng Lithium approved a second-stage expansion at the Caucharí-Olaroz lithium project in Jujuy province, which is expected to enter production in the third quarter of 2022.

By the end of 2021, Rio Tinto (NYSE: RIO; LSE: RIO; ASX: RIO) gave the sector yet another boost by buying the Rincon brine project for US$825 million.

In terms of most appealing provinces, the government said San Juan led the provinces by attracting US$5.1 billion in investments, or 55.6% of the country’s total, in the two years. Salta followed with US$2.5 billion, Catamarca with US$1.2 billion and Jujuy with US$420 million. 

Argentina’s current mining portfolio comprises 87 projects, with 30 in an advanced exploration stage, 14 with a preliminary economic assessment underway, five in the prefeasibility stage and 12 in feasibility. 

The country has 17 in production and three in the construction phase, along with six in early exploration projects.