Departing Argentina’s President Cristina Fernández de Kirchner presents a 100 pesos bank note with a portrait of former First Lady Eva Peron, in 2012. (Image from archives)
Only weeks before Argentina heads to the polls to choose its new leader, analysts are saying that President Cristina Fernandez’s chosen successor, Daniel Scioli, would probably be the best outcome for miners, as he has promised to maintain financial incentives designed to bolster investments, as well as oil and gas production.
But others differ. One of them is Santiago Dondo, a mining specialist at Pensar, the think tank of leading opposition candidate Mauricio Macri’s party. He told Reuters that the former mayor of Buenos Aires and ex-president of the popular Boca Juniors soccer team, may be a better choice. This, as Macri would give provincial governments a larger chunk of profits from companies operating in the country. The candidate, he added, has vowed to improve environmental inspections across the industry.
“The main challenge … is to generate trust at home, which would also give investors stability,” Dondo said.
But according to the country’s mining chamber, any of the three candidates running in the upcoming October election is a good option, as they all have said they see mining as the platform for Argentina’s recovery.
“Scioli has said mining should be an engine for the economy, Macri has been consistent in his support and [opposition candidate] Sergio Massa has said the sector deserves attention,” the president of the Argentine Mining Chamber, Martin Dedeu, said earlier this year, according to País Minero (in Spanish).
The industry body estimates there are at least $5 billion worth of mining projects waiting for a more supportive government to go ahead with plans.
Fernández restricted imports and repatriated export revenue since she was re-elected in 2011. The current President also created currency controls that hurt firms such as Chevron Corp, Petronas and Total, and led Brazil’s Vale (NYSE:VALE) to cancel its $6bn Río Colorado potash project in the country.
The projects
Most of the projects hoping for a mining-friendly new president are, according to the Argentine Mining Chamber, copper-focused ventures.
One of the most touted is Glencore’s (LON:GLEN) plans to invest about $3 billion over three years at El Pachón, located in San Juan province.
Yamana Gold’s (TSX:YRI)(NYSE:AUY) Cerro Moro, a gold and silver mine in Santa Cruz province, would be the other major projects to benefit if October’s presidential elections herald an easing of capital restrictions.
The Canadian miner has promised to invest $398 million in the venture, but construction won’t start unless federal regulations are changed including currency controls and repatriation of export revenue, a provincial mining department official told País Minero (in Spanish).
Then, there’s Goldcorp’s (TSX:G) (NYSE:GG) Cerro Negro, which began commercial output in January and is targeting production of 425,000 to 475,000 ounces this year.
And the Chubut province is considering reopening talks with Pan American Silver (TSE:PAA) with the goal of resuming development of its Navidad silver project.
Overall, Argentina’s next president will be pressured to change the way the country’s regulatory systems operate, analysts at Stratfor Global Intelligence wrote earlier this month.
Limitations on investments and on the repatriation of funds will have to be addressed during the next four years, and the next president will have to begin trying to renew the domestic oil and natural gas sectors, they noted.
However, they warned that while Argentina will definitively change after the Oct. 25 elections, the transformations will not be as drastic as global observers hope.
6 Comments
John Doe
Keep your finger crossed? Better keep your legs crossed too or get a nasty surprise. I worked three years in Southern Africa. I remember what happened to Rhodesia/Zimbabwe. In Argentina I would wait until I see what the new Person does about Barrick’s Veladoro mine before taking any risks. Talk is cheap and environmentalists are hard to keep reasonable. If I could not buy out enough of any water demand downstream of my project I would not trust my water supply either.
Ronnie Mac Allister
As an Argentine Mining Engineer that I worked the last 15 years in Mining International Companies in Argentina as Barrick ( Veladero mIne ) , AngloGold ( Cerro Vanguardia Mine ) and Panamerican Silver ( Manantial Espejo Mine ), I consider that we ( the argentinians) have the great opportunity with the new Presidential Elections next October , to change our direction in how to do businees with the world and to be in the right way , same as all normal countries work. It will depend who will win the elections , but we all know that with the official candidate Daniel Scioli , we will continue in the actual recession and without external investments , but if we `ll decide to the actual opposition Eng. Mauricio Macri , we will have new air to breathe and the International Investment will return to our country , considering that Argentina has a lot of Mineral Resources availables.
Che Guevarra
If the new government in Argentina doesnt reduce import restrictions, currency controls and capital control for repatriation of profits then it wont happen. They want donors not investors, because they have run out of lendors.
Argentina is like a tango, beautiful but somewhat tragic.
jgv1 .
The argentine president looks like an old stripper/porn star. Unless you can get a crony deal with a crook local politician and a free lap dance, don’t invest with Socialists.
How to do it, put all loans in their name, the stripper pays the unions off, and you get your money upfront. Nah, not worth it, this is Venezuela with good soccer players.
Abdul
Good idea, to promote mining is not only boost the industrial growth but will also improve the oil prices in international market.
Abdul
The quality control of different articles in market is the main issue for the recession in the world.Most of the articles(different products) are made without any quality control in cheap prices (low cost of production) while at the other side the companies who produced the same thing (high quality products) in high price ultimately suffers in world markets and consumers dont purchase their products.If an international standard of all products is fixed and strictly followed on the production of consuming items recession will be controlled.