Mining Sector Expands US $ 1165 Million

Most initiatives are lithium related; Copper projects, meanwhile, promise more exports and manpower creation.

Cordoba-. On several occasions since the beginning of his term, the President
Mauricio Macri he says bet on the
mining as one of the
investment growth engines and
Argentine exports. The reinstatement of tax deductions and the decisions of the Supreme Court of Justice (two others will come in the short term) which determined that the constitutionality of the glacier law has created uncertainty in the sector. , but the government insists that there is no risk and until 2022, project deposits amount to 1165 million dollars. 90% of these investments are lithium related.

When signing the federal mining agreement with the provinces to homogenize the laws, Macri said the sector could generate 125,000 jobs (for each direct job, there are five indirect jobs) and although "star" of official speeches is lithium, the Ministry of Mines stresses that the "real leap" in terms of income and exports will be in the hands of copper. "Lithium represents 2% of the world market, copper has a greater participation and its projects, even if they are less numerous, require more investment," he explains.
THE NATION Carolina Sánchez, Secretary of Mining Policy.

With current international prices, gold exports (2412 million USD in 2018, or 70% of the total of the article) will lose their participation (it is estimated that in 2024, this figure will be 1666 million USD, minus 20% ). At the same time, copper sales abroad would reach 3041 million US dollars in 2024, considering the most advanced projects in terms of feasibility studies, financing and advances in the environmental license. San Juan, Catamarca and Salta are the richest provinces in copper.

The official data represents 33 stock extraction initiatives, including those planned and under construction (18 are in an "advanced" state of exploration). This year, investment in the sector amounts to about US $ 250 million and 60% is exploration to increase operating resources, the rest being in high risk areas.

The projections

From the Chamber of Mining Entrepreneurs of Argentina (CMEA), they limit themselves to disseminate their forecasts: since 2004, the annualized growth of their exports is 10.1% of oil, gas and livestock), while the employment during this period increased at an annual rate of 5.7% (81,500 people, including direct and indirect jobs, accounting for 1.2% of registered jobs).

According to the calculation, the mining companies inject 20,136 million dollars in mbad of payroll consumption taking only the direct positions. And they pay in taxes (up to 2018), $ 29,176 million (including national and provincial charges). From CMEA, they point out that 80% of sector purchases are concentrated in local suppliers.

"The situations are varied, but the mining industry is a strategic sector to attract investment and improve the trade balance," Sánchez said. "We have worked on several fronts as part of a concerted policy with the provinces that are the main owners of the resources, we are modernizing the regulatory framework and integrating international standards and informing about the benefits to the communities. . "

Miguel Zielonka, economist at Econviews, said: "There is a lot of potential in the mining sector, geologically we have the same wealth as Chile, so there is still a lot of work to be done to solve the environmental impact issues. and the rules of the game. The potential of lithium is strong because its cost of extraction is lower than in other countries, since it is extracted from saltpetre and that it is more accessible.It is essential to go ahead and achieve not only the production of the basic raw material, but also the vertical integration that is refined or manufactured here. "

Sánchez specifies that the demand for lithium will be accompanied by that of copper: eight kilograms are needed for a combustion car and, in the case of an electric car (equipped with a lithium battery), this amount is multiplied by four. An initiative on lithium requires between 200 and 400 people for its operation, but one on copper requires up to 4000 workers and, in terms of investments, it can multiply by ten a large lithium project.

For example, Taca-Taca de Salta will require about US $ 3 billion for its construction; It is in the exploration phase and comes from the Australian company First Quantum Minerals.

Copper and lithium are gaining ground in gold. Veladero's sanjuanina – operated by Canadian companies Barrick Gold and Shandong Gold in China – ranks among the top ten in the world. This mine (highly questioned by its environmental accidents) with those of Cerro Negro and Cerro Vanguardia (Santa Cruz) provides more than 70% of the national production, about 62 tons per year. The activity is concentrated in these two provinces (Don Nicolás and Cerro Moro have recently entered Patagonia); Catamarca lost its stake at the end of La Alumbrera's life and Salta will be incorporated next year in Lindero.

Waiting for the gold

The downward trend in gold prices, initiated between 2011 and 2012, would have begun to reverse in 2016, so a better scenario is expected for the coming years. Like any export, the mining company pays a withholding tax of 10% with a cap of three pesos if it has an added value in terms of manufacturing and four pesos if there is no added value . 35% of mining exports correspond to the province of Santa Cruz; 25% in San Juan; 19% in Catamarca and 9% in Jujuy. The rest is distributed among other jurisdictions.

"The private sector understands that withholding taxes are a transitional measure, and investors are looking at the long term," Sánchez said. "There are other decisions that seek to favor operations". Reference is made to resolutions that simplify registration to access benefits to promote the activity of reducing taxes on exploration expenses.

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