The National Government has predicted a strong increase in the mining activity in the oncoming eight years. What are the indicators that have been launched and what are the issues to be settled so as to achieve the outlined objectives?
The support givento the mining sector by the government of Mauricio Macri has been strong since he took office. He announced the removal of export taxes on this activity a few weeks after he took over as President of Argentina. Today, after months of intense negotiations with the provinces , the Governments is seeking to jump-start mining activity throughout the country so as to multiply the projects and increase relevant investments. This will be achieved through a bill to be sanctioned into the New Federal Mining Agreement. This Agreement will homogenize national and provincial legislations ,and will strengthenin this way, the fiscal stability the investors are looking for. The backing of the communities where this activity is going to be developed is an important aspect to be taken into account. The goal is to attract investors for 25,000 millions of dollars in the following eight years, so that Argentina can be viewed as a great mining power in the region. Although this figure is more than twice than the 10,000 millions registered between 2007 and 20015, it is much lower than what was invested in Chile (U$S 80,000 millions) and Peru (U$S 52,000 millions ) in the same period. The Chamber of Mining Business People (CAEM) has forecast an even more optimistic outlook. It has based its assumptions on information provided by the consulting firm Abeceb. According to it, in 2021 – that is half the time of the other estimationinvestments in this sector will reach 20,000 millions of dollars. And , according to CAEM, In the same period , 130,000 jobs will be created in the mining field (the results showed, in 2016 a total of 80,000 direct and indirect jobs).
Obviously, there will be a lenghty debate to reach these figures and the environmental concern has become the main objection to this New Federal Agreement. The most sensitive point lies in the possible impact on the glaciar and periglaciar environment. It must be remembered that these landforms are protected by the Law of Glaciars as they are considered a strategic water reservoir for the country. Anyway, the Secretariat for Minery have stated that responsible mining activity can be environmentally friendly and have highlighted the enormous economic benefit that could be brought about by the minery boom. (see interview to the secretary Daniel Meilán in this same edition ). Another important issue to deal with is taxation. The agreement establishes that the provinces are not allowed to charge more than the 3 % of royalties on the total amount of the gross revenues of the companies and that the canon will not increase , will be fixed every two years by the Secretariat for Minery as long as a mining enterprise is being developed.
A boost to the SMEs in this area
Beyond any pending debates, there are some tools available to jump-start development in this market. Accoding to Telam news agency, about 10,000 SMEs would be able to have access to affordable financing for the mining sector through the agreement sealed by the Secretariat for Minery of the Nation and the Reciprocal Guarantee Society Garantizar “The agreement’s aim is to strengthen the value chain produced by the mining companies and its effect on regional economies “,said Carlos Pirovano, manager of Garantizar, which is the most important Reciprocal Guarantee Society (RGS) in the market. The loans provided to the mining sector by the National Bank will be backed by this company. “This agreement is an undertaking of the Secretariat for Minery whose aim is to work mainly with the mining SMEs, focusing on provision of services and those companies committed to mining exploration “, he explained. He added that, within this framework, “incentives are launched to tackle the environmetal issue in the appropriate way” At the beginning of 2017, the Secretariat for Minery and the National Bank agreed on a contract by which the Secretariat for Minery committed itself to grant the benefit of 2 points rate to the mining SMEs. Anyway, Pirovano pointed out that the companies that are and a risk analysis carried out by Garantizar. Pirovano also explained that the guarantees to be granted , according to the agreement signed with the Secretariat of Minery,are intended to the purchase of goods, civil works, investment projects in the mining sector with associated working capital and specific working capital. All this data simply confirms the view that by the end of this decade , the mining sector will have become a promising activity.