Profiling Argentina’s Mining Industry

An Attractive Prospect

The Argentine Republic, more commonly known as Argentina, is a Spanish-speaking Latin American country home to around 40,134,425 people [:INDEC – National Institute of Statistics and Census of Argentina, 2008]. It is an interesting country to research when it comes to mining because it’s a relatively new kid on the block. Today there are five regions best-known for producing the country’s minerals:

– The Puna region —Known for various minerals including copper, gold, silver, tin, lead and zinc.
– Patagonia — Known to host epithermal gold deposits, silver and lead-zinc deposits
– The central Cordillera and Precordillera — Which houses copper, gold and chromium
– The northeast —Known for various minerals including diamonds, nickel and amethyst
– The central country area —Home to gold, porphyry copper, manganese and nickel-platinum.

Of course, the other landscape aspect is of the political variety. Decades of changing laws may have proved rocky, but today look likely to greatly improve the mining industry within this country.

Argentina’s burgeoning mining landscape

The mining industry in Argentina really sparked following the 1993 changes to its laws, making it much more friendly to foreign investors. In 1995, mining exports for the country soared by 33 per cent. Speaking in 1996, Carlos Magarinos, then Argentina’s secretary of mining and industry, said that foreign investment and exports “have increased since free market reform began in 1991,” and cited “stable politics, consistent regulations, dynamic market and vast natural resources,” amongst those requirements for long-term industry growth. In 2001, Argentina’s copper production increased by 30 per cent and gold by 18 per cent. Come 2003, the country’s non-fuel mineral production valued $1.1 billion and today the nation is acclaimed for its production of various resources including gold, silver, lead, zinc, copper and aluminium. By 2006, investment in Argentinean mining projects hit $1.27 billion. In an interview with Mining Weekly in August, 2009, Miguel Guerrero, Argentina’s National Mining Director, said that despite the hardships incurred under the global financial crisis, the country expected to see up to US$40 billion in mining investment by 2015.

“The results are extremely positive; we have projects like Pascua Lama, Pirquitas, Gualcamayo, Manantial Espejo, Potasio Río Colorado, Pachón, Agua Rica, San Jorge… and the exploration of new mineral deposits in Patagonia and provinces like Salta, Jujuy, San Juan and Mendoza,” Guerrero told the press.
In saying this, he makes a good point. In order to fully understand the mining industry in Argentina and its potential for growth today, we need look no further than the mining giants with projects there.

Argentina: project snapshot

Amongst the many to turn their attentions, and funds, towards Argentina, are names such as Xstrata, Barrick Gold, AngloGold Ashanti and GoldCorp. Closer inspection of exactly what sorts of projects are on offer makes it easy to see why some of the world’s biggest names in mining are present in the country:
La Alumbrera — Argentina’s largest open pit mine, La Alumbrera, offers an annual production of 400,000 ounces of gold concentrate, 150,000 tonnes of copper concentrate, 50,000 ounces of gold doré and 1,600 tonnes of molybdenum concentrate. It is 50 per cent-owned by Xstrata Copper, and Goldcorp and Yamana Gold, both of Canada, hold the remaining 50 per cent.

Pascua Lama — stretching across the Chile/Argentina border, Pascua has proven and probable reserves of 17.8 million ounces of gold which contains 671 million ounces of silver within it and a 25-year estimated mine life. It is being developed by the Toronto mining conglomerate Barrick Gold.

Potasio Río Colorado potash project —Mining major Vale, of Brazil, purchased this project from Rio Tinto in 2009 and plans to bring it into production in 2013. Río Colorado has a production capacity of 4.3 million tons per annum.

Cerro Vanguardia —This epithermal gold project, under AngloAshanti, has been in production since 1999. It is estimated to be four million tonnes at 8.7 grams per tonne gold for 1.1 million ounces gold. In 2009, this mine produced 192,000 ounces at a cash cost of $335 an ounce, with a CAPEX of $17 million.

In the news

Amidst the World Cup dominating news, the tournament has gone so far as to penetrate market commentary, and on June 15, Bloomberg’s Matthew Lynn suggested that buying up stocks dependent on who wins the World Cup could be a healthy decision.

“True, designing a portfolio around soccer rather than financial results isn’t the most scientific way of allocating assets. It’s probably not the kind of approach that gets you on the fast track at Goldman Sachs Group Inc,” Lynn writes, saying that, “if Argentina goes all the way, go big on mining and oil stocks.”

In other news, Argentina has made some pivotal changes in the country’s approach to mining environmental management. The government has stumped up more than US$20 million towards sustainability in its first official environmental management programme for the resource sector. Daniel Scioli, the governor of Buenos Aires, and Jorge Mayoral, the National Mining Secretary, both signed the agreement on June 10, 2010.

“Mining operations in Argentina will prioritise protecting the environment and being sustainable” Mayoral told press.

He added that the nation’s mining sector is expected to garner around US$32 billion in investments and generate in excess of 450,000 jobs.

In operations news, the US precious metals house, Coeur d’Alene Mines, looks to be preparing to cease operations at its Martha mine in the Santa Cruz province, as the mine nears the end of its ore reserves and work scheduled into late 2010 draws to a close. These reports are said to come from anonymous sources within the company.

A hot commodity for the country today is lithium and Korea Resources Corporation is the latest company in a bunch who have recently headed over to the country. This comes as little surprise —more than half of the world’s lithium comes from Argentina and Chile —but it does indicate continual interest and investment in the nation too. If and when Argentina’s mining industry will reach up to US$32, or even US$40 billion, in investments is not yet clear, but these sorts of predictions do look to be gathering weight as the sector continues to develop.

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