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Argentina’s economic rock star Milei opens the country to mining LATIN AMERICA
BY COLIN MCCLELLAND
A
rgentine President Javier Milei, who took office two years ago in a chainsaw-wielding campaign against big government, has slashed inflation by nearly two-thirds after gutting public spending and halting money printing to finance the deficit. His Incentive Regime for Large Investments of more than $200 million (C$285 million), known by its Spanish acronym RIGI, offers 25% corporate income tax instead of 35%, plans regulatory stability for 30 years and, in a major shift, allows external arbitration over disputes. “He’s changed the ground rules significantly,” Rob McEwen, founder and executive chairman of McEwen Mining (TSX, NYSE: MUX), which is advancing the roughly $3-billion capex Los Azules copper project in the country, said by phone. “He’s going to cut out the bureaucracy, get permitting faster, get the money invested and attract the capital.” Not since the free-market revolutions of 1990s Eastern Europe has a leader attempted to rewrite the investment playbook so completely — and so quickly — as Milei. Already, he’s witnessed the $4.1-bil-
| Libertarian’s RIGI program draws billions
lion BHP (NYSE, LSE, ASX: BHP) and Lundin Mining (TSX: LUN) tie up over Filo Corp. in the country as well as Rio Tinto’s (NYSE, LSE, ASX: RIO) $6.7-billion purchase of Arcadium, which has two of its three lithium mining projects in Argentina. RIGI draws $15B value So far, 11 companies have applied under RIGI. Six of them are mining projects, which could hit 10 by the end of the year for a ballpark value of $15 billion, National Mining Secretary Luis Lucero said in an interview. “The companies have expressed that this RIGI system has been very, very fundamental in their decision to select Argentina as a place where to invest,” Lucero said on March 20 by video phone. “Probably we would have seen, I wouldn’t say nothing, but certainly not the large investment we will see in copper.” Two projects by Glencore (LSE: GLEN), El Pachón and MARA, plus First Quantum Minerals’ (TSX: FM) $3.6-billion capex Taca Taca, Lundin’s Josemaría and McEwen’s Los Azules are all due to start output by around the end of the decade. Together they could contribute some $47 billion
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“He’s changed the ground rules. He’s going to cut out the bureaucracy, get permitting faster, get the money invested and attract the capital.” ROB MCEWEN FOUNDER, MCEWEN MINING
to Argentina’s economy by 2040, according to London-based analysis firm CRU. Only Los Azules has applied under RIGI, which McEwen confirmed, while the names of the program’s other applicants are confidential, Lucero said. Large investment forum Applications for RIGI, besides details of who, what, where and how the project plans to operate, must be new projects and explain the business plan, the cash flow expected and how it’s intended to be financed. One project, for an energy initiative has been approved. Two more projects should be approved very soon, Lucero said.
“Sometimes we’re talking about projects that were well known for a long time,” the secretary said. “But as an economic investment, they’re new because before, the conditions for a large investor to commit the hundreds of millions (or billions) dollars were simply not there.” After three years, RIGI relaxes limits on U.S. dollar buying and repatriating profit. Coupled with the other incentives, the program is a way to boost the country’s low foreign reserves of around $28 billion and to encourage investment even as capital controls remain, Thiago Amâncio, a senior consultant with Control Risks based in Sao Paulo, Brazil, said by email. Thin on results “However, the program has yet to yield concrete results in attracting foreign investment,” Amâncio said. “So far, only two projects have been approved: one for solar energy by YPF Luz and another for an oil pipeline in Vaca Muerta. As a result, it remains uncertain whether the country will meet the government’s optimistic projections of $22 billion in mining investments between 2026 and 2029.” Annual inflation has dropped Argentina 40 >
Full coverage from PDAC / 9
The Cauchari-Olaroz lithium project by joint venture group Minera Exar. ARGENTINA SECRETARIAT OF MINING PM44082538