Diego Temperley of Auscham on the potential of Mining and development of Lithium in Argentina
Published: 9 August 2018 09:09
The mining sector in Argentina is becoming more increasingly more attractive for investors since the government's plan to encourage more investment and develop new projects. We spoke to Diego Temperley, President of Auscham to get an overview on how the industry is moving forward and to explain why Lithium could be a game changer.
Miners & Investors - What have been the major developments and changes you are seeing in the Argentinian mining sector under President Macri’s term?
Diego Temperley - Right from the beginning this government has made it clear that mining is one of its key sectors. President Macri removed export taxes, dividend repatriation controls, exports controls and foreign exchange restrictions.
Indeed, in his first speech, our (former) Mining Secretary, Daniel Meilán, told us that he wanted mining to do for the mountain provinces, what agroindustry has done for the pampas.
The Argentine provinces that border Chile along the Andes are full of mining resources. They are especially rich in lithium, graphite, copper, gold and silver.
When you consider that mining makes up 15% of Chilean GDP but just 1% in of Argentina’s GDP you can see how much potential we have for growth. We also have the plains of Patagonia that are rich in minerals.
We’re fortunate that prices are now recovering, which means the industry has more money to invest. Finally, the new political and economic framework in Argentina is encouraging mining firms to invest.
Miners & Investors - How is the government looking to encourage investment into mining and support companies in Argentina?
Diego Temperley - The 1990s marked the beginning of the modern mining industry in Argentina. This saw the establishment of a strong regulatory framework. This led to several large mining companies such as Silver Standard, Anglo Gold and Barrick building mines in Argentina. Many of these mines being built in the 1990s, they are now reaching maturity. Therefore, those operators are faced with the difficult choice of whether to shut the mine down or invest in underground mining, balancing the higher costs against the higher grades. Some of the operators have also looked at securing tenements close to their main property.
The problem was that with a change of government the country had a period from 2001 to 2015 where there was no new mining exploration in Argentina. That regime didn’t support FDI in mining and as a result many of the producers stopped their activities.
However, under Macri’s administration, many of these miners are going back to projects which they have already done the PFS for and looking to bring them into production.
This government has forged a federal mining agreement between all of the provinces, which seeks to standardized each jurisdiction so a mining company will face the same procedures and taxes across the country. It is also creating a digital national mining registry so that investors can see what projects are available, instead of having to contact each individual province.
Miners & Investors - Which provinces do you see the most potential for mining development and investment?
Diego Temperley - The most attractive provinces at the moment are Salta, Catamarca, San Juan, Santa Cruz and Rio Negro. They have an attractive combination of excellent deposits, a solid business environment and welcoming local governments and communities.
Miners & Investors - How will the Lithium story in Argentina continue to evolve? What are your expectations?
Diego Temperley -Argentina is part of the lithium triangle with Bolivia and Chile, and the sector has moved quickly following Macri’s election. Lithium is one area that has seen lots of activity, a lot of lithium investments have been done.
We’ve seen around 30 to 40 companies entering Argentina from Australia and Canada. In the mid-term, we expect a concentration process to a smaller number of players. You can explore quite easily but producing LCE has been demonstrated to be more challenging.
We have seen a lot of inbound investment coming from Japan, China and Korea as they look to secure the supply chain going into production. For example, a Korean company have taken a stake in Galaxy or Japanese in Orocobre
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