'Argentina is strongly committed to the development of sustainable and transparent mining'

Bnamericas Published: Saturday, October 01, 2022
'Argentina is strongly committed to the development of sustainable and transparent mining'

The governors of Argentine lithium powerhouse provinces Salta, Jujuy and Catamarca have just met in Washington to discuss with US officials and corporate representatives the advantages of investing in the jurisdictions’ mining industry.

The meeting was held at the Department of State and was attended by representatives of multinationals such as General Motors, BMW and Tesla, as well as companies related to lithium extraction such as Lilac Solutions, Lithium Americas and Livent.

In addition to presenting strategic plans, the mining potential of Argentina and the legal conditions for investment in the country, the role of lithium as a contributor to the energy transition and electromobility was highlighted.

Argentina is the world's fourth largest lithium producer and has the second biggest lithium reserves at 19.3Mt, according to the US Geological Survey. Together with Chile and Bolivia, the three South American countries hold more than half the estimated global resources of the metal, most of which are found in extensive salt flats.

To find out more, BNamericas spoke with Mario Belardinelli, lead mining partner for Argentina at KPMG. This interview was conducted by email.

BNamericas: What are the legal, tax or other mechanisms with which Argentina is promoting investments in mining?

Belardinelli: The activity is governed by a specific law, mining investment law No. 24,196. The mining code establishes the mechanisms to grant, maintain, transfer or revoke mining rights through a system of concessions, which obliges the concessionaire to pay an annual canon and to make investments.

The promotion of the activity occurs, among others, by tax benefits such as:

  • Fiscal stability for a period of 30 years from the declaration of feasibility of projects.
  • For the determination of income tax, deduction of 100% of investments in prospecting, trial tests, construction of a pilot plant and other investments necessary to bring the project to the feasibility stage.
  • VAT reimbursement related to investments in exploration.
  • Cap for the calculation of royalties of 3% on the extraction value of the mineral.

BNamericas: How have you seen the interest of the US, China and the European Union in mining in Latin America and in particular, Chile and Argentina?

Belardinelli: In particular, the interest in mineral resources is concentrated in American, Asian and Canadian companies, with some participation also by French and Swiss companies. Interest is growing due to the existence and potential of resources and the existence of skilled labor.

BNamericas: Will the slowdown in the Chinese economy cause a decrease in investments by Chinese companies in Latin America?  

Belardinelli: So far, the effects of this slowdown in our country have not been seen.

BNamericas: China has large investments in mining in Argentina. Why?

Belardinelli: Chinese investments in Argentina began to expand in 2004 when Argentina recognized China as a market economy. China is currently Argentina's second largest trading partner, behind Brazil. The investments are in different sectors: lithium and solar energy in Salta and Jujuy, mining in San Juan, Mendoza and Catamarca, wind energy in Chubut and Neuquén, freight transport, among others. An agreement was even signed between the central banks of both countries so that the yuan forms part of the reserves of the central bank of Argentina. China is a country with a high volume of capital that has identified mineral resources in our country, particularly copper, gold, silver and lithium.

Argentina is strongly committed to the development of sustainable and transparent mining. In 2019 it joined the EITI [Extractive Industries Transparency Initiative] and in 2022 launched the SIACAM [a system open to the public with information on mining].

BNamericas: Due to the increased Chinese investment in lithium production in Argentina, could it lead to a monopoly situation that countries like the United States are so concerned about?

Belardinelli: I don't see it as a risk. Lithium exploitation is diversified mainly among American, Canadian and Asian companies. And in all cases, significant investments are being made in exploration and in expanding the production capacity of the projects that are already in operation.

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