How Argentina’s Provincial Governments Are Shaping Mining Opportunities
Mining companies see Argentina as the next big opportunity in the global market. The country offers an unexplored copper endowment, and lithium extraction has been rising in recent years.
While President Javier Milei’s market-friendly federal administration has attracted support abroad, provincial governments hold the right to regulate mining activities in their territories. These governments see mining as a source of much-needed investment amid a recession that began in April 2023, and 289% annual inflation.
Argentina’s provincial governments largely favor mining, especially in the lithium-rich northern provinces of Catamarca, Jujuy, and Salta. Lawmakers from these provinces broadly support a new Milei-led initiative in Argentina’s Congress to slash taxes and regulations for large businesses, seeing the proposal as an open door to attracting more mining activity in their provinces. Conversely, environmental and indigenous activists have fiercely opposed mining projects in other parts of the country. These include the provinces of Mendoza and Chubut, which are home to copper reserves in the Andes Mountains.
Lithium leads Argentina’s mining industry
Argentina is home to in-demand minerals including copper and lithium. These minerals are used to manufacture electronics such as computers and mobile phones, and also power 5G networks. In today’s global context of climate change and geopolitical competition, governments and private companies in the US, Europe, and China are all channeling increased funds into industries related to energy transition. If major economies want to phase out gasoline-powered vehicles, lithium-ion batteries are the top choice.
Lithium is now one of the top money makers for Argentina’s mining industry. Northern Argentina forms part of the so-called “lithium triangle” with Chile and Bolivia, which is home to 55% of the world’s lithium reserves. Argentina is the only one of these countries where subnational governments have legal authority over the natural resources within their jurisdictions, allowing them to drive investment activities in their provinces.
Lithium is booming in Argentina. Figures from Argentina’s government statistics bureau (INDEC) show that in March 2024 production was up 53.7% when compared with the same month in 2023. Argentina’s private and public foreign investment for exploring new mining projects totaled USD385 million in 2022 — just below similar investment figures in South America’s two traditional mining powerhouses, Chile and Peru.
Lithium also made up a sizable chunk of Argentina’s total mining exports in the first quarter of this year, which amounted to USD861 million. Roughly half of that amount came from lithium in the northern provinces of San Juan, Jujuy, Catamarca, and Salta. The rest came from the Patagonian province of Santa Cruz, which is known for its gold and silver mines. Data from INDEC show that silver and gold production has also risen in the past five years, although at a slower pace.
Argentina’s natural resource endowment is all the more important when considering today’s global funding landscape. The countries with the highest foreign mining investments in Argentina are Canada, China, the US, the UK, and South Korea, which together make up 90% of the sector’s international investments.
Potential new incentives
Milei, inaugurated in December 2023, aims to carry out a bold, pro-market reformist agenda. Through legislative changes, he aims to slash regulations and provide economic incentives for capital-intensive projects, including those in the mining sector.
Provincial governors largely support his mining reforms, especially in the lithium-rich northern provinces. Mendoza Governor Alfredo Cornejo is also lobbying to allow mining in his province, despite Mendoza and Chubut recently passing regulations against mining activities due to environmental concerns.
Under Milei, Argentina’s Chamber of Deputies has advanced a proposal that would help finance projects worth more than USD200 million with private investors’ funds. The Incentive Plan for Large Investments (RIGI for its Spanish acronym) aims to foster growth in industries with high capital expenditure, such as mining, energy, and infrastructure.
The bill has support from mining majors and junior miners alike. The Argentina Chamber of Mining Companies (CAEM) supports the proposal, saying it could boost the number of lithium and copper projects. Moreover, CAEM Chairman Roberto Cacciola said that the industry confides in Milei’s administration.
The lower chamber of Argentina’s Congress approved the bill on 30 April 2024, and the Senate is now discussing articles in the legislative package that includes RIGI. Milei’s La Libertad Avanza party holds only seven of the 72 Senate seats, so it will need support from the center-right parties and even the Peronist bloc that governed Argentina until December 2023.
Provincial governors have historically played a key role in the Senate, granting support for the federal administration’s proposals in exchange for discretionary federal funds. However, Milei is currently carrying out an aggressive fiscal adjustment, cutting all non-mandatory transfers to provinces. He has not publicly committed to sending more money to provinces if RIGI is approved. Furthermore, Economist Martin Kalos of Buenos Aires-based consulting firm EPyCA told Southern Pulse that the extension of tax breaks to industries outlined in the bill might deprive future federal and provincial administrations of much-needed money.
And yet, provincial governors largely still want RIGI to become law because they want new mining projects on their turf. Given that support, RIGI is likely to pass in the Senate even if it is modified. Governors from various political parties in mining provinces have been cooperating with the Milei administration. La Politica Online energy reporter Luciana Glezer told Southern Pulse that Peronist governors sometimes choose to align with very different parties at the national level, meaning Milei may be able to find wider support for RIGI beyond his own party.
Catamarca governor Raúl Jalil and Salta governor Gustavo Sáenz have been calling on lawmakers from their provinces to pass RIGI. Center-right governors from other major mining provinces also support RIGI, including Marcelo Orrego from San Juan and Carlos Sadir from Jujuy.
Even so, RIGI is a controversial piece of legislation. Critics say that the bill is short-sighted because it would favor international investors over Argentinian private companies by granting generous tax breaks — likely for foreign businesses. As currently written, RIGI would not require these companies to hire local workers or local companies as vendors. Furthermore, the law would allow capital goods to be exempt from import tariffs, posing fierce competition to Argentina’s existing manufacturing sector.
China cozies up to provincial governments
Provincial governments with mining resources in Argentina are open for business with companies from all over the world. Their governors have a clear, direct interest in further developing those industries in their provinces. Chinese companies, especially, have developed close ties with provincial governments in recent years while other international players have been slower to move on the opportunities in Argentina.
Currently, China is the top importer of products from mining operations in Argentina's northern provinces — Catamarca, Jujuy, and Salta. China held 44% of this market share in Q1 2024, followed by the US in a distant second place (21.5%). Most of these exports can be traced back to active lithium projects.
Argentina’s mining provinces have their own state-run mining companies, such as REMSa in Salta, CAMYEN in Catamarca, JEMSE in Jujuy, and San Juan Innova in San Juan. While these companies do not directly engage in mining activity, they form joint ventures and manage concessions with private investors, largely based abroad. Joint ventures have been one easy way for Chinese companies to enter the Argentine market.
As Argentina’s provincial governments have the authority to sign off on new investments in their provinces, several provinces have signed memorandums with Chinese companies active in the mining sector.
For example, Jujuy’s government signed a February 2023 memorandum with the Chinese mining company Tsingshan to invest USD120 million toward constructing a plant for processing lithium carbonate. Tsingshan signed a similar deal with Salta's provincial government, as well as the companies Tibet Summit and Ganfeng Lithium.
Another example comes from the province of Santiago del Estero, which has no proven lithium reserves. And yet, local governor Gerardo Zamora announced in 2022 that a lithium-ion battery factory would be built by a consortium of Chinese heavyweights: CATL, Tianqi Lithium, and Gotion High Tech. However, the venture never took off.
On the surface, investment opportunities appear positive for their potential to bolster the struggling Argentine economy and take advantage of the opportunities for mining in the country. However, the nature of some of these agreements has raised questions about the circumstances surrounding these new opportunities.
In one case that has made its way into traditional media outlets, politicians in the province of Catamarca are coming under fire for cozying up to mining companies. Catamarca’s Vice Governor Rubén Dusso has family members directly benefiting from the local business activities of these Chinese companies. In August 2023, La Política Online reported that Dusso’s son, Juan Pablo Dusso, is both a municipal councilor in the province’s capital city of San Fernando del Valle de Catamarca and a shareholder at key Zijin vendor Altcaly. Meanwhile, the vice governor’s daughter Natalia Dusso became vice president of CAMYEN, the province’s state-run mining company.
But even with friends in high places, Zijin, one of the largest mining companies in the world, has been probed by Argentine authorities for irregularities related to tax payments and import-export duties.
Southern Pulse’s team in Argentina, Chile, and Peru believes that Chinese firms have a handful of advantages over their US, Canadian, British, and European counterparts trying to enter or expand in Argentina and South America in general. This is especially relevant considering the current global scenario of strategic competition between the US and China. More explicitly, Chinese businesses are not bound by anti-bribery legislation or reporting requirements, nor are they bound by similar human rights legislation. This makes them particularly attractive to business people and politicians looking to turn a blind eye to issues such as the lifespan of a mining project or relations with environmental and community groups, ignoring a better long-term investment option in exchange for fast cash.
Territorial risks
While mining opportunities abound in Argentina, the sector also comes with potential risks. These risks encompass perennial issues well-known to those familiar with operating in Argentina, such as corrupt politicians, indigenous groups, and unions.
However, organized crime — not traditionally a significant issue in the Argentine context — is undoubtedly emerging as a threat in correlation with mining growth in the country. While organized criminal groups generally follow the money and diversify as they expand their operations, the criminal sphere in Argentina has more recently been bolstered by an increase in the movement of illicit drugs — particularly along the Route 34 highway to the port city of Rosario. “The criminal landscape in northern Argentina and the broader South America region has been shifting at a fast pace in the past five years, and many government authorities have still not woken up to the problem,” according to Southern Pulse’s Managing Director for South America Pablo Zeballos.
That is especially true for Argentina’s federal government, which appears almost exclusively focused on implementing an urgent agenda focused on fighting a recession and rampant inflation and anything that could support those goals. If Argentina’s mineral-rich provinces succeed at attracting a flood of new investments, criminal organizations will follow. They will see these investments as an opportunity to explore new turf for illicit economies, whether it be opening up their own licit business ventures, extorting the area’s key vendors and businesses, or establishing new corridors for drug and human smuggling.
The federal government’s deep fiscal adjustment, led by media-savvy Milei, occupies most of Argentina’s headlines. But at the provincial level, there is a different story about developments related to the wider geopolitical race that does not receive enough attention. As that race plays out in Argentina, it comes with immense opportunity for those who recognize that there are accompanying risks tied to an expanding black and gray economy in the country.
Like anywhere in Latin America, businesses can succeed with their eyes closed in the short term — but entering with such a posture will be extremely costly in the long run.
Whether it’s Argentina or elsewhere in Latin America, Southern Pulse has the experience, network, and relationships to simplify this challenging region with honest, direct answers to your most complicated questions.
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