By Joseph Grosso, President, Golden Arrow Resources Corp.,The Grosso Group
Meilan named National Mining Secretary
The mining world is watching with keen interest the promise of change made by the recently elected new Argentina government.
Daniel Meilan, a licensed geologist, returns to the Mining Ministry as the National Mining Secretary. He previously held the position of Sub‑Secretary of Mining in 1994 and then moved on to become the National Mining Secretary until 1999. He was an original pioneer in promoting mining and instrumental in bringing about the bilateral agreement with Chile to develop the huge mineral resources which cross the border into Argentina. Until recently, Mr. Meilan was working as an international consultant to a wide range of multinational companies with an interest to re-enter Argentina’s mining industry.
He is therefore very aware of the changes needed in Argentina’s mining policy in order to attract foreign investors. His decision to return to the Mining Ministry was stimulated by his firm belief that there would be a revised plan and a government policy to bridge the existing disparity and notable differences existing between federal/provincial fiscal policies and their implementation which has been a concern for international investors who either did not go to Argentina or placed their projects on hold until such needed policy changes were implemented.
The return of Mr. Meilan as Secretary of Mining is a sign that Argentina`s government is now ready and committed to continue with mining growth by building the incentives needed to attract foreign investors. It is hoped that the new approach will aim to put a balanced fiscal policy so that Argentina is in line with the most advanced and successful mining jurisdictions around the world.
Message needed from the Argentina delegation during PDAC
Argentina`s delegation to the PDAC, which will be making its presentation on Monday, March 7, has the responsibility of bringing the new government`s message of change to an international audience who are already aware of the prospective geological potential of the country. The mining industry will be very interested to learn the details of proposed policy changes. It will be important to show the world that Argentina is just as economically competitive as its prominent neighbouring countries.
The mining industry welcomes the recent policy shifts in December 2015, being the:
- Lifting of currency controls – devalued Peso may result in lower costs for project development;
- Elimination of export taxes including 5% on gold/silver doré and 10% on concentrate;
- Lifting of some import restrictions allowing for international sourcing of equipment; and
- Restarting negotiations with holdout bondholders from Argentina’s 2001 default.
Junior exploration companies
Major mining discoveries are extremely rare and require early and advanced exploration financed by high-risk capital raised by junior companies in the risk capital markets. When an economic project is found it is usually taken to production by a major mining producer which has the required funds that can total several billion dollars. These large investments must produce revenues for conservative financial institutions that seek to invest in countries with low political risk and adequate incentives for the invested capital. Argentina’s new government is demonstrating its desire to be competitive in wanting to attract the capital needed to develop its vast, yet undeveloped, natural resources which are one of the primary sources for building a strong Argentine economy.
A mining pioneer’s observations
The Grosso Group is one of the many junior mining operators whose affiliated companies explore and provide new discoveries to major producers. Sourcing capital for companies listed on stock exchanges is highly susceptible to government stability and investor friendly economic policies. As Argentina is a major destination of choice for Grosso Group and its affiliated companies for the past 23 years, we are looking forward to improved investor policies that incentivize and attract foreign investment to Argentina making it a natural resource destination of logical choice to invest and create a:
- Win for the government
- Win for the community
- Win for the investor
Company commitment entering Argentina
In the final analysis, serious companies entering Argentina will have to be inclusive of local community leaders and make them part of the decision making process, respecting cultural norms and work together with authorities and communities to address fears and environmental concerns. It is important to also discuss the economic benefits to communities and be committed to work in a transparent and informative way always within federal / provincial objectives and mining code compliance.
A corporate presence is very important in order to keep authorities and impacted communities and surface owners apprised of contemplated activity or changes that may affect them, especially in times of intense technical activity in a region that may raise questions and foster social unrest.
The Grosso Group and its affiliated companies intend to remain in Argentina, continuing to explore to achieve a fourth world‑class discovery to benefit the communities, government and investors and are looking forward to Argentina implementing a more friendly fiscal environment for foreign investment possible only with favourable mining policies.