Canadian mining entrepreneur Rob McEwen is urging Argentina to move forward with legislative changes that would increase the nation's attractiveness to investors, or risk missing the boat in cyclical metals markets.
McEwen, whose namesake company is drilling a copper mine in San Juan Province near the Chilean border, has been encouraged by authorities who recognise that mining can help shore up the country's finances and generate jobs. With Argentina already a hotspot for lithium, the global copper industry is also taking another look at the South American nation.
But to realise that potential, Argentina should make its tax system more competitive and lift controls on capital and foreign exchange, said the president of McEwen Mining Inc. Authorities must act now to avoid closing the window of opportunity as rising interest rates and blockades in China reduce demand prospects, which could lead to capital flows drying up, he said.
"There is a caution that investors have right now," McEwen said in an interview on Tuesday. "And if you go into a weak market, the capital simply won't be there for a while. They may have to wait until the next cycle."
Argentina's protectionist bent and politically volatile past mean it is still a tricky place to do business, but President Alberto Fernández's government is now making efforts to develop more of its vast lithium and copper deposits, which are critical to the transition to clean energy. It is resorting to measures such as tax breaks and capital control loopholes, in contrast to Chile and Peru, where authorities are seeking more restrictive regulations and greater profit-sharing.
"The government should be playing a bit harder, they don't realise the advantage they could have," McEwen said. "They just need to enact some legislation that really reassures foreign investors. They talk about it, but they have to go further than just talking."
McEwen remains a believer in copper, and the wiring metal is a key component in the move away from fossil fuels. But he says a market downturn could delay the transition to clean energy.
His company is working hard on the Los Azules copper project in Argentina, albeit with delays due to difficulties in obtaining drillers. It had hoped to have an updated preliminary economic assessment ready before the end of the year, but that probably won't happen until the first quarter of next year. That could mean missing the financing window, McEwen said.
by James Attwood, Bloomberg