Sunday, November 17, 2019
Perfil

ECONOMY | 07-09-2019 01:40

Mining companies hope for pragmatic form of Peronism amid project freeze

Alberto Fernández tells representatives from 50 mining firms he’s ready to work with them, if elected.

Whoever wins next month’s presidential election in Argentina will have to rely on commodity exporters to bring in much-needed foreign currency. The mining industry is hoping that will win them some concessions.

Since Alberto Fernández nailed a landslide win over President Mauricio Macri in the August PASO primary election, Argentina’s foreign currency reserves have fallen 22 percent to US$51.7 billion.

The victory has led mining companies that were considering billions of dollars in investment in Argentina to think again. They want clarity on whether Fernández and his running-mate, former president Cristina Fernández de Kirchner, will resort to the protectionist measures and populist policies of the past.

“It is more than natural that anyone mulling an investment in Argentina is taking some time to think,” said Gustavo Koch, executive director of mining chamber CAEM (Camara Argentina de Empresarios Mineros). “Decisions will be delayed and I’m not sure they will necessarily happen after the elections.”

Foreign companies are monitoring the situation, according to both Daniel Meilán, a former mining secretary under Macri, and Rolando Dávila, secretary general of the Chile and Argentina Chamber of Commerce. Both said they’re serving as advisers for the companies, which they declined to name.

“It’s a shame, but this looks like another setback for the mining sector in Argentina and the question is how long and how big that setback will be,” said Fiona Mackie, Latin America director at the Economist Intelligence Unit. “Even if Fernández wants to implement a relatively pragmatic, centrist policy, there’s a huge risk we won’t see macroeconomic stabilisation for a few more years.”

‘No alternative’

Last Sunday, Macri’s government announced capital controls to halt the slump in foreign currency reserves, including restrictions on distributing benefits abroad and on buying dollars. But there’s already been a backlash in agriculture, Argentina’s top exporting sector. Among other strategies, farmers are planting more soybeans instead of corn because it requires less investment.

Meilán says that whoever becomes president will need to support mining growth in Argentina to help rebuild the country’s economy. “Argentina has no alternative,” Meilán said in an interview in Santiago, Chile. “It needs to export and it needs dollars to come back in. That’s true for Macri, and that’s true for Fernández.”

Mining giants Glencore Plc, Newmont Goldcorp Corp and Yamana Gold Inc are doing early studies on a plan to jointly develop the Agua Rica gold and copper deposits in the country’s northwest. In March, the government said an investment decision could happen within months. The companies are planning to present a feasibility study within the next year, Yamana said on Tuesday in an emailed answer to questions. Newmont Goldcorp and Glencore declined to comment.

Yamana does not expect capital controls to have a significant impact on the business, as the project is years away from entering production, the statement said. The company doesn’t like the imposition of currency controls, but is confident that it’s a short-term measure and that it can manage around it.

Reviewing rules

Barrick Gold Corp, which operates the Veladero gold mine, said in an email that it is reviewing the new rules and it expects to be able to work within the regulations as required. “Argentina’s political situation right now is dynamic,” the company said. “While we are always supportive of our host countries, we do not involve ourselves in politics.”

Fernández hasn’t made public an economic programme for his presidency. While he was seen as more moderate than Fernández de Kirchner, his rhetoric has become increasingly combative, saying he is unwilling to support the government’s emergency measures aimed at containing rising volatility.

The Peronist contender told about 50 mining company officials at a private meeting in Buenos Aires last month that Argentina needs to produce and export minerals as a way to get foreign currency flowing into the country, according to a presentation on the meeting by pollster Poliarquía seen by Bloomberg.

Fernández didn’t make promises, but asked miners to see him as an ally, saying he will not be an obstacle for mining activity, according to the document. A spokesperson for the Frente de Todos official did not immediately respond to a request for comment. The document, aimed at mining executives who did not attend the meeting, included a word of caution.

“There is no certainty that what he said in that meeting is what will actually happen,” the Poliarquía presentation said. “Everything that mining representatives heard was said by a politician, an Argentine and a Peronist who is about to win the next elections.”

Bloomberg

by Laura Millan Lombraña

More in (in spanish)

Comments

Música

Bambi: "Vuelve a casa"

Ads Space

Ads Space