One year after it was approved by Congress and launched to fanfare, one of President Javier Milei’s flagship policies, the Régimen de Incentivos para Grandes Inversiones incentive scheme for major investments – better known as RIGI – is still not taking off.
Over the past 12 months, seven initiatives totalling US$13.167 billion in investment have been approved. A further 11 projects are still in the pipeline. There has been only one rejection until now, a project put forth by the Chinese firm Ganfeng.
“RIGI is coming along a bit slowly,” economist Federico Bernini tells Perfil. “The projects took their time in being presented and approved.”
RIGI projects have shown scant investment activity. For example, on imports.
“ The imports are moving slowly, with even various projects already approved yet to register purchases. But most of these projects are long-term – copper, for example – so that the imports are not instantaneous but take time,” said Bernini, a member of Instituto Interdisciplinario de Economía Política (IIEP) at the University of Buenos Aires.
The October midterms are also stalling investment. “They could be awaiting the results of the elections to know whether there exists a possibility of non-compliance with the conditions,” as happened with the mining investment legislation of the 1990s, said the economist.
In concrete terms, three projects have registered imports. For Luz de Campo, a solar energy park that became the first project to be approved by the RIGI, the latest data available from July show zero imports, although accumulated imports were worth US$22 million until then, the highest so far. Products acquired were complete solar trackers, liquid dielectric transformers, static converters and photovoltaic cells assembled in modules or panels. Next comes VMOS SA, the Vaca Muerta Southern Oil Pipeline Project, whose July imports were US$24,000, adding to a total of US$4.6 million so far this year. The main product was steel containers with a capacity superior to 300 litres. Finally, the Proyecto Rincón mining project in Salta began importing last month with barely US$5,500 to buy alternatives volumetric pumps.
Matías Cena Trebucq, an economist with the Fundación Ambiente y Recursos Naturales (FARN) working at the environmental foundation’s RIGI Observatory, said in dialogue with Perfil: “This kind of régime finds it difficult at the start to grease the institutional and bureaucratic processes for the review and approval of all the paperwork the companies have to hand in to join the régime. This might have complicated the situation a bit, plus the political context in which we currently find ourselves.”
Trebucq stressed the importance of other factors, not just the carrots used to encourage investors. “There are also different studies showing that it is not just the fiscal incentives, as RIGI offers in particular, which really count for foreign direct investment (FDI) coming to the country. Other variables tend to carry more weight, such as what might be the level of education of the population, i.e. whether the workforce is skilled or not, as well as the level of infrastructure to supply services, ensure connectivity and maintain roads in good condition.”
As for Argentina’s level of FDI, the difference between inflow and outflow presents a negative balance of US$1.527 billion, according to recent Central Bank data. If it ends the year like that, it would be the worst such figure since it was registered. Last year there was a positive balance of US$89 million.
FARN’s RIGI Observatory prepared a study for the anniversary of approval of the scheme. It worked with other groups, including the CELS (Centro de Estudios Legales y Sociales) human rights group, CEPPAS (Centro de Políticas Públicas para el Socialismo), EPyG/NUSAM (Escuela de Política y Gobierno de la Universidad Nacional de San Martín), ETFE (Espacio de Trabajo Fiscal para la Equidad) and the Transnational Institute (TNI).
The report highlighted that “19 investment projects were identified, 10 in the mining sector (five lithium, three copper and two gold ), three in renewable energy (two wind farms and one photovoltaic), three for oil and gas infrastructure with one each for steel, biofuels and port infrastructure. The investment pledged by all these projects combined would ascend to over US$30.76 billion.”
Breaking down the projects, the mining sector represents 63 percent of pledged investment, the oil sector 32 percent, renewable energy two percent and biofuels, steel and port infrastructure on one percent each. In other words, mining and oil concentrate 95 percent of pledged investments.
“Mining constitutes the most attractive sector for the main international players. This is where the highest number of initiatives is concentrated, 10 in total – the highest volume of pledged investments, reaching US$19.312 billion from private international capital in its totality,” continues the report.
Lithium is the main focus of investments: five projects in Salta and Catamarca, with combined commitments of approximately US$4.485 billion. “To these should be added three ventures in copper and a further two in gold,” adds the report.
The fiscal benefits of the scheme translates into revenue which the state ceases to collect. "To give you a reference, for the mining régime, which has some very similar aspects to Law 24,196 such as granting 30 years of fiscal stability, accelerated amortisation and tariff exemptions for the companies which explore or exploit minerals, the Undersecretariat of Public Revenues has made a calculation estimating a revenue loss of 0.07 percent of Gross Domestic Product this year,” said ETFE economist María Julia Eliosoff.
RIGI: The projects approved to date
To date seven projects have been approved for RIGI to the tune of over US$13 billion, coming from both local and foreign capital. Three are in the energy sector, two involved in mining lithium and one in the steel industry.
Approved projects
– Southern Energy, a partnership between Pan American Energy (PAE), YPF, Pampa Energía, Harbour Energy and Golar LNG: Investment estimated at US$6.878 billion for shipping and exporting liquefied natural gas (LNG) from Río Negro.
– Rincon Mining, belonging to the company Rio Tinto: US$2.724 billion for the construction of a lithium carbonate plant in Salar del Rincón, Salta.
– VMOS S.A.: Almost US$2.586 billion for the Oleoducto Sur de Vaca Muerta, an oil pipeline 437 kilometres long from Añelo (Neuquén) to Punta Colorada (Río Negro), as well as six storage tanks and a maritime terminal for exporting crude oil.
– Sidersa: US$296 million for the construction of a new steel plant in San Nicolás, Buenos Aires Province.
– YPF Luz: US$211 million for the creation of a photovoltaic solar farm of 305 megawatts in Las Heras, Mendoza.
– Galan Lithium: The latest in the list with a sum of US$217 million for the production of lithium chloride in Salar del Hombre Muerto, Catamarca.
– Generación Eléctrica Argentina Renovable (GEAR 1 S.A.): Creation of a wind farm in Olavarría, Buenos Aires Province, for a sum of US$255 million.
RIGI: Projects still awaiting review
There are still 11 projects in the files of the RIGI evaluation council awaiting approval or rejection, according to the RIGI Observatory’s survey.
– Minas Argentinas SA: Gualcamayo project for mining gold in San Juan, for US$700 million.
– Posco Argentina SA: Sal de Oro project for mining lithium in Salta for US$633 million.
– Andes Corporación Minera SA: Los Azules project for mining copper in San Juan for US$227 million.
– Galaxy Lithium: Sal de Vida project for mining lithium in Catamarca for US$638 million.
– Vientos La Rinconada PE: La Rinconada project for US$206 million in the electricity sector in Buenos Aires Province.
– Terminal Timbués SA: project for the construction of infrastructure at the port of Timbués in Santa Fe Province for US$290 million.
– Pampa Energía: Rincón de Aranda project for a processing plant for oil and gas in Neuquén for US$426 million.
– Santa Fe Bio: US$400-million project for a refinery at San Lorenzo, Santa Fe Province in the biofuels sector.
– Barrick and Shandong Gold: Veladero project for mining gold in San Juan, US$400 million.
– Glencore: Minería Agua Rica (MARA) project for mining copper in Catamarca for US$4 billion.
– Glencore: El Pachón project for mining copper in San Juan for US$9.5 billion.
RIGI: The rejected project
The only initiative to be rejected was the Mariana lithium project presented by the Ganfeng enterprise for some US$273 million. Economy Minister Luis Caputo announced its rejection himself on social media.
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