Argentina plans to triple its mining exports

RIO DE JANEIRO, BRAZIL – The Argentine government will launch a mining plan to triple export revenue to more than US$10 billion. The mining sector’s contribution to GDP is barely 0.6%, while it reaches 10% in Peru, 11% in Brazil, and 12% in Chile.

The program is called the Strategic Plan for the Development of Argentine Mining (PEDMA) and will be launched after the November elections, as the election embargo period does not allow any government announcements.

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Although the first part of the program talks about environmental sustainability, the government knows that this point will cause discussions. For this reason, the Ministry of Productive Development has asked entrepreneurs to oppose the supposed environmental protection publicly.

The Ministry of Mines believes that this activity could be a “driving force for community development, national industry growth, and exports.” Current exports amount to US$3.2 billion. This is “less than 10% of Chile, which has the same mountain range as us,” according to Daniel Schteingart, director of the Center for Production Studies (CEP XXI).

There are currently 15 mining companies in operation and 50 advanced projects, both metal-bearing and lithium-bearing. According to official sources, they could increase export revenues 3.4 times to US$10.76 billion. The increase in exports would be due to exponential growth in lithium (from US$190 million to US$2.1 billion) and copper (from virtually zero to US$5.42 billion).

To realize the potential of the sector, capital investment will amount to US$27.25 billion. As these are substantial long-term investments, the plan will include tax provisions to incentivize capital and infrastructure investment to make the activity competitive.

On this point, the fine print has yet to be defined, as the corporate sector is lobbying hard for a reduction in withholding tax, while the Ministry of Economy is looking for more “progressive” instruments.

Another argument put forward by the government is the level of salaries. In 2020, metal mining was the sector with the highest wages in the economy. In May 2021, the average salary was ARS254,000, three times the average in the formal sector, according to Schteingart. Ninety percent of wage earners in the sector earn more than ARS111,603.

The mining program will be part of the environmentally sustainable product development plan, as efforts to develop clean energy and electric mobility are embedded in that plan. An electric vehicle requires four times more copper than a vehicle with an internal combustion engine.

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