Representatives from investment bank and brokerage firm Cantor Fitzgerald recently attended a briefing at the embassy of Argentina on the changes underway in the country following last year’s general election, and stated that after 12 years of ‘Kirchnerism’ (left-wing populism), “Argentina’s new government under President Mauricio Marci is wasting no time in recreating a pro-business political environment which should attract significant foreign investment back in to the country.”
“Natural resource industries – mining, energy and agriculture – have been identified as key elements for this re-engagement, with the government hoping to attract $40 billion of direct foreign investment over the next two years. Since the election last December, significant policy changes have already been achieved.” Cantor said that of particular note for the mining industry has been the formation of a new Ministry of Energy and Minerals headed by Juan Jose Aranguren, the former CEO of Shell Argentina; removal of the 5% export tax on mining products; and removal of exchange controls and import-related bureaucracy. Further legislative changes are expected once Congress returns from its summer recess on March 1.
The country has also made significant progress in reaching financial settlement with the “holdout creditors” over the country’s $95 billion default in 2001. “To date, two of the groups involved, as well as the 50,000 Italian bondholders, have agreed terms, and some observers are hopeful of a complete settlement by year end. This would allow Argentina greater access to international capital markets again.”
Cantor Fitzgerald concludes: “Overall, the target is to make Argentina as attractive for natural resource companies as any of its South American peers. The country’s mineral endowment is significant with the focus for mining investment being placed on gold, silver and lithium assets. Given this particular mix of metals, the well-established mining culture, and a healthy dose of the feel good factor, 2016 could be a significant year for Argentina.”
On its investor advice for Patagonia Gold (PGD), the company states: “PGD has already highlighted policy changes which have positively impacted its business, and we believe the recent formation of a new Energy and Mines Ministry, and the country’s drive to attract fresh foreign investment, should further benefit PGD and the country’s mining sector as a whole. Furthermore, PGD should produce some important news flow during the year as it looks to stabilise its mining operation at Lomada and continue its assessment of the COSE and Cap-Oeste projects.”