The purpose of this legal update is to describe the situation in Argentina in respect of mining projects, particularly in the context of some recent political trends and developments in Latin America. In principle, nothing has changed, and nothing is expected to change in the near and mid-term future in a way that may adversely impact mining in Argentina. As it is generally known, the country is a relatively new participant in the mining industry, opening to large foreign players only in the 1990s. Despite the political colors of successive governments, these last 30 years evidence a consistently favorable attitude towards mining, an activity acknowledged by all political parties as a very important element of the country’s economy.

Most mineral resources in Argentina are found in areas with little or no arable land, very few inhabitants, and usually little or no access to basic infrastructure and services. The arrival of majors changed all that, and in most cases, they have become a positive influence, by providing locals -who are mostly public servants- with job opportunities, training, sanitary and communication improvements. They also help local government through taxes and royalties.

In these 30 years there has been a relatively low degree of conflict with the mining industry and, while they exist here and there, aboriginal, or social license issues have not been the prevailing feature in local mining projects. On the environmental front, a law protecting glaciers did generate some challenges.^[1]

The National Constitution of 1852 declared mining an activity of “national interest” and the Mining Code was adopted in the 19th century but mining as “the food basket of the world” did not really flourish until the Mining Investment Law was passed in 1992. The Mining Investment Law offers mining companies a 30-year tax stability. This law does not only protect them against new taxes but also against the imposition of foreign exchange restrictions and the increase of export and import duties once the feasibility study has been submitted.^[2]

Also, in the 1990s Argentina signed several bilateral investment treaties which expressly contemplate the possibility of a foreign investor to resort to international arbitration in cases of expropriation or unfair treatment by the federal government or any agency, including provinces and municipalities.^[3]The system was tested after a big financial and political crisis in 2001-2002, when the government changed the economic equation of most long-term contracts awarded to public utilities.

Argentina was brought to ICSID arbitration in over to dozen cases, and the system worked well as a neutral forum: aggrieved foreign investors succeeded in the proceedings, and some obtained favorable awards. Other cases were settled or withdrawn for strategic or commercial reasons. Some foreign companies expressed they would like a layer of protection beyond and above the ones above mentioned, some kind of ¨special treatment”.

In a very limited number of pretty recent large projects, we have seen foreign investors sign an MOU or something akin to an investment agreement. Such agreements only have a symbolic or moral value and do not add much to the battery of protections already available to all. Some challenges lie ahead:

A bit more than two years ago the Argentine government reimposed foreign exchange restrictions to prevent capital flight. Realizing this was preventing capital-intensive mining projects from kick-off, the Executive enacted last year a decree allowing companies investing more than US$100MM to freely use up to 20% of their export revenues. This is obviously not enough, but it is a step in the right direction. Also, in the southern province of Chubut, which holds world-class silver reserves, a new law was passed^[4] last year to deal once and for all with the standstill derived from open pit mining prohibition. Anti-mining movements rallied in opposition to the new law, making the governor repeal the law, and propose a referendum whose date has yet to be set.

One last positive thing that it is worth mentioning is that Argentina has not and is not expected to declare lithium a “strategic resource” -as it has happened in other countries- which essentially leads to having the State as an uncomfortable partner. In fact, as a quick and firm response to a few isolated voices proposing that direction, the three main provinces where lithium is concentrated (Salta, Jujuy and Catamarca) signed an internal treaty, endorsed by the federal government, in which they created a committee to promote investments by setting clear and stable rules. It also reinforced the fact that mining is a local provincial matter, not an area where the federal government may intervene or tamper with.^[5]

To conclude, we all know it takes 10 to 15 years to develop a mine, and that the industry is used to operating in jurisdictions where the rules of the game may change to some extent. Recent and ongoing political changes in the region may only be of significant concern to some international players, but countries that can combine attractive resources with a track record of respect for property rights and a steady positive attitude towards the mining industry, as is the case of Argentina, are definitely better positioned and stand to gain by being the recipients of significant investments.

^{[1] Law 26,639 on Minimum Standards for the Protection of Glaciers.}

^{[2] Law 24,196, article 8 and supplementary regulations.}

^{[3] In general, the treaties signed by Argentina include substantive protections related to expropriation (direct/indirect), fair and equitable treatment, full protection and security, denial of justice, most-favored-nation treatment, and free transfer of funds relating to investments.}

^{[4] Law 128 of the Province of Chubut.}

^{[5] See “The Interprovincial Treaty Concerning the Regional Development of the Lithium Sector” available at https://www.dentons.com/en/insights/articles/2021/december/9/the-interprovincial-treaty-concerning.}