Mining, one of the sectors that could grow this year
This year, when Argentina is predisposed to a fall in GDP of 1.7%, only a few sectors -especially those linked to external demand- will be able to show a good performance. This is the case of the field, mining, oil and gas. In the mining activity, by case, a growth of 1% is expected, according to some private estimates.
A recent report by the consultancy Econviews, explained that “the good numbers in the agricultural sector will be the product of the sum of the record harvest together with a low base of comparison, and that, in mining, the increase of about 1% in the year will be a genuine growth after a string of years of stagnation, “he said.
But, on the other hand, Juan Ignacio Paolicchi, an economist at the consultancy Eco Go, warns that this year, “mining is a sector that is favored by the change in relative prices that occurred during 2018, that is, the jump in the exchange rate. ” Although, it clarifies that a negative impact for the activity, is the fact that its exports return to pay retentions “, according to the government established since September of last year for different activities, anyway, according to the analyst,” mining It is among the few sectors that can show a good performance, “he said.
According to the forecasts of this consultant, the fall of the GDP, on average, will be 1.8%, given the negative statistical drag that left the 2018 (-3.7%). “That is to say, although the economy will grow a little during 2019, it is not enough to offset the negative drag of last year, so on average it falls, beyond the progress of some sectors,” explains the economist.
Regarding the retentions, the undersecretary of Mining Development of the Nation, Mariano Lamothe, assures that “today the private sector understands that it is a transitory measure and also, investors look at the long term,” he says. According to him, “since 3 years ago, Argentina changed the investment environment, which is why many projects are being mobilized”. Among the latest investments, the official highlighted the Cerro Moro projects, where the mining company Yamana Gold and the Chinchillas project operate in Jujuy, dedicated to the production of lead, silver and zinc, under the responsibility of SSRMining.
The official also highlighted the expected advance – this year – of the Lindero project, in Salta, where the mining company Mansfield, extracts gold in the open. As well as the operation of the Posco and Exar mines, in Salta and Jujuy respectively, devoted to the extraction of lithium. “Among these projects plus the expansion of others, we will see much more movement in investments,” he said.
In this sense, a recent official measure tends to favor the operation of mining companies by reducing the entry procedures for the activity in the country. It rules from this month. Through resolutions 06/2019 and 09/2019 published in the Official Gazette, the Government sought to simplify the registration to access the benefits of legislation for investors in the sector, which includes the reduction of taxes on exploration expenses. It is estimated that this measure will allow companies that invest in the sector to save more than $ 376 million annually.
According to the Chamber of Mining Entrepreneurs (CAEM), Argentina is worldwide, the first country with the largest reserves of lithium, the sixth in silver and the tenth in gold. In terms of its contribution to the country’s economic performance, a report from the consulting firm KPMG said that mining accounts for around 3% of GDP (mines and quarries exploitation, which includes oil and gas) and 6% of total national exports (Mining and Fuels item).