Struggling Argentina expects US$14 billion in mining exports

Struggling Argentina expects US$14 billion in mining exports

Argentina's President Cristina Fernandez de Kirchner presenting the latest 100 pesos bank note with a portrait of former First Lady Eva Peron, in 2012. (Image courtesy of @ForsterRicardo)

Argentina, the poster child of nations that default on their loans, is trying hard to pull itself back up by leaning in one of its once key sectors: the mining industry.

According to Buenos Aires-based Quevedo Law Firm Principal, Ignacio Celorrio, the country’s recovering mining industry could generate exports worth more than US$14 billion within five years, as Argentina emerges from several years of declining resource deals and sales.

Speaking in Sydney during the second day of the Paydirt 2015 Latin America Down Under Conference, Celorrio said the export target was a realistic horizon considering the country’s projects pipeline.

The return to higher exports would be driven in part by at least 16 major projects now likely to go into production within the next few years,” he said.

The reactivation of such ventures, which have a current capital value of over US$28 billion, will be a welcome boom for Argentina’s mining industry, according to the expert.

Celorrio acknowledged that any resurgence would not be without its challenges.

“The current drop in internal commodity prices, limited access to project capital, and internal Argentinian economic issues, have delayed good development projects,” he said.

Signs of life

While Argentina’s economy is projected to show little or negative growth this year, its stock market is rallying and investors are buying the countries' debt.

The nation’s s Merval stock market is up 45% so far this year, more than Europe's stellar performance and way more than the S&P 500.

Yesterday JPMorgan Chase & Co. announced it wants to make Buenos Aires its regional hub by tripling its staff on expectations of a more stable monetary outlook, Bloomberg reported.

Even citizens, battered by rising food prices and electric bills, seem to be feeling better lately. The country's consumer confidence index is up over 40% from a year ago, according to Torcuato di Tella University, a private university in Buenos Aires.

There is also light at the end of the tunnel provided by the upcoming presidential elections in October, analysts agree.

“The anticipated move to a more pro-investment national administration will help deliver returns to the first new players in the country’s mining future,” said Celorrio.

“The country is well past the ‘hectic learning period’ it experienced in the 1990s and now has a very attractive and protective regulatory mining framework for private owners of mineral rights,” he added.

Official figures show that an improved project start-up had the potential to boost Argentina’s mineral exports 150% by 2021. This has the potential to generate 70,000 mining jobs and another 62,000 indirect jobs among suppliers.