Argentina's presidential election holds keys to $5-billion in mine projects
The future of $5 billion in mining projects rides on Argentina’s presidential election this October, as the results will likely influence some of the world’s largest mining companies.
According to Bloomberg, Glencore Plc, Yamana Gold Inc. and Goldcorp Inc. are among producers signaling new investments in the country if the next government is more receptive to the industry.
Glencore is said to be considering a $3 billion investment to double copper production in Argentina over three years; Yamana Gold said it will invest $398 million in Cerro Moro, a gold and silver mine in Santa Cruz province; and Goldcorp, the largest gold miner by market value, is building the Cerro Negro gold mine, which began commercial output in January and is targeting production of 425,000 to 475,000 ounces this year.
Martin Dedeu, president of the Argentine Mining Chamber believes the next president will reduce mining taxes as well as steadily lowering currency controls, including a ban on dividends going offshore.
“The three leading candidates are convinced about the importance of the industry,” said Dedeu. “Daniel Scioli has said mining should be an engine for the economy, Mauricio Macri has been consistent in his support and Sergio Massa has said the sector deserves attention.”
Obstacles in the way
Since her re-election in 2011, President Cristina Fernandez de Kirchner has restricted imports and repatriated export revenue, creating controls that hurt international mining companies. In fact, Brazil’s Vale SA canceled a $5.9 billion potash project in the country due to Kirchner’s restrictions.
Three provincial mining officials, according to Bloomberg, said federal regulatory changes are expected by the 10 provinces that own resources as their income has declined since October 2011, when Fernandez ordered mining companies to expel all export revenue and cut company investments.
Yamana’s Cerro Moro, Argentina’s second-largest mining project is expected to commence construction later this year; however, construction won’t start unless federal regulations are changed including currency controls.
Marcelo Agulles, a Yamana spokesman in Argentina, told Bloomberg the company’s plans are firm under current Argentine regulations, but may be halted if gold or silver prices slump.
For Goldcorp, the upcoming election is critical as the Canadian miner booked a $2.3 billion writedown on Cerro Negro last year, citing “challenging fiscal conditions.” In an interview in March, CEO Chuck Jeannes said he had high hopes for the Argentine mine as elections would bring beneficial changes.
Goldcorp said it will accelerate spending and boost output if the incoming government does ease capital restrictions.
“All these projects will be executed if, and only if, the new federal administration changes regulations,” said Mariano Lamothe, chief economist at Abeceb.com. “The companies are announcing projects as an invitation to presidential candidates to set the table for the arrival of dollars. I’m sure these changes will happen.”
British Lithium Pressured Due To Calls for Electric Cars
The British demand for lithium is set to reach 75,000 tonnes by 2035 as the government works towards their ban on the sale of high-polluting diesel and petrol vehicles within the UK. This comes as automakers worldwide continue to insist on the benefits electric vehicles will have on slowing the rate of climate change.
It is estimated that the UK will require 50,000-60,000 MT of lithium carbonate a year by 2035 for battery production to satisfy government needs. This is assuming production remains at 1.2 million vehicles per year, and the amount of lithium required does not increase.
British Lithium, which hopes to begin constructing a quarry to produce 20,000 MT of lithium carbonate a year in a $400 million investment, are not without competitors, both within the UK and abroad.
Competition For Lithium Rises In Europe
After only five years after its initial launch, Cornish Lithium is setting its sights on becoming a UK powerhouse in mining lithium, aiming to begin commercial production in under four years. Jeremy Wrathall, a former investment banker and current managing director of Cornish Lithium, had the future in mind when founding the company.
“In 2016, I started to think about the electric vehicle revolution and what that would mean for metal demand, and I started to think about lithium,” he said in an interview with AFP. “A friend of mine mentioned lithium being identified in Cornwall, and I just wondered if that was a sort of unrecognised thing in the UK.”
Lithium was first discovered in Cornwall around 1864 and has not been mined again since 1914 when it was produced as an ingredient in fireworks. Now, however, Cornish Lithium is reportedly in the testing stage to see if the metal can be produced commercially to meet the growing demand required for the electric car sector.
Despite Cornwall’s close historic ties to mining lithium, Wrathall insists that the project is purely commercial.
Cornish Mining Revival For Lithium Production
“It’s not a mission that drives me to the point of being emotional or romantic,” he says. “It’s vitally important that we do get this technology otherwise Europe has got no lithium supply.”
The European Commission has also stated their goal to end the sale of new petrol and diesel cars by 2035 to aid the environment. That being said, the majority of lithium extraction currently relies on power provided by environmentally damaging fossil fuels─a slight contradiction.
Alex Keynes, from the Brussels-based lobby group Transport & Environment, is adamant that mining for lithium should be done sustainably.
“Our view is that medium-to-long term, the majority of materials including lithium should come from efficient and clean recycling.
“Europe from a strategic point of view should be looking at securing its own supply of lithium.”
Despite growing competition from abroad, British Lithium Chairman, Roderick Smith, continues to place importance on the mining of lithium within the UK.
“Imagine what the UK economy would look like if we lost our automotive industry,” Smith says. “The stakes are high for the UK.”
Smith expects the UK to compete with other European countries to secure a lithium battery plant in the near future.