By Patricio Eleisegui
The expansive movement that international capital has been carrying out, with its consequent effects on the Argentine geography and the availability of local resources, not only provokes the rejection of environmentalists but also motivates the emergence of legal actions that aim to limit the business of the mining companies. It also inhibits the possibility of using water from rivers or springs for mineral extraction, and proposes the establishment of monitoring and fines in order to avoid negative actions on the environment.
The advance of investors and large foreign corporations on Argentina does not recognize limits.
In a first stage, as iProfesional.com reported in various research notes, this avalanche of foreign groups led to a transfer to foreign hands of vast extensions of land, large freshwater reservoirs, forests, jungles, plantations and endless of natural resources. To such an extent that the area under its dominion is comparable to that of the entire Uruguayan territory.
However, this is only part of the reality. There is another, which is given by the takeover of the Argentine subsoil.
It is known that, in terms of mining, the country has enviable wealth. The problem is that those who exploit it are others. And they will do so for many, many years.
Gold, silver, copper and uranium, among other materials, are extracted from the earth to be taken out of the country and commercialized in other latitudes.
Even Argentina is among the main holders of the so-called "raw material of the future": lithium, an essential element for the manufacture of electric cars, cell phone batteries and notebooks, among other uses.
Now, who are the ones who benefit from that wealth worthy of being envied? Economic groups from Canada, the United States, Australia, Great Britain, Switzerland and Brazil.
Large international corporations from these countries are those that have shared the control and extraction of these strategic minerals.
The process (consisting of the extraction and subsequent departure to other destinations) does not generate any profit for the country since, by current regulations, companies are not obliged to enter Argentina the large amount of foreign currency they receive for the minerals extracted .
For example: the great wealth in gold that the territory possesses made it the second regional producer. However, the state barely collects 3% of the profits from royalties.
Even that percentage, specialists explained to iProfesional.com, is reduced to just 1.8 percent.
This is so given that the mining companies enjoy a regime by which they are allowed to deduct all the costs related to the extraction of the material from the total to be paid to each province.
"The relevant mining, better known as‘ mega-mining, ’is all owned by foreign companies at this time. The Argentine participation was reduced to the extraction of lime or materials for cement. Local businesses, at most, can become suppliers. But the exploitation of the main wealth is in the hands of foreign capital ”, emphasized to iProfesional.com, María Fernanda Reyes, national deputy for the Civic Coalition (CC).
“One of the biggest irregularities happens because in itself, it is not known for sure what exactly is extracted. Many firms declare that they exploit one thing, but other types of minerals are also taken in the same extraction, ”Reyes said.
The deputy also referred to the detection of "many cases of mineral smuggling" and pointed out somewhat diffuse procedures in the affidavits of some companies.
The "owners" of the blue and white subsoil
Argentina has key resources, due to their scarcity and because they have the character of "strategic", facing the future.
And it is for this matter that even giants like China have already set their sights on these lands (see note: An "Asian elephant" silently advances on key companies and sectors in Argentina).
In this context, and as far as land wealth is concerned, large corporations of origin:
- Canadian (Barrick Gold)
- Anglo-Swiss (Xstrata Copper)
- American (Coeur D’Alene)
- Australian (BHP Minerals)
- Brazilian (Vale do Rio Doce)
Among others, they are some of the "heavyweights" that control the large farms that are carried out in these lands.
After a detailed investigation, iProfesional.com, obtained the details of the main farms in the country, their respective locations, and the companies that control them:
“In Catamarca a foreign company has just bought 117,000 hectares with a population of 300 families. All because of mining, which generates wealth for foreign companies and in the area only leaves environmental damage ”, Pablo Orsolini, national deputy of the UCR for the Chaco and former vice president of the Agrarian Federation, had assured iProfesional.com (see note: They seek to stop the avalanche of foreigners, after "taking over" key resources in the country).
"Precisely Catamarca, Tucumán, La Rioja and San Juan are examples of water pollution due to the use of arsenic for the extraction of gold," he stressed.
No to VAT, Earnings and other issues
The current legal framework not only enables foreign capital to exercise control of strategic resources, but also allows them to obtain profits and pay only royalties.
"The companies that take the main minerals in Argentina, by laws promoting the sector, are exempted from paying VAT, check tax and stamps, among other items. They also have benefits in terms of income tax. And they do not have the obligation to re-enter the country the foreign exchange they obtain from the sale of the final product abroad, ”said Reyes, from the Civic Coalition.
Indeed, since 1993, after the enactment of Law 24,196, mining companies have enjoyed a fiscal stability regime for a period of three decades, from the date of presentation of the feasibility study of a project.
“This means that all benefits, exemptions, allowances and incentives cannot be modified for a 30-year term. This regime covers direct taxes, tax rates and contributions, customs duties, and import and export duties, ”the document remarks.
“In other words, the fiscal stability regime prevents the total tax burden of the subjects reached by these benefits from increasing for a period of 30 years, at the national, provincial and municipal levels. The subjects reached are not affected by the creation of new taxes, the increase in aliquots, the repeal of granted exemptions, the elimination of admitted deductions, etc. ”, he adds.
Reyes assured that, in addition, the companies obtain the VAT refund if they remove the minerals out of Argentina, through the Patagonian ports.
In this sense, the study by the Civic Coalition specifies that, since 1993, “the State reimburses a percentage of the value of exports made through the ports incorporated into the applicable law, that is, the ports or customs south of the Colorado River".
"The reimbursement rate increases as the port is in a more southern area," he points out.
On the other hand, the imposition at the time of withholdings to the sector did not mean a significant outlay for the firms either.
“Export duties are only 5 percent. At the time, many provinces opposed their entry into force, fearing that companies would declare them as costs, as they do with part of the 3% that they must pay in royalties, ”Reyes pointed out.
The legislator maintained that, if all the exemptions that benefit the work of foreign companies are added, "they end up leaving practically nothing for the country, while they continue to take minerals to destinations such as France or Germany for processing."
Gold and silver (due to their historical economic weight), copper, zinc and lead (due to their permanent industrial use), uranium and lithium (due to their energy wealth), and potassium (key to agribusiness), are some of the raw materials that they concentrate the disbursements of international corporations.
Examples that amaze
1. The case of Bajo de la Alumbrera (Catamarca): in terms of relevance, this deposit appears as the maximum exponent of this “foreignization” of mineral wealth.
It is controlled by Anglo-Swiss firm Xstrata Copper and Canada's Goldcorp and Northern Orion.
Bajo de la Alumbrera is considered the most important gold mine in the country. Through the application of large-scale crushing, grinding and flotation processes, the deposit generates some 700,000 tonnes of concentrates per year, containing 190,000 tonnes of copper and around 600,000 ounces of gold.
This material, with the addition of water:
- It is pumped to the province of Tucumán, through a 316-kilometer mineraloduct.
- In that province, the mixture is filtered in a separation plant and then transported by rail to Santa Fe.
- From there, the mineral is derived to processing plants abroad.
- The gold that is extracted is destined for the markets of China, India, Japan, Germany, Spain and Finland, among others.
According to specialized sources in the sector, the companies that are in charge of the exploitation of the deposit have been denounced on countless occasions for the improper use of corrosive fertilizers, and environmental contamination with arsenic, cadmium, copper, mercury, lead and selenium.
2. The Pascua Lama case (San Juan): also, regarding the exploitation of the precious metal par excellence, the Canadian Barrick Gold stands out, which is in charge of the Veladero and the controversial Pascua Lama projects.
This year the company completed an expansion of its first deposit, in order to achieve a daily production of 85,000 tons of material, and launched its second initiative - which includes work on the Chilean side of the mountain range.
Pascua Lama has suffered criticism since the initiative was announced for being located in an area surrounded by glaciers.
3. Pachón (San Juan): oriented to the extraction of copper.
The exploitation is controlled by Xstrata Copper, the deposit has an estimated useful life of 25 years, and its production is destined to supply refining plants in Japan, Korea, Taiwan and North America.
The deposit is also rich in molybdenum, a mineral widely used in the development of alloys.
4. Agua Rica (Catamarca): represents another of the great bets of large corporations. In charge of the Australian BHP Minerals, the planned investment for the total development of the deposit is $ 9,000 million, and its activity is adjusted to the exploitation of copper and gold.
With production to begin scheduled for 2012, Agua Rica is currently facing strong opposition from environmentalists and political figures.
The cause: the potential contamination of water and land by the application of cyanide, a substance that is used to separate the precious metal from other elements. In this regard, the European Union this year banned its use in mining, as a result of its harmfulness to the environment.
5. Potasio Río Colorado (Mendoza): stands out for the strong disbursement committed by the Brazilian Vale for the entire initiative: 7,000 million pesos.
The fight for the raw material of the future
Special mention deserves the so-called battle for lithium. At present, North Americans, Japanese, Koreans and Chinese appear as the promoters of a wave of projects and exploitations that, with their epicenter in the Argentine Puna, accumulate millionaire disbursements:
- FMC Minera del Altiplano –controlled by the American FMC Corporation.
- Ady Resources, under the control of an Australian firm.
- Lithium Ameritas, went down the orbit of a Canadian company (associated with the auto parts company Magna).
Among others, they are part of an outpost that, in a few months, has been adding more participants in this fight to get hold of the mineral.
A project to stop mega-mining
The expansive movement that international capital is carrying out, with its consequent effects on the Argentine geography and the availability of local resources, not only provokes the rejection of environmentalists but also motivates the emergence of legal actions that aim to limit the business of the mining companies.
In this sense, Congressman Fernando Solanas, leader of Proyecto Sur, has just presented a project that, if approved, will prohibit open-pit mining. In other words, the type of activity that the giants of the segment carry out today.
The proposal is also signed by Felipe Solá, Margarita Stolbizer, Jorge Obeid, Claudio Lozano and the interviewee, María Fernanda Reyes, among other officials.
It also inhibits the possibility of using water from rivers or springs for mineral extraction, and proposes the establishment of monitoring and fines in order to avoid negative actions on the environment.
The text, accessed by iProfesional.com, puts the care of water sources among its priorities:
“Large amounts of water are used and polluted, which are the main input in the extractive process. It is obtained from rivers, glaciers and aquifers near the projects, at a rate of several hundred or thousands of liters per second. For this reason, the farms are located at the origin of the water basins and in the vicinity of the fossil water reserves ”, the project warns.
"According to a study published by the Ministry of Mining in relation to the Veladero project, in San Juan, the nominal consumption of a project that would employ 360 people operating in regime would be 3,250 m³ / day (3,250,000 liters / day), that is to say the amount of water a town of 40,600 inhabitants would consume in one day. "
In another section, it states: “The La Alumbrera project has an installed power of 15,000 KW. The energy consumed is close to 72,720 MWh / year ”in such a way that it represents“ the equivalent to supply a city of 48,500 inhabitants. It is the largest company in Argentina in terms of electricity consumption ”, he says.
The document goes further: “While there is talk of the energy crisis in the country and the population is asked to use low-consumption lamps, only this undertaking represents 68% of the entire provincial market (Catamarca) and 15% of the NOA ( Argentine Northwest) ”.
Thus, it is clear that the strategic wealth of the Argentine subsoil, for the next few years, will be highly compromised.
“Since the 1990s, all possible legislation has been created to encourage looting. In this way, we have spent years of companies taking the minerals almost for free. If it persists over time, this will end when there is nothing more to extract from Argentine soil, ”the legislator complained.
Patrick Eleisegui - July 2010 - http://www.iprofesional.com