Argentina Mining Report 2012

Argentina's mining sector holds some of the largest potential for development in the Americas region. Large natural resources and minimal historical mining presence suggest that major mineral deposits are still to be discovered. We forecast Argentina's mining sector value to increase from US$27.5bn in 2012 to US$49.8bn by 2016, representing average annual growth of 15.7%. We are forecasting strong growth in output of gold, silver and copper over this period, driven by elevated prices for these minerals. The mining sector faces major risks, however, as the economic environment in Argentina is increasingly uncertain and likely to deteriorate.

Elevated Prices Attracting Investment We forecast strong growth in the production of three minerals primarily, copper, gold and silver. We expect exploration and mine development will continue to focus on these minerals as global fundamentals and prices are more favourable. Several large projects include Barrick Gold's Pascua Lama mine, which straddles the border with Chile. Pascua Lama is one of the largest planned gold mines in the world with anticipated annual output of 750-800koz (thousand ounces). Because mineral rights in Argentina are decentralised and regulated by the individual provinces, we expect exploration and mine development will centre on provinces that are committed to and favourable towards mining.

Argentina's mining sector has successfully attracted investment from some of the largest mining companies in the world. Industry giants such as Xstrata, Barrick Gold, AngloGold Ashanti and GoldCorp all currently have exploration or development projects in the country. Many other mid-tier miners are actively developing mine projects in Argentina that could see some sector consolidation as companies are acquired or merged. The presence of both large and small miners will see Argentina's mineral output grow rapidly from a relatively low base, given the lack of a strong historical mining presence. Global demand for minerals will see companies continue to invest in areas with higher risks and naturally higher returns.

Rising Risks To Mining Sector In spite of our optimistic view for mineral production growth, we forecast such growth with a note of caution due to the substantial risks that remain. Argentina's second place position in our regional Risk/Reward Ratings is due to the greater weighting towards potential rewards. This does not, however, diminish the risks mining companies face including rapidly rising costs and increased government intervention in the extractive resources sector. Several other factors make us relatively cautious towards the business environment in Argentina such as the country's weak financial and legal system as well as a high level of perceived corruption.

Miners will also face the risk of rising costs. Faced with double-digit inflation and a highly managed currency, companies will face difficulty combating higher labour and raw material costs. We see the Argentine peso as very overvalued at present with the risk of a devaluation in real terms in the coming years. Higher costs in Argentina decrease the country's competitiveness and will force companies to increase capital expenditure budgets. While we have not yet seen companies delaying projects, should metals prices weaken and costs rise, the incentives for mining in Argentina will decrease significantly compared with other, more stable economies in the region.

Argentina's regulatory environment is relatively favourable at present. Federal government policies have yet to restrict or regulate the mining sector extensively given its previously weak presence. That said, recent developments in other areas of the extractive resources sector highlight one of the key risks to mining projects as metals prices remain elevated and companies reap large profits. The increasing control over the oil and gas sector could spill into mining as well, should the government take more extreme measures to manage the economy

Business Monitor International's Argentina Mining Report provides industry professionals and strategists, corporate analysts, mining associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Argentina's mining industry. SHOW LESS READ MORE >

Executive Summary
SWOT Analysis
Argentina Mining SWOT
Argentina Political SWOT
Argentina Economic SWOT
Argentina Business Environment SWOT
Global Mining Outlook
Table: Recent Tax Increases
Table: Largest Coal Projects
Table: Frontier Mining Projects
Americas: Mining Sector Outlook
Table: Key Central America And Caribbean Mining Projects
Industry Forecasts
Copper: High Risks To Growth Projects
Table: Major Copper Projects In Argentina
Table: Argentina's Copper Production
Silver: Emerging Global Producer To Grow Despite Challenges
Table: Key Mine Expansion Plans In Argentina
Table: Argentina's Silver Production
Gold: Risks Remain Amid Strong Growth
Table: Key Mine Expansion Plans In Argentina
Table: Argentina's Gold Production
Regulatory Structure
Americas Business Environment Ratings
Table: Americas Mining Business Environment Risk/Reward Ratings
Competitive Landscape
Company Profiles
Barrick Gold
Table: Barrick Gold's Key Financial Data, 2008-2011
Xstrata
Table: Xstrata's Financial Data, 2007-2011
AngloGold Ashanti
Table: AngloGold Ashanti's Key Financial Data
Commodities Forecasts
Copper
Aluminium
Lead
Nickel
Tin
Zinc
Gold
Business Environment Ratings Methodology
Table: Mining Business Environment Indicators
Table: Weighting Of Components

- Barrick Gold
- Xstrata
- AngloGold Ashanti