Wednesday, January 23, 2008

Anti-Mining Environmentalists Win Big in Argentina - Goldcorp Retaliates Following Argentine Tariff Move - Will Halt All Exploration Spending

Bullion giant Goldcorp Inc. says it will halt exploration spending in Argentina after the government imposed export duties on metals production, reversing a pledge to keep miners' tax rates stable for 30 years.

Vancouver-based Goldcorp owns a 37.5-per-cent stake in copper and gold mine Alumbrera, the largest mining operation in Argentina.

In late December, the Argentine government stunned the country's burgeoning mining industry, slapping a 10-per-cent tariff on base metals exports and a 5-per cent-levy on gold production, seeking a larger slice of miners' profits from record metals prices.

(See: 10 Things Canada Does Best - What Canada doesn't do best is hold domestic mining companies accountable for the damage they do abroad. , Possible Tax Evasion? Under-declaration of profits by mining companies costs Tanzania US$207 million )

In retaliation, Goldcorp has decided to put exploration efforts in Argentina on hold.

"I have already taken Argentina from the 2008 list of places I am going to go," Tim Miller, Goldcorp's vice-president in Central and South America, said in an interview.
(Now that is making a positive contribution to Argentina, as defined by its citizens: Esquel Celebrates One Year Anti-Gold Mining Referendum Anniversary)

"I have put it on hold. There are other places that are inviting foreign development and investment much more than Argentina," he said.
(Like Papua New Guinea and Guatemala: Canadian, Goldcorp's open pit, cyanide-leeching mine runs up against local opposition in Guatemala , Unregulated Gold Miners – Environmental Stewards or Criminals? Not a single mine in Papua New Guinea has a Tailings Dam )

The surprise export duty has threatened Argentina's rapid ascent (descent?) as a destination for the world's mining industry. In search of the next metals hot spot to rival Chile or Peru, international mining firms have flocked to Argentina in recent years, spending billions on exploration and mine construction.

Mining investment in Argentina has increased to $1.77-billion (U.S.) in 2007 from $220-million in 2003.

The country promised 30 years of tax stability to mining companies in 1993 and issued exemptions from export duties imposed during the country's financial crisis in 2002 to mines already in production.

Now some of the world's largest mining companies have filed a legal action against the government in a bid to fight the new duties. Xstrata PLC, which controls and operates Alumbrera, Rio Tinto PLC, the owner of a borax mine in Argentina, and AngloGold Ashanti, which has run the Cerro Vanguardia gold mine since 1998, are seeking an injunction preventing the government from collecting the new tax.
(Mining companies are NOTORIOUS for not paying taxes: 10 Things Canada Does Best - What Canada doesn't do best is hold domestic mining companies accountable for the damage they do abroad. , Possible Tax Evasion? Under-declaration of profits by mining companies costs Tanzania US$207 million )

"We continue to be hopeful we will reach a solution through dialogue with the government respecting legislation currently in effect but, in the meantime, it has been necessary for us to protect our short-term interests and we had to commence legal proceedings," Xstrata spokeswoman Emily Russell said.

(Protect their interests is all they care about, not an iota of heed for the opinion of the community in which they operate: Argentine Supreme court upholds Chubut Province ban of cyanide leach mining - local protest crucial to the verdict )

Some miners in Argentina were already paying the duty. Barrick Gold Corp., the world's largest bullion producer, operates the Veladero mine in Argentina and has been paying a "temporary" 5-per-cent export duty on gold production since 2005. Barrick, which is developing the massive Pascua Lama project that straddles the Argentine border with Chile, is not involved in the litigation and is "monitoring" the situation, a company spokesman said.
(In Barrick's case, litigating against a government that it needs permits from isn't a good idea:Barrick Gold Corporation's Pascua Lama Mining Project on Hold - The Perils of Gold Mining in Chile's Border Region - Uncertainty Rattles Shareholders )

Goldcorp does not have any major exploration operations in Argentina. However, the country "was high on its list of countries we would like to expand into," Mr. Miller said.

Exploration around the Alumbrera concession by the mine's partnership has also been put on hold, the Goldcorp executive said, delaying "millions of dollars from being spent on planned exploration."
(And saving billions of dollars of future clean-up costs: Supreme Court Decision Rattles Canadian Mining Industry – Right to Pollute Under Threat – Teck Cominco Execs Vow Fight, say No to Cleaning Environment , $400 Million Taxpayer Financed Superfund Clean-up Effort and Tourism Dollars Revive Idaho Mining Town after 1981 Mine Closure )

Goldcorp has lobbied Ottawa for help and hopes the export tax issue will be raised by MP Ted Menzies in meetings with Argentine officials in Buenos Aires this week.

(Yes, the Canadian Government is stooge of the Canadian Mining Industry: The Canadian Government and Mining Industry)

Toronto's Yamana Gold Inc., which owns 12.5 per cent of Alumbrera and is developing the Gualcamayo mine and several other projects in Argentina, is also watching the situation closely.

(So is Esquel: Yamana Gold Corporation acquires Meridian Gold Inc. owner of the stalled Esquel Gold Mine Project )

"To have sustainability for mining you have to have certainty. You can't change the rules midstream," Peter Marrone, Yamana's chief executive officer, said in an interview.

(And few environmental regulations: "Chile is the best mining jurisdiction in the world... Canada is not a jurisdiction where I would like to develop a mine." says Centenario Copper CEO )

Here is the full article.