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General Market Commentary
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General Market Commentary
New Mining Deal to Boost Lithium Production in Argentina
Argentina might be one step closer to becoming a leading exporter of lithium. Last week, the country’s federal government signed a new mining act aimed at attracting foreign investment, and it is expected to boost lithium production over the next five years.
Introduced by President Mauricio Macri, the deal is expected to increase foreign investment in Argentina’s entire mining sector to $25 billion by 2025; that’s on top of the $3 billion already confirmed for 2017 to 2018. Last year, the country received $1.5 billion for lithium projects alone, and was able to increase its total lithium production by nearly 60 percent.
“[Mining] is an activity that could be one of the pillars of job creation,” Macri said at a signing ceremony. “We can develop it with perfect care of the environment.” Currently Argentina is the world’s third-largest lithium-producing country, accounting for 16 percent of production at 29,000 tonnes.
The agreement will set a 3-percent cap on the royalties that mining companies pay to Argentina’s provinces. Provinces will be able to tax miners an additional 1.5 percent on their sales for local infrastructure funds. The new mining act has yet to receive approval from Congress, but was signed by most Argentinian provinces except Chubut, La Pampa and La Rioja.
Since becoming president in 2015, Macri has removed the currency and capital controls and taxes introduced by his predecessors; those actions have largely been seen as wins for the mining industry. In fact, about 40 foreign companies began to consider opportunities in Argentina’s mining industry after the changes, more than half of those in lithium, according to Mining Secretary Daniel Meilan.