Argentina, which has a canny knack for existing in a state of almost perpetual bankruptcy, often thinks about ways to make more money. The Government’s latest brainstorming has Buenos Aires looking southwards toward the resource-rich province of Chubut. Above ground, Chubut – a sparsely populated province in Patagonia – features clean air, pure water and spectacular scenery. Below ground, there are huge deposits of silver which the Government is keen to exploit. Locals, concerned about the effect on the pristine environment, are not quite so enthusiastic.
A mining engineer involved in some of Argentina’s largest exploration works, explained, “The region has for many years been a hotspot of resistance to the expansion of local mining projects. Self-styled ‘environmentalist’ movements have campaigned very strongly. They are galvanised by the fact that they were able to effectively put an end to previous projects and they believe that they can do the same this time around. They exert a significant influence in the provincial legislature. In Chubut, their activities led to the passing of two provincial laws that prohibit open pit mining and the use of certain substances, such as cyanide.”
“The region has for many years been a hotspot of resistance to the expansion of local mining projects.”
Mining engineer, Argentina
The administration of President Alberto Fernández is looking to progress work at the province’s ‘Navidad Project’. It is one of Argentina’s largest mining projects. Work there is carried out by the Pan American Silver company. If the company develops commercial mining activities in the region as the Government wishes, Argentina will become one of the top five silver producers in the world. Given the high price of silver in global commodities markets, this is a lucrative prospect.
The company has already successfully executed the entire exploratory stage, but cannot proceed to the next stage of mine construction and commercial production because of provincial laws. Recently, the provincial legislature approved a law that lifted these restrictions, but the violent reaction of anti-mining groups forced the provincial government to veto the law.
A local plebiscite is now planned to decide whether or not mining should be allowed in the province, but at the moment there is some scepticism that it will be carried out in the short-term. Even so, it doesn’t seem that Pan American Silver is going to abandon the project anytime soon. The results of the initial exploration were very positive and prospects for the future reflect a strong financial incentive for the company to dig its heels in.
A former official in Argentina’s Ministry of National Production said, “The time frames of mining companies and the risks they are willing to assume are very different from those of other sectors – I think that Pan American Silver will prefer to play the long game. The reality is that the exploration has already been done; it is difficult to abandon the project in this instance. At some point I suppose they will have to make a decision, but I don’t think it will be soon.”
“The time frames of mining companies and the risks they are willing to assume are very different from those of other sectors.”
Former official, Argentina’s Ministry of Natural Production
Both sides have nothing to lose by waiting. It is quite possible that neither the plebiscite nor direct talks will yield movement in the direction of one verdict or another. In this Patagonian David vs Goliath, a final resolution remains nothing if not unpredictable.