Zeev's Turnips Patch-No Politics (ZEEV)

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*** Argentina rewrites the minerals rules ***


Argentina rewrites the minerals rules

By: Jim Jones
Posted: '05-JUL-06 10:16' GMT © Mineweb 1997-2004

ST JEAN (Mineweb.com) --The name Patagonia stirs up all sorts of images of a remote, wind-swept and very environmentally sensitive region. And it is, then, understandable that environmental issues come very much to the fore when mining projects are planned. But the latest move by Argentina’s provincial Chubut government to suspend all mining developments over a vast area for three years without reference to explorers and miners operating legally in the area is incomprehensible.

Let’s get it straight, the move has no apparent basis in environmental concerns. The prohibition applies to companies such as Patagonia Gold and excludes artisanal miners. And they, arguably, often do more damage to fragile environments and operate more unsafely than mine operators that bring more-sophisticated methods to their operations. One has only to look at the likes of Brazil’s garimpeiros whose surface scratchings cause significant damage in the fragile Amazonian basin.

Patagonia Gold has been at an advanced stage in planning and exploring its Huemules copper/gold deposit, and this has now to be put on ice for at least three years because of the Chubut government’s decision. And that decision has the backing of the central government in Buenos Aires.

So what is happening? And why have the Argentinean authorities changed the rules of the game so abruptly and without any public discussion? The fact that artisanal miners are excluded from the prohibition displays a political sensitivity. Government does not want to take the risk of armed miners stomping through the streets of the provincial capital, something that has not been uncommon in some of the country’s more-remote provinces.

Is someone looking for a bribe? What a suggestion! But this can often underlie decisions by authorities or officials who do not care that legislative unpredictability is a major disincentive to investors. Not that Mineweb carries a torch for Patagonia Gold per se. But the company can call upon a wealth of indigenous and foreign geological skills and has already proved deposits – such as the Esquel gold venture – that have been transferred to other companies to develop and work. Esquel, for example, was being developed towards the production stage by Canada’s Meridian Gold. It now appears to have been halted by the new rules.

Was Esquel the real target of the legislation? There have been some environmental questions over its development. But surely any dispute over Esquel should have been settled by direct negotiation between the authorities and the mining company than by a blanket prohibition of mining and exploration activity.

Patagonia Gold says that it is re-focussing its exploration activities to areas not covered by the Chubut prohibition. But one might well ask whether the same sort of unpredictable regulation will eventually extend to other areas. It has other concessions that are in the initial stages of exploration and drilling.

Maybe, just maybe, the Chubut action will not be repeated. But with the sort of uncertainty that now surrounds mineral developments and ownership in countries such as Bolivia and Venezuela investors might well start questioning their approaches to other countries in the sub-continent.

http://www.mineweb.net/columns/american_notes/656114.htm