Mining 2024

Last Updated January 25, 2024

Argentina

Law and Practice

Authors



Beretta Godoy is a leading Argentine law firm. It specialises in foreign direct investment and offers innovative and practical advice to clients across various sectors. It has a particularly strong practice in natural resources, tax, corporate M&A, labour, foreign trade and arbitration, and has a wealth of experience in relation to mining, energy, agribusiness, telecommunications, media and entertainment, manufacturing and infrastructure. Over 90% of the firm’s clients are headquartered outside of Argentina. Beretta Godoy has been highly ranked and recommended as one of the leading law firms in energy and infrastructure in Argentina.

Argentina is a country with great mining potential. It has abundant mineral resources reserves, with similar geological composition to other countries in the Andes, such as Chile and Peru. Opportunities exist particularly in relation to gold, silver, copper, lithium, and uranium. It is estimated that in Argentina there is approximately 2.3 million square kilometres of terrain which is appropriate for mining.

Argentine mining has also expanded to the world stage.

  • Mineral products from Argentina are exported to approximately 80 countries. 
  • The Argentine mining sector has also been invested in by investors from more than 30 countries spread across the world.

Argentina also has considerable competitive advantages over many other resource-rich countries.

  • It has a highly educated population, with large numbers of geologists, engineers, and geophysicists. It also has a literacy level of 99.3% which is among the highest in the world. Argentina’s highly educated workforce is relatively inexpensive. 
  • Argentina has first-class infrastructure. With a network of over 500,000 kilometres of roads and highways, it amounts to one of the largest rail networks in the world. It has 43 ports, and all the infrastructure necessary to become a mining powerhouse.
  • Filings for mining prospecting and exploration rights are simple and inexpensive; moreover, there are no significant requirements for keeping such rights in good standing. 
  • There are no limitations for mining prospecting and exploration of minerals.

Argentina’s competitive advantages, unexploited mineral resources, favourable mining investment laws and its resources in critical minerals for the energy transition explain the exponential growth of its mining sector over the last three decades.

The country has enacted the Mining Investment Law (No 24.196), which provides a 30-year fiscal stability period and additional incentives at each phase of project development.

In furtherance of attracting investments, Argentina has introduced a New Investment Promotion Regime for Exports through Decree 234/21 and 836/21. This regulatory framework ensures that investors have guaranteed access to foreign currency on the local foreign exchange market.

The Argentine government has also taken significant strides in enhancing transparency within the mining sector. Notably, the country became a participant in the Extractive Industries Transparency Initiative (EITI) in February 2019, underscoring its commitment to transparency and accountability. Additionally, the government launched the SIACAM initiative in 2022, an open-access Mining Information System available to the public, further reinforcing its dedication to transparent mining practices.

Argentina is a civil law jurisdiction.

It is a republic with three branches of government: Executive (President and Cabinet of Ministries), Legislative (Congress, comprised of the House of Representatives and Senate) and judiciary (Supreme and lower courts).  Argentina is a federal state, divided into provinces.

Lawmaking in Argentina can be done at different levels, as follows.

  • Federal – the national level – ie, Argentina. The Argentine government is the federal government and makes laws and regulations that apply nationwide.
  • Provincial – Argentina has 23 provinces and the autonomous City of Buenos Aires. Provinces are subject to federal laws and regulations. They also have the power to legislate on all matters that have not been delegated to the federal government under the Federal Constitution, which includes, importantly, matters related to natural resources and the environment.
    1. Provinces have their own constitutions and executive, legislative and judicial branches of government. In addition, each province is divided into administrative units (ie, municipalities) which are not autonomous but have their own budgets and administrative structures.
  • Municipal – the most local level – including cities, towns, and villages. Municipalities are responsible for property taxes, property standards, zoning, business licences, and local by-laws. They are subject to relevant federal and provincial laws and regulations.

The National Congress has the exclusive power to enact federal laws, including for international and inter-provincial trade, immigration and citizenship, patents, and trademarks.

The Argentine Constitution also entitles the Argentine Congress to enact codes, which are applicable nationwide concerning civil, commercial, criminal, labour, and mining. Procedural codes are enacted by each province.

In Argentina, material mining laws are issued by the National Congress and are contained in the National Mining Code (the “Mining Code”), as amended and complemented.

However, the property of natural resources belongs to the provinces or, only to the extent the resource is in a federal territory, to the federal government. Also, as mentioned, legislating on procedural rules falls within the provincial jurisdiction, so each province has its own code of mining procedure. Accordingly, provinces (i) appoint mining authorities and (ii) provide procedural mining regulations that individuals and legal entities must follow to be awarded mining rights and property. Exploration permits granted are subject to specific terms, but resulting exploitation concessions, provided that certain requirements are met, are perpetual.

The Mining Code contains regulations covering the general extent of permits, technical requirements, permit-holder obligations and permit limitations.

The Mining Code also identifies the limits of the rights and relationships between exploration and mining concessionaries, landowners, and the community; providing specific material regulations in connection with (i) easements; (ii) guarantee bonds; (iii) indemnifications and (iv) environmental control of the mining prospecting and exploration activities.

Mines are classified in three categories based on the type of mineral discovered. Lithium (together with gold, silver, platinum, mercury, copper, iron, lead, tin, zinc, nickel, cobalt, bismuth, manganese, antimony, wolframite, aluminum, beryllium, vanadium, cadmium, tantalum, molybdenum, and potassium, among others) belongs to the first category of mines, in which the soil is an accessory, that belongs to the provincial state in which it lies and can only be exploited given a legal grant though a concession by the relevant mining authority. The landowner, based solely on this condition, is not entitled to exploit these minerals.

Additionally, foreign investors should also consider federal regulations regarding natural reserve areas since such regulations might entail a particular inability to conduct mining prospecting and exploration activities in different parts of the country.

In Argentina, material mining regulations are given by the National Congress and are contained in the Mining Code.

However, property in and relating to mining natural resources belongs to the provinces or the federal state. Accordingly, provinces (i) appoint mining authorities (that may be part of the Provincial Executive Power or the judiciary) and (ii) provide procedural mining regulations that individuals and legal entities must follow to be awarded mining rights and property. Exploration permits granted are subject to specific terms, but resulting exploitation concessions, provided that certain requirements are met, are perpetual.

Although provincial laws and regulations cannot alter, in any way, the rights and obligations established by the Mining Code, provincial regulations are not identical. Therefore, the process for obtaining and maintaining exploration permits varies slightly from one province to another.

The Argentine Constitution delegates to the Federal Congress the power to issue the Mining Code. Mineral rights derive from law, are deemed private property and, as such, they are protected by the Argentine Constitution. See 1.2 Legal System and Sources of Mining Law, 1.3 Ownership of Mineral Resources, and 1.4 Role of the State in Mining Law and Regulations.

Provinces are the owners of mineral resources located in their territories and are the granting authorities of the mining rights over them. See 1.2 Legal System and Sources of Mining Law, 1.3 Ownership of Mineral Resources, and 1.4 Role of the State in Mining Law and Regulations.

The Mining Code sets forth requirements for exploration and exploitation permits.

Title to Mining Exploration Rights

In legal terms, mining prospecting and exploration rights can be granted to individuals or legal entities through exploration permits. Any person can request an exploration permit on a first-come, first-served basis, provided that the land is available for mining (meaning that it is an urban area, or not affected by infrastructure uses such as railroads, roads, or power lines, and that it is not in an environmentally protected zone). Any mineral discovery performed either by the permit-holder or third parties, provided it takes place within the area and term of the permit, grants the permit-holder the right to turn such discovery into a mine (see the next chapter on exploitation concessions).

Those who obtain an exploration permit will have exclusivity rights to apply for and obtain a mining concession for the same area in which minerals were found.

Main Features of Exploration Permits

The most important feature of exploration permits is that they are granted in connection with a limited ground area, for a limited period:

  • Permit area – the area of each permit is divided into surface units and each unit has a size of 500 hectares. Each permit can have up to 20 surface units and therefore the largest permit might cover an area of 10,000 hectares (although as detailed in the fifth bullet point below, a single person can hold more than one permit). However, as the permit term runs, its size should be gradually reduced by the permit-holder.
  • Permit term – the term of an exploration permit depends on the size of the granted permit area. The basic 500 hectares permit lasts for 150 days and each surface unit added to such basic permit increases the term by 50 additional days. Therefore, the largest possible permit will last for a 1,100 days’ term.
  • Permit rights – holding an exploration permit is not a prerequisite for acquiring a mining concession, as the existence of a deposit may also be discovered accidentally. However, when carrying out exploration activities it is advisable to apply for an exploration permit, because conducting exploration activities without an exploration permit or the consent of the surface landowner may lead to liabilities for damages caused as well as very substantial penalties ranging from 10 to 100 times the exploration canon corresponding to one unit of measurement. Moreover, the exploration permit is enforceable against third parties. Holders of an exploration permit will have exclusivity rights to apply for and obtain a mining concession within the area covered by such permit. Provided that the area of the exploration permit is entirely free from mining rights or properties previously granted, the permit-holder has the exclusive right to claim mines in such area from the date of filing the permit request with the corresponding provincial mining authority.
  • Obligations associated with an exploration permit – exploration permits impose a relatively small number of obligations on the permit-holder. However, once obtained, it is mandatory to keep the exploration permit in good standing. Below is an outline of such obligations.
    1. A one-time exploration canon (or fee) payment, regardless of the term of the permit. The amount of this canon is set forth by law of the National Congress. 
    2. Identifying the landowners of the requested area and publishing the request with the local official gazette; it is worth pointing out that, although in general terms landowners are not entitled to file oppositions against exploration permits, they can demand a bond from the permit-holder to guarantee potential damages to their property.
    3. An environmental impact report (EIR) to be filed with the appropriate provincial authority, containing a description of any proposed environmental and protection methods to be used, and any actions to be taken.
    4. To legally initiate mining activities, an EIR must be filed and be assessed through a technical, scientific, and legal administrative process. Then, the enforcement authority shall issue an environmental impact statement (EIS). The EIR should be filed and approved on a bi-annual basis. 
    5. Forecasting mining exploration activities and, upon the granting of the permit, performing as forecasted. Failure to fulfill such requirements obliges the corresponding provincial authority to terminate the permit.
    6. Once the exploration permit expires, the permit-holder must file with the corresponding provincial mining authority the information and documentation resulting from the exploration activities conducted.
  • Restrictions associated with exploration permits – Argentina has historically supported mining prospecting and exploration activities. In fact, mining activities are considered of public interest, which means that confronted with other rights, mining development activities shall prevail. A direct consequence of this is the relatively small number of limitations associated with exploration permits. Below is a brief outline of the most relevant limitations.
    1. The largest area that can be simultaneously awarded to a single person or legal entity is 200,000 hectares per province.
    2. There is a limit of 20 exploration permits for a single person or legal entity per province.
    3. Exploration permits cannot be granted consecutively to the same person or legal entity over the same area; however, after a one-year term from the termination of the permit, a former permit-holder will be allowed again to file a request for such area.
    4. Conducting prospecting and exploration activities near crops, gardens, buildings, or other facilities requires the consent of the corresponding landowner.
    5. It is forbidden to conduct prospecting and exploration activities near cemeteries, streets, roads, railroads, pipelines, public domain waters, or other public facilities.
    6. Both residents and non-residents may apply for an exploration permit. However, to own mining rights, foreign companies must register a branch in the country or conduct such activities through a local subsidiary.
    7. Mining activity is prohibited within protected areas in Argentina as determined by National Parks Law No 22,351.
    8. Additionally, the Minimum Standards for the Preservation of Glaciers and Periglacial Environments prohibits the development of industrial activities (specifically mining) that negatively affect the natural environmental condition of glaciers.

Exploitation Concessions

Definitions

For reference purposes, what follows is a brief description of the defined terms used. The terms kept in Spanish are in italics.

  • Canon – an annual or six-monthly payment that concession holders must make to the state (either national or provincial) to keep the concession in good standing. This payment is usually divided into two equal amounts.
  • Environmental Impact Report (EIR) – environmental report for exploration or exploitation purposes filed with the Mining Authority, required by Section 256 of the Mining Code. It must be updated every two years.
  • Environmental Impact Assessment or (EIA) – environmental impact assessment issued by the Mining Authority for exploration or exploitation purposes through which the EIR is approved.
  • Environmental file – environmental matters of a given mining property or rights are controlled and followed up in an administrative file kept at the Mining Authority.
  • Labour legal – the initial prospection work that should be conducted on the mine surface to determine its potential for exploitation and the location of the property’s mineralisation. Its timely execution is mandatory to keep the title in good standing.
  • Mensura – the final mine survey procedure, which consists of the measurement of the area requested by the concessionaire for the Pertenencias of a given mine. The approval of the mensura creates the final title to a mine.
  • Mining Investment Plan – legal requirement set forth by Section 217 of the Mining Code that must be complied with by the titleholders of mining concessions to keep titles to the mining properties in good standing. The Mining Investment Plan comprises minimum investments that must be performed in the mining concession within a term of five years. The titleholders must submit annual affidavits to the Mining Authority to evidence compliance with the Mining Investment Plan.
  • Mining Authority – the provincial mining authorities in charge of awarding mining titles and verifying their good standing.
  • Pertenencia – the surface unit into which a mine can be divided. In the case of vein minerals, each pertenencia has a surface of six hectares. In the case of disseminated minerals, borates, and lithium, each pertenencia has a surface of 100 hectares.
  • Title file – The file under which title to a given mining property is granted.
  • Statement of Discovery (SD) – the filing made before the Mining Authority, stating the finding of mineral resources in a particular area of land. This filing is mandatory and is the first step in the process to obtain the concession of a mine.

Main features and steps for the grant of an exploitation concession

Mining exploitation concessions are granted to the discoverer of a mineral deposit on first-time, first-served basis and they are perpetual, subject to complying with basic good-standing requirements described below.

The key steps for the grant of a mining exploitation concession are the following.

Filing of a Statement of Discovery

the first step in the process to obtain a mining concession is to submit a “Statement of Discovery”. The discoverer must also submit a sample of the mineral found to determine its class or type. The discoverer can preliminarily request an area that is twice the maximum concession area for that kind of mineral. (If the application exceeds the maximum concession area, the applicant must reduce the mensura at the time of the request. For lithium, the maximum concession area is 1,500 hectares if for an individual application, 2,500 hectares if the application is jointly made by two or three persons, or 3,500 hectares if it is jointly made by four persons or more). If all requirements are met, the discovery will be registered by the Mining Authority and published in the provincial Official Gazette at the discoverer’s expense. Within 20 days from the last publication in the Official Gazette, landowners or anyone who might have a right to oppose the Statement of Discovery may do so in writing (for example, the owner of an overlapping and prior Statement of Discovery). If no opposition is filed, or the opposition is solved, the statement of discovery must be registered by the Mining Authority. In the province of Jujuy, the Statement of Discovery is not registered until the discoverer obtains an environmental impact statement (EIS) approving the property’s first exploration programme. The registration of a Statement of Discovery allows the discoverer to conduct works in the properties (subject to obtaining environmental permits and any other applicable permits and licences). No works whatsoever can be performed before the registration.

Labour legal

After the statement of discovery has been registered, the discoverer is able to start working on the property. Within 100 days of registration of the declaration of discovery, the discoverer must perform what is known as labour legal, which consists of a preliminary prospection work to determine the location of the mineralisation in the area. This term can be extended for another 100-day term if the discoverer justifies that there were obstacles to perform the labour legal in time. The discoverer can request additional 50-day term if additional works are needed to locate the property’s mineralisation after performing the labour legal. In some provinces, such as Catamarca, the first 100-day term starts to run after the grant of the EIS for performing the works needed for the labour legal.

Mensura

Within 30 days after the expiration of the terms for performing the labour legal, the discoverer must request the mensura (land survey) from the Mining Authority. In the request for the mensura, the discoverer must chart the final location and extension of the mining concession, which is divided into pertenencias (work units). The extension of a pertenencia depends on the mineral and type of mineralisation of the deposit. The proposed mensura must be advertised in a newspaper indicated by the Mining Authority over a 15-day period. If no objections are raised (a possible objection could be that the area being requested is already occupied by another mining property, or that mining is not allowed in the area being requested, or that the extension of the concession exceeds the legal maximum for that mineral), or if such objections are determined to be unwarranted, the authority will conduct the mensura. The mensura is conducted at the property’s site. A representative of the Mining Authority must verify the discovery point, the performance of the labour legal, and must mark the property’s boundaries. Landowners and neighbouring concessionaries are entitled to participate in the mensura. Once the mensura has been conducted, the Mining Authority will order its approval and registration with the mining cadaster, and the discoverer will obtain a final title over the mine. Under Argentine law, a mining property is called a “mine” (that is, a final mining concession) after the approval of the mensura, hence forming a Title File.

Discoverers and mining concessionaires must comply with the following obligations.

  • Pay a canon on a semi-annual basis, starting three years after the registration of the application for a mining concession.
  • Within a year after the filing of a Mining Investment Plan in respect of each Title File submitted to the Mining Authority, obtain its approval by the Mining Authority, and file annual affidavits during a five-year term proving compliance with the Mining Investment Plan.
  • File an EIR for each stage of a mining project (prospection, exploration, and exploitation). Each mining property requires the filing of an individual environmental report. However, it is common for the Mining Authority to accept the filing of a single environmental report for a group of mining properties in those cases where geological and technical reasons support such unification. Environmental reports must be updated every two years.
  • Work in the mine – if the mine is inactive for more than four years, the Mining Authority can request the concessionaire to produce a reactivation plan within six months. The reactivation plan must not exceed five years, must be divided in stages, and failure to comply with a stage will lead to the termination of the mining concession.

If the first and third requirement above are not complied with, the Mining Authority must notify the concessionaire and demand it to remedy such failures. Failure to do so by the concessionaire allows the Mining Authority to declare the vacancy of the mining property. In case of non-payment of the mining canon, the concessionaire may recover the mine if, within a term of 45 days, it pays the canon due plus a 20% penalty.

If the third requirement above is not complied with, the Mining Authority may impose – at its own discretion and according to the degree of seriousness of the breach – the following sanctions on the concessionaire: (i) the temporary suspension of mining activities; (ii) the additional imposition of: (a) warning notices, (b) fines, or (c) the temporary or permanent prohibition against conducting mining activities within the province.

In addition, mining concessionaires must pay a royalty based on the minerals extracted from the mine, which according to the Mining Investments Law No 24,196 cannot exceed 3% of the minerals’ mine-mouth value.

All days are calendar days unless stated otherwise.

Pursuant to the Argentine Constitution, all inhabitants are entitled to a healthy and balanced environment fit for human development in order that productive activities shall meet present needs without endangering those of future generations; and shall have the duty to preserve it.

Any damage to the environment shall be primarily remedied according to the applicable laws. The authorities shall provide for the protection of this right, the rational use of natural resources, the preservation of the natural and cultural heritage and of the biological diversity and shall also provide for environmental information and education.

The Federal Government shall regulate the minimum protection standards, and the provinces those necessary to complement them but are not entitled to lower them.

The entry into the national territory of actual or potentially hazardous waste and of radioactive materials, is forbidden.

Below are the main federal laws for environmental protection.

Environmental Rules for Mining Activities

The main environmental rules applicable to mining are set by the Mining Code, pursuant to its Complementary Title “Environmental Protection for Mining Activity”, (specifically for the mining industry) and by the Environmental Law – Law 25,675 (for all industries). Both set of legislation contain similar principles on the environmental conditions that must be met.

These are federal statutes, and their provisions are directly applicable to each of the provincial states, presenting a homogeneous regime and clear rules throughout the national territory.

The Mining Code sets forth the following mechanism for environmental management.

Each company must submit an EIR analysing the environmental impact of each of its activities. This is applicable at the prospection, exploration, and exploitation stages of any project.

The EIR is approved by the province by issuing an EIS.

The Environmental Law establishes the minimum standards applicable in all provinces, and each province can in turn set higher standards for its territory. It also provides that whoever causes environmental damage will be strictly liable for its re-establishment to its prior state. If not possible, the judiciary will establish monetary compensation to fund an environmental compensation fund.

The Environmental Law provides for citizen participation mechanisms, assuring all people the right to participate in the procedures of environmental impact assessment through public hearings. Such hearings are mandatory for the issuance of an EIS.

In addition, the Environmental Law sets forth that any person that performs environmentally risky activities must obtain an insurance policy.

Among the most relevant federal laws for environmental protection are the following.

Protection of glaciers

A glacier is defined as a mass of perennial ice that its stable or that slowly floats, with or without interstitial water, formed of the crystallisation of snow, located in different ecosystems, whatever its form, dimension, and state of conservation. The rocky detrital material and the internal and superficial water courses are a constituent part of each glacier. The periglacial environment is defined as the area with frozen soils that acts as a regulator of hydric resources. In the medium and low mountains, the area that functions as a regulator of hydric resources with ice saturated soils.

This law prohibits activities that may affect the natural condition or function of glaciers, those that imply their destruction or transfer or interfere with their movement, particularly mining and hydrocarbon exploration and exploitation, which are also prohibited in the periglacial environment.

Laws on industrial waste, hazardous waste, prevention of atmospheric pollution, prevention of atmospheric pollution and protection of native woods

There exist registries for generators, carriers, operators, and other different activities that imply a threat to the environment. These laws also establish the minimum environmental standards to be complied with.

There is a Management Manual for the administrative procedures substantiated within the scope of the Hazardous Waste Registry Unit of the Secretary of the Environment and Sustainable Development of the Nation regulated by Resolution 737/01.

Free access to environmental public information

This law guarantees free and public access to environmental information. This includes the federal entities, provinces, municipalities, the City of Buenos Aires, autarchic entities, and utility companies (whether public or private). Access to the information could be denied in cases of protection of trade secrets, intellectual property, personal data, security reasons, or cases of confidential information.

Mining activity is prohibited within protected areas in Argentina as determined by National Parks Law No 22,351.

Some provinces have also established reserves of natural areas regulating different levels of protection ranging from plain prohibition to authorisation subject to comprehensive protection plans for the wildlife of the reserve.

Argentina’s General Environmental Law No 26,675 provides for citizen participation mechanisms, allowing every person to be consulted and to express opinions in administrative procedures related to the preservation and protection of the environment. The opinions or objections of participants in the mandatory consultations or public hearings are not binding for the convening authorities; however, if they present an opinion contrary to the results achieved in the public hearing or consultation, they must justify it and make it public.

Also, Argentina is a party to the “Regional Agreement on Access to Information, Public Participation and Justice in Environmental Matters in Latin America and the Caribbean”, known as the Escazú Agreement.

It contains provisions on access to environmental information with full disclosure, public participation in the environmental decision-making process from the early stages of the environmental decision-making process, access to justice, and guarantees a safe and enabling environment for persons, groups and organisations that promote and defend human rights in environmental matters.

Prior and informed consultation is only mandatory with respect to indigenous peoples.

Argentina counts about 1 million people who are self-recognised as descendants of indigenous communities.

The ILO Convention No 169 on Indigenous and Tribal Peoples in Independent Countries is an international treaty approved by Argentina through National Law No 24,071 (“Convention 169”).

The main purpose of Convention 169 is to protect the right of the indigenous people to keep and strengthen their own culture and institutions; and their right to effectively participate in the decisions that affect them.

Article 6 of Convention 169 grants indigenous people the right of consultation. This consultation right of the communities is a compulsory process for all levels of the state. It includes the executive, legislative and judicial branches. The consultation process with indigenous peoples shall be performed whenever consideration is being given to legislative or administrative measures which may affect them directly. It must be “carried out in application of this Convention shall be undertaken, in good faith and in a form appropriate to the circumstances, with the objective of achieving agreement or consent to the proposed measures”.

Although Convention 169 is not part of the Inter-American Human Rights system and it does not provide for the jurisdiction of Inter American Court of Human Rights (IACHR) as its enforcement body, the IACH has applied the rules of Convention 169 by interpreting that they are embodied in the principles of the Inter-American Human Rights Convention and created standards for the protection of indigenous peoples.

Article 15 of Convention 169 provides that “[t]he rights of the peoples concerned to the natural resources pertaining to their lands shall be specially safeguarded. These rights include the right of these peoples to participate in the use, management, and conservation of these resources”.

Section 16 of Convention 169 provides that “1. [Indigenous] peoples […] shall not be removed from the lands which they occupy. […] 2. Where the relocation of these peoples is considered necessary as an exceptional measure, such relocation shall take place only with their free and informed consent. Where their consent cannot be obtained, such relocation shall take place only following appropriate procedures established by national laws and regulations, including public inquiries where appropriate, which provide the opportunity for effective representation of the peoples concerned”.

There have been some examples of community development agreements structured as private initiatives originated by mining companies. They are not mandatory.

There are no ESG regulations or government guidelines for the mineral sector.

At the time of analysing an Environmental Impact Report, provinces typically demand that mining companies include several social responsibility actions as a condition for its approval. Roads, electric lines and other infrastructure, and social actions, are usual items that a province may wish to include in an exploitation EIS. These kinds of requests are not common for exploration EISs, but only for the latest stages of a project’s development (ie, exploitation). Also, a mine closure plan must include social actions to mitigate the impact of the mine closure on the community, which includes developing other work sources during the mine life.

Provinces with mining operations have enacted laws and regulations to regulate the percentage for sourcing of works, services, goods and/or other supplies that must be hired within the relevant province to promote local employment and economic activity.

Some regulations treat localisation rules as part of the obligations contained in an EIS.

No compliance may be sanctioned with warnings, fines, or expiry of the EIS.

The use of cyanide and “toxic substances” in mining has been banned in the province of Mendoza since 2007. Also, Chubut prohibited mining in its territory in 2003 pending the issuance of zoning regulation, which has not been issued so far.

Other provinces, such as Santa Cruz, San Juan, Catamarca, Salta, and Jujuy provide a strong institutional support to mining through their governmental authorities, and their business communities. The population in those provinces is generally supportive of mining.

Some provinces, such as Santa Cruz and San Juan, have created trust funds where the mining companies voluntarily contribute funds for the development of the province.

In June 2023, Argentina published its National Energy Transition Plan to 2030 (TP 2030).

This plan contains the vision, objectives and goals that set the path, as well as the challenges and barriers to overcome, to the projected energy transition scenario by 2030. In 2019, the energy sector was responsible for 78% of greenhouse gas (GHG) emissions globally, making it the largest contributor, with only the remaining 22% attributed to agriculture, land use and other sectors. However, in Argentina, the energy sector’s contribution to GHG emissions is considerably lower, accounting for only51% of the total emissions, according to the latest National Greenhouse Gas Inventory (INGEI) data.

When analysing the total emissions by subsector, the energy sector’s emissions primarily come from the transportation sector, explaining 13.9% of the total emissions, followed by the electricity generation sector, contributing 11% to the total emissions. While Argentina’s emissions are below the global average, transforming its energy matrix towards a cleaner, more resilient and sustainable system is crucial in achieving the global decarbonisation goals set in the 2015 Paris Agreement.

At the same time, this transition provides an opportunity to develop a sector with significant growth potential. In this regard, Argentina has taken a fundamental step by publishing the National Climate Change Adaptation and Mitigation Plan through Resolution No 146 of 2023 by the Ministry of Environment. Additionally, a long-term resilient and low-emission development strategy by 2050 has been formulated.

No climate change legislation related to mining has been passed.

The Mining Association of Canada’s Towards Sustainable Mining (TSM) was adopted by the Chamber of Mining Companies (Cámara Argentina de Empresas Mineras or CAEM). CAEM adopted protocols and guides on key aspects of the mining industry such as mines closures, biodiversity, safety and health, communities’ relationships, energy use and GHG emissions, and crisis management.

The programme is supervised by a voluntary independent interdisciplinary panel.

Argentina’s law provides for the private property of mineral rights and the minerals extracted pursuant to such rights, and this rule also applies to energy-transition minerals. This is an explicit policy choice maintained throughout different government administrations, at a federal level and by Argentina’s most important mining provinces. Because of this, lithium mining in Argentina is exponentially more developed than in its neighbouring countries.

Unless the promotional regime for mining investments applies (as described in 4.2 Tax Incentives for Mining Investors and Projects), exploration and mining activities are subject to the general tax treatment at the national, provincial, and municipal levels. There is no distinction between taxing national and foreign investors.

Key National Taxes

  • Income tax – a local branch or subsidiary will be subject to income tax at a rate from 25 to 35% on their net income. The tax is payable on an annual basis, but monthly advance payments apply after the first year in which taxable income was derived.
  • Value added tax applies to all supplies of goods and services carried out within Argentina, as well as on the imports of goods and services at a general rate of 21%. There are reduced rates of 10.5% for certain cases. The supplies of services provided in Argentina but economically used or exploited abroad; the “exports of services”, are zero-rated.
  • Personal asset tax applies to non-resident companies participating in local companies. The local company must pay annually the tax on personal assets at a rate of 0,5% on the value of the shares held by non-residents. 
  • Tax on debits and credits in banking accounts applies at 0.6% on each debit and credit occurred on bank accounts in Argentina. 

Key Provincial Taxes

These taxes are found in both the local provinces and the city of Buenos Aires.

  • Turnover tax – levied on gross income at a rate ranging from 1% to 4% depending on the activity and province.
  • Stamp tax – payable in the jurisdiction in which an agreement either is signed or has effects.

The rate varies between provinces, but generally is 1% (higher rates may apply to mine transfers). It may be legally avoided by using offer letters.

Some provinces allow exemption or reduced turnover tax rates, and stamp tax exemptions.

In addition to the taxes described above, note that discoverers and mining concessionaires must pay (i) a canon on a semi-annual basis, starting three years after the registration of the application for a mining concession, and (ii) a royalty based on the minerals extracted from the mine, which cannot exceed 3% of the minerals’ mine-mouth value.

The Mining Investment Law No 24,196 provides its beneficiaries a reduction of the economic burden on their projects. To become a beneficiary under the Mining Investment Law, persons and/or legal entities must be registered before the Mining Investment Office and file a report explaining the project, geology, resources estimations, and the tax benefits requested according to the type and location of the project.

The benefits include the following.

  • Tax and customs stability for 30 years. 
  • Reimbursement of value added tax (VAT applicable to the importation and acquisition of goods and services made by enterprises enrolled in the promotional regime that take part in exploration activities is reimbursed).
  • Custom duties exemption for capital assets. 
  • Income tax benefits:
    1. double deduction of exploration expenses; 
    2. optional accelerated depreciation system;
    3. exemption on profits derived from the contribution of mineral property to a company in exchange for an equity participation; 
    4. option to capitalise 50% of proved mining reserves; and
    5. royalty cap at 3% of the mine-mouth value of extracted minerals. 

The mining property may be acquired through a stock deal or an asset deal. From a tax perspective, it is important to consider the tax impact of the exit scenario in each case.

In a stock deal scenario, capital gains derived by the sale of shares in an Argentine company are taxable in Argentina. The seller may choose between a 13.5% effective rate over the gross amount of the sale price or 15% of the net gain (the difference between the acquisition cost and the sales price). 

These rates apply both to direct and indirect transfers of shares.

An indirect transfer refers to the transfer of a foreign company that owns a controlling interest in an Argentine company.

Although this tax applies to the seller, it should be considered since it will impact on the seller’s return on the transaction, and therefore in its price.

In an asset deal exit scenario, it should be noted that the sale of real estate is subject to a 35% tax on the net gain. The acquisition cost may be adjusted for inflation.

Under Argentine law, the only strategic minerals are uranium and thorium, based on their nuclear use. Holders of permits and concessions to explore and extract these minerals are subject to a higher governmental scrutiny in connection with their environmental compliance, must comply with reporting obligations on their works and reserves, and must give the federal government a first option right for the purchase of their production.

It must be noted that, in Argentina, critical minerals for the manufacturing of electric vehicle batteries are not subject to any restriction and are treated in the same manner as any other first-category mineral. This is remarkably different from Argentina’s neighbouring countries Chile and Bolivia, where lithium exploration and production are reserved to the government.

By comparison, Chile announced earlier in 2023 a National Lithium Strategy, providing for the creation of public-private joint ventures for lithium production controlled by the state-owned Corporation Nacional del Cobre de Chile and implemented through public-private agreements.

Current legislation grants the Chilean State the exclusive authority to exploit the mineral, with two exceptions: by entering a special lithium operation contract or an administrative concession, or in cases with companies with concessions granted before 1979, which, by law, do not require a special exploitation contract.

Bolivia, on the contrary, has adopted a strategy of nationalisation by reserving the exploitation of this mineral to the stated-owned Yacimientos de Litio Boliviano, which will be responsible for carrying out the activities of the entire lithium production chain.

There are no particular restrictions for foreign investments in the mining sector in Argentina, except for a general exception for acquisition of rural lands.

Although Law No 26,737 (the “Rural Lands Law”) does not apply to mining properties that do not constitute a property right over the land where they stand, there is a particular exception in case of mining companies wishing to acquire land to exploit mineral resources according to the mining law.

The Rural Lands Law sets forth that no more than 15% of the total amount of rural land in the country may be owned or possessed by foreign entities. In addition, foreign investors of the same nationality are not entitled to hold or possess more than 30% of the 15% nationwide. Finally, each foreign investor is not entitled to have more than 1,000 hectares or equivalent area as determined by the authorities.

The Rural Lands Law prohibits direct purchases in excess of the limit as well as indirect purchases through the change of control of the company that owns the land. The change of control of foreign companies that own rural land must be reported to the National Registry of Rural Land for validation of adjustment of percentage in case it exceeds the threshold.

Argentina has enacted a favourable environment for foreign investments, maintaining bilateral investment treaties with over 50 countries to safeguard them. To name a few among this extensive list are: Australia, Canada, China, France, Germany, Israel, Italy, Mexico, the Netherlands, New Zealand, Panama, Peru, Russia, Spain, Sweden, the United Kingdom, and the USA.

Moreover, for tax matters, the Argentine government maintains over 20 bilateral treaties against double taxation to promote foreign investments.

Early exploration projects are generally financed by their discoverers, angel investors and friends and family. More recently, because of the sharp increase in value of energy-transition minerals, there is an increasing number of self-financed domestic and international corporations. After surpassing the early exploration stage, Argentine projects generally obtain their financing in international markets (see 5.5 Role of Domestic and International Securities Markets in the Financing of Exploration, Development and Mining).

Argentine mining projects mostly raise financing in the Toronto Stock Exchange and the Australia Stock Exchange. There is a long-standing track record of collaboration and several success stories linking Argentine developers to the corporate and financial environment of Canada and Australia. International royalty companies also have a material role in the financing of Argentina’s projects.

Mining concessions (together with equipment and construction in the mine) can be mortgaged as any other real estate property pursuant to the civil and commercial code. Alternative structures to this include trust agreements, pledges on shares, equipment or production and assignment of rights.

Argentina currently has 36 lithium projects in production, feasibility, pre-feasibility, PEA (Preliminary Economic Assessment) and advanced exploration stages. In addition, Argentina is the fourth gold producer in South America, with 38 projects, 12 of which are in production, and has 21 advanced copper projects, one of which is in construction.

It is expected that in the coming years there will be more projects entering into the final stage of production and many others developing rapidly.

Beretta Godoy

Avenida del Libertador 6250
8th floor
C1428ARS
City of Buenos Aires
Argentina

+54 11 3220 7166

info@berettagodoy.com www.berettagodoy.com/
Author Business Card

Trends and Developments


Author



Beretta Godoy is a leading Argentine law firm. It specialises in foreign direct investment and offers innovative and practical advice to clients across various sectors. It has a particularly strong practice in natural resources, tax, corporate M&A, labour, foreign trade and arbitration, and has a wealth of experience in relation to mining, energy, agribusiness, telecommunications, media and entertainment, manufacturing and infrastructure. Over 90% of the firm’s clients are headquartered outside of Argentina. Beretta Godoy has been highly ranked and recommended as one of the leading law firms in energy and infrastructure in Argentina.

Background

Although Argentina’s mining tradition goes back to the times before the Spanish conquest, modern mining started in our country 30 years ago. In this short time, the richness of Argentina’s mining resources has fostered an exponential growth of our mining industry.

Today, Argentina is the fourth-largest lithium producer worldwide, after Australia, China, and Chile, with a production of 37,500 tons per year of lithium carbonate equivalent, and the potential to expand it to 290,000 tons a year to become the second-largest producer by the end of this decade. In addition, Argentina is the only country in the “lithium triangle” (Argentina, Bolivia, and Chile) that allows the private ownership, exploration, development, and production of lithium resources. Due to this legal framework, Argentina currently has 36 lithium projects in production, feasibility, pre-feasibility, PEA (Preliminary Economic Assessment) and advanced exploration stages. In addition, Argentina is the fourth gold producer in South America, with 38 projects, 12 of which are in production, and has 21 advanced copper projects, one of which is in construction.

Legal Framework for Mining

Argentina is a federal republic, with three levels of government: federal, provincial, and municipal. In turn, the federal and provincial government have three branches: executive, legislative and judicial.

The Argentine Constitution delegated on the Federal Congress the power to issue a Mining Code, which legislates on the key aspects of the mining industry, namely the mining property, how to obtain, keep it in good standing, and transfer it, and how to perform mining activities. The Mining Code contains regulations covering the general extent of permits, technical requirements, permit-holder obligations, as well as permit limitations. The Mining Code also identifies the limits of the rights and relationships between exploration and mining concessionaries, landowners, and the community; providing specific material regulations in connection with (i) easements; (ii) expropriation of surface land used for mining activities, and (iii) environmental control of the mining prospecting and exploration activities.

The main mining rights are exploration permits and exploitation concessions. Both are awarded to discoverers in a first-come, first-served basis. Any individual or entity, local or foreign, can claim a mining exploration permit or exploitation concession over an area, and if the area is free and suitable for mining, such individual or entity is entitled to be awarded such permit or concession. Exploration permits are subject to a specific timeframe (a maximum of three years), but exploitation concessions, provided that the requirements to keep them in good standing are met, are perpetual.

Mining rights are deemed private property under Argentine law. As such, they are freely transferable, they can be used as collateral for financing and secured by mortgages or guaranty trusts. The owners of mining rights can enter into agreements concerning their mineral production without restrictions, such as royalties or offtake agreements.

The property of natural resources belongs to the provinces or, only to the extent the resource is in a federal territory, to the federal government. Also, legislating on procedural rules falls within the provincial jurisdiction, so each province has its own code of mining procedure. Accordingly, provinces (i) appoint mining authorities and (ii) provide procedural mining regulations that individuals and legal entities must follow to be awarded mining rights and property.

Key Environmental Rules

The Argentine Constitution sets forth that the federal government has the power to set minimum environmental standards, which can be supplemented by the provinces. That is to say, the provinces can increase the minimum environmental standards provided by the federal government but cannot reduce them.

Pursuant to the Mining Code and Argentina’s General Environmental Law, mining activity at any stage requires prior environmental assessment. Provinces are in charge of the environmental assessment of mining projects.

Mining is forbidden in glaciers and periglacial environments. The mapping of glaciers corresponds to the federal government, and the assessment of whether a mining project affects a glacier or periglacial environment is part of the environmental impact assessment that corresponds to each province.

Strengths and Challenges of Argentina’s Mining Industries

In addition to its mineral richness, the main strengths of Argentina’s mining environment are the perpetual nature of mining concessions, and the private ownership over exploration permits and exploitation concessions. In addition, Argentina has a well-developed network of mining suppliers, and an educated workforce.

Being a federal country, there are a few specific provinces in Argentina where mining has been impeded through regulatory action, such as Mendoza and Neuquén, or where the province adopted policies that have crippled the long-term development of the industry, such as the decision to unconstitutionally confiscate lithium properties adopted by the province of La Rioja in early 2023. However, Argentina’s main mining provinces, such as Santa Cruz, San Juan, Catamarca, Salta, and Jujuy give long-standing institutional support to mining, which is a crucial part of their economies and business environment. Such support has been consistent throughout different administrations of various political parties, both at a provincial and federal level.

Argentina is a party to the ILO’s Convention 169 on Indigenous and Tribal Peoples, although such Convention’s provisions have not been fully implemented.

Last, but not least, Argentina has a mining investment framework that provides material incentives to mining projects, such as tax and foreign exchange stability, accelerated amortisation and double deduction of exploration and development expenses, and several tax exemptions. However, Argentina’s macro-economic instability led to the erosion of key parts of the tax and foreign exchange stability framework, and to a material extent the mining sector is now subject to the volatility and challenges of Argentina’s economy.

Beretta Godoy

Avenida del Libertador 6250
8th floor
C1428ARS
City of Buenos Aires
Argentina

+54 11 3220 7166

info@berettagodoy.com www.berettagodoy.com/
Author Business Card

Law and Practice

Authors



Beretta Godoy is a leading Argentine law firm. It specialises in foreign direct investment and offers innovative and practical advice to clients across various sectors. It has a particularly strong practice in natural resources, tax, corporate M&A, labour, foreign trade and arbitration, and has a wealth of experience in relation to mining, energy, agribusiness, telecommunications, media and entertainment, manufacturing and infrastructure. Over 90% of the firm’s clients are headquartered outside of Argentina. Beretta Godoy has been highly ranked and recommended as one of the leading law firms in energy and infrastructure in Argentina.

Trends and Development

Author



Beretta Godoy is a leading Argentine law firm. It specialises in foreign direct investment and offers innovative and practical advice to clients across various sectors. It has a particularly strong practice in natural resources, tax, corporate M&A, labour, foreign trade and arbitration, and has a wealth of experience in relation to mining, energy, agribusiness, telecommunications, media and entertainment, manufacturing and infrastructure. Over 90% of the firm’s clients are headquartered outside of Argentina. Beretta Godoy has been highly ranked and recommended as one of the leading law firms in energy and infrastructure in Argentina.

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