With the huge, unexplored mining potential and the geological fact that it shares the Andean mountain chain with Chile (with two-thirds within Argentine territory and with topography that facilitates access and building of infrastructure), Argentina remains as one of the most interesting destinations regarding mining investments (especially within certain Argentine provinces with very clear pro-mining policies and culture). There are several exploration projects that are very close to achieving feasibility. There is also a large number of prospects that have shown good results in exploration.

The price of Argentinean mining assets is low in comparison to similar assets located in other parts of the world. To add to this, Argentina’s democratic and federal constitutional system has continued in stability for more than 30 years, despite periods of political and economic crisis.

The mining legal regime is solid and stable, awarding strong rights to owners of mining concessions. Mining exploitation concessions have perpetual duration and mining activity is considered to be of public interest, meaning that its development has priority over other activities that may be developed in the same area, except for public services. There is a general prohibition by the state to conduct exploitation activities on its own.

There is also a promotional regime for the mining industry that grants a 30-year tax stability for new or for expansions of existing mines, among other benefits (pursuant to Mining Investment Law). All provinces have adhered to this regime. There is also a new promotional Regime under Law 27,742 referred to as RIGI (Incentive Regime for Large Investments), which aims to generate incentives for Large and Long-Term Investments (including mining, among other sectors), solving for projects that qualify under such regime many of the problems that investors where expecting Argentina to overcome in connection with reducing tax burden, limiting the sort of restrictions for outflows and inflows of funds that Central Bank may impose, granting stronger stability and swift access to international arbitration.

In general, there are no conflicts with indigenous communities in areas where mineral resources are located; however, it should be noted that obtaining a social licence requires more engagement than before and has gradually increasing standards that have to be met, which is further reflected in the legislation issued by some provinces in recent years. Also, a few provinces have in force regulations banning certain methodologies of mining (open pit, use of cyanide) or establishing zones within their territories where mining is restricted.

Argentina is a federal country and a civil law jurisdiction.

In addition to general corporate, labour, regulatory and tax rules that are generally applicable to all industries in Argentina, the main legal rules regulating the mining industry arise from the following statutes:

• the federal constitution;
• the Mining Treaty between Argentina and Chile;
• the Federal Mining Code (FMC);
• Law 24,585 (specific environmental title for mining included in the FMC);
• the Minimum Environmental Protection Standards Legislation, enacted by Federal Congress and applicable in all Argentine territory;
• Law 24,196 (promotional legal regime to which all of the Provinces have adhered – the Mining Investments Law);
• provincial and municipal regulations; and
• Law 27,742 Title VII enacting RIGI (Incentive Regime for Large Investments).

Argentina is a federal country with a federal government, 23 provinces and an autonomous city. Each province has its respective constitution and government. The general rule under the national constitution is that provinces shall retain all powers not delegated upon the federal government.

The FMC regulates the rights, obligations and substantial procedures for the acquisition, exploration, exploitation and termination of mining rights and properties, and is applicable all through the country and is enforced by provincial or federal authorities, depending on the jurisdiction (or federal territory) where the deposits are located.

Each province retains the power to regulate and enact local procedures, such as passing, thus further regulating the FMC locally at the provincial level. Moreover, provinces may have their own Provincial Mining Procedural Code (Procedural Code), which further regulates the FMC in each provincial territory.

According to the Argentine constitution, provinces are the owners of natural resources located in their respective territories.

Generally, mining rights and concessions are granted to private parties who hold title to such rights and mining concessions, and explore, exploit and develop them.

As an exception, state-owned companies may hold mining rights (in reserved areas) but are bound to grant them to third private parties for exploitation.

See 1.5 Nature of Mineral Rights.

With respect to deposits located in provincial territories, each province is in charge of enforcing the FMC, the respective Procedural Code and all environmental legislation. The enforcement of the FMC and environmental rules falls to the federal authorities only when deposits are located in a territory that is subject to federal jurisdiction. Federal authorities are also involved where there is an interprovincial environmental impact or effect involving more than one province for purposes of environmental permitting.

Most of the Argentine provinces have entrusted the enforcement of the FMC to different branches within their executive powers; only a few provinces have entrusted this enforcement to the judicial branch. Some provinces have decided to entrust the enforcement of environmental rules that apply to mining to the appointed Mining Authority, while others have entrusted it to the Provincial Environmental Authority (which is separate from the agency in charge of mining).

The federal government articulates the main national mining policies, and co-ordinates those policies with the provinces.

The Federal Mining Secretary is the competent enforcement authority of the Mining Investments Law, which includes a promotional investment regime for mining, to which all of the Argentine provinces have adhered.

The Federal Economy Minister is in charge of applying RIGI (Incentive Regime for Large Investments).

Minerals are divided into three different categories, based on their importance and value and how they appear in nature. For minerals qualifying under the first and second categories, the underground mining rights and properties constitute a separate and different right from the surface land property. Accordingly, the mining right- or concession-holder may not be the same person as the one owning the surface land.

Type of Minerals

Each category has different rules for the acquisition of mining rights.

• First-category minerals (precious metals and stones and valuable minerals, such as potassium, gold and silver) are granted to private concessionaires for exploration or exploitation under the “first in time, first in right principle”, and can be exploited by private parties only under a legal concession granted by the competent authority.
• Second-category minerals (metals not included in the first category and other minerals) are subdivided into two different subcategories: the first one is granted through direct concession to third parties, but the surface-owner has a preference to acquire; the second subcategory is a general concession granted to the public in general and of common use.
• Third-category minerals (mainly minerals used for construction – quarries) in principle are not subject to concession but rather owned by the surface land-owner.

Mines

Mines of the first and second category of minerals are considered, by the FMC, to be real estate separate from the surface property above them. Minerals of both categories constitute underground property, subject to mining legal concession. They are granted to private third parties through a direct legal concession. Minerals are granted through public bid only as an exception (for example when the concession is owned by a provincial, state-owned company through a reserved area).

Third-category minerals constitute the same property as the surface land and in principle are not subject to concession, but rather are directly owned by the owner of the surface land.

Owners

The owner of a mining concession owns all the minerals included in the first and second categories.

State-owned companies holding mining rights must in principle grant them to private third parties for exploitation. In these cases, a bidding process is usually carried out in order to enter into an agreement between the private third party and the state-owned company. This agreement shall contain the terms and conditions for the private party to conduct specific activities (ie, exploration/exploitation activities), among other things.

Private persons can obtain the exclusive right to explore and exploit minerals via permits and concessions from the respective provincial mining authorities, under the applicable rules of the FMC. Exceptionally, exploration or exploitation rights may be obtained through contracts executed with state-owned companies holding mining properties.

Types of Mineral Rights According to the Federal Mining Code

Exploration permit or cateo

Prior to conducting prospection and/or exploration activities, it is advisable that an exploration permit (cateo) be obtained. An environmental permit must be obtained in order to conduct the exploration works. Although discoveries as a result of exploration activities without an exploration permit can occur (provided any such exploration is conducted in an area free of registered mining rights), thus making the exploration permit not always a material requirement, doing so is not advisable and may lead to conflict with other registered holders of mining rights and surface landowners, resulting in significant fines and potential criminal accusations.

A cateo is an exclusive exploration permit granted by the Mining Authority for a certain period, covering a specific area. During its validity term, the cateo gives the concessionaire the exclusive right to conduct exploration activities in the defined exploration area, and exclusivity to declare discoveries in such area. An important aspect of being able to perform exploration activities allowed under a permit is the ability to maintain the exploration permit in good standing.

The size of a cateo is measured in units of 500 hectares (has), which is the minimum size of a cateo; the maximum size is 20 units (10,000 has). No single person or entity (nor its agents) can hold more than 20 cateos or more than 400 units (200,000 has) per province.

A cateo of one unit has a duration of 150 days. For each additional unit, the overall duration is increased by 50 additional days. Cateos exceeding four units in size must be periodically reduced in size. Once 300 days have elapsed, 50% of the area in excess of four units must be relinquished. After 700 days, 50% of the remaining area in excess of four units must be relinquished. The application for relinquishment must show the co-ordinates of the area being kept by the applicant.

The steps to be taken to obtain a cateo can mainly be summarised as follows:

• application and payment of canon (exploration fee);
• Graphic Register certification that the area is available;
• registration of the application;
• publication of the application and notice to the surface owner; and
• granting of the cateo to the applicant.

The cateo application filed first in time with the Mining Authority gives the applicant priority over third parties claiming permits for the same areas. Discoveries made in a cate by third parties is not allowed and would only benefit the holder of the cateo.

The cateo permit does not allow the conducting of exploitation activities, and for this purpose a registered discovery claim is required.

Exploitation Permit (Registered Discovery Claims and Mining Concessions)

In order to be able to conduct mining exploitation activities, a discovery claim needs to be registered with the Mining Authority. Claim of a discovery for this discovery registration is the initial step for acquiring and owning a mining concession, which has multiple stages and requirements. Nevertheless, the mining concessionaire has legal title to conduct exploitation activities from the registration of the discovery claim (this is without prejudice to the additional environmental permits required to conduct such activities).

Irrespective of the legal title to conduct exploitation activities, these activities can only be legally deployed and conducted after obtaining the environmental approval for the exploitation stage.

Steps for obtaining a mining concession

The sequence of actions to be taken in order to obtain a mining concession may be summarised as follows:

• filing of a discovery claim (where the date and time of the claim are registered and a sequential number is assigned to the submission; there is no need for a pre-existing exploration permit to be in place);
• a Graphic Register certification that the area is available;
• registration of the discovery claim/granting of the mining concession;
• publication of the registration;
• performance of statutory works (Labour Legal), claim of pertenencias and survey of the land by the interested party; and
• granting of mining units (one or more pertenencias – see below) to the applicant (equivalent to a property title).

Written applications (discovery claims) must be filed with the Mining Authority in order to obtain the mining concessions, and give the applicant priority over third parties claiming mining rights in the same area, if the applications concerned do not overlap with other mining rights previously granted or applied for.

The discoverer must submit a sample of the mineral discovered, together with the discovery claim. The discoverer must also indicate by Gauss Kruger co-ordinates an area not larger than twice the maximum size of the mining concession, within which the discoverer will perform the exploration works to confirm the discovery. The area must be regular, except as affected by pre-existing claims or surface obstacles, and will remain unavailable to third parties until legal survey approval takes place.

Pertenencias

First and second-category mineral mines are granted in the form of a concession to private individuals or companies in units called pertenencias (one pertenencia is the minimum non-dividable exploitation area). Under the FMC, the mining concession vests the concessionaire with a property title over the mine (including the right to explore and exploit in the concession area).

After confirmation from the Graphic Register Department that the area described in the application is not subject to previously submitted applications or registered mining rights, the Authority registers the discovery claim.

The registration of the discovery claim is published, and opposition by third parties may be filed against it.

From the registration of the discovery claim, the mining concessionaire has 100 days in order to complete certain statutory works, under penalty of forfeiture of the registered mine.

Within 30 days of the lapsing of the 100-day term, the mining concessionaire needs to file with the Mining Authority a request for the granting of pertenencias and a request for the authority to conduct the survey of the area. Failure to meet this obligation in time results in the forfeiture of the mine.

The pertenencia is the unit of concession of a mine within whose limits the miner can carry out exploitation works. It consists of a solid body of rectangular or square base (unless the conditions of the land make such a form impossible) and indefinite depth. The size and number of pertenencias a discoverer can apply for at the time the measurement and demarcation are requested depends on the type of mineral deposit discovered (lode ore or disseminated ore) and whether the discoverer is a company or an individual.

After the survey request, the survey is conducted and the requested units are granted according to law. Following the survey and pertenencias petition, the Mining Authority must issue a decision thereon. Both the petition and the resolution are published in the provincial Official Gazette. After that, if no third parties file an opposition, the survey and demarcation of the pertenencias is carried out. Finally, the Mining Authority registers it in the Registry Book, and a copy is given to the interested party as title to that mining property.

Obligations for Maintaining Title of Mining Concessions

Mining concessions are, by law, granted in perpetuity (not subject to a validity term), under certain conditions and obligations. The violation of those conditions may lead to the forfeiture and revocation of the mining title, making the mine become vacant.

The following obligations are mandatory in order to maintain the validity of the exploitation title in good standing.

Fulfilment of certain legally required works at the mine – Statutory Works (minimum mine works) and Survey (mensura)

Statutory Works must be performed within 100 days of the day following the discovery registration. Lack of performance of Statutory Works may result in the termination of the mining claim registration by the Mining Authority.

A Survey (including claim of pertenencias) must be requested within 30 days of the lapsing of the term for performing Statutory Works. Non-compliance with that obligation may cause the Mining Authority arbitrarily to locate the pertenencias and, in this case, the rights of the discoverer are forfeited and the mine is registered as vacant.

Failure to evidence performance of Statutory Works or to file the claim of pertenencias and the Survey in due time may result in the forfeiture of the concession.

Canon payment to the province (exploitation fees payable per mine and calculated on the type and amount of pertenencias of each mine during its life)

The canon is a fee charged on the mining concession, payable from three years after the date on which the mine is granted/registered, on an annual basis. Law issued by National Congress fixes the annual canon per pertenencia. Generally, the annual canon is paid in advance in two equal instalments on June 30 and December 31 of every year.

The mining concession automatically lapses if the canon is not paid, at the latest, during the two months following the June 30 deadline. The Mining Authority shall formally notify that circumstance to the applicant, and the latter is allowed to cure the lapsing of the concession by paying the canon, plus fines, within a 45-day term from the date on which the relevant resolution by the Mining Authority is notified to the applicant. If the applicant does not cure the situation in that 45-day term, the lapsing is then confirmed with no possible appeal, and the mine is registered as vacant, thus allowing any third party to apply for it.

Difference between “canon” and “legal royalties”

“Canon” and “legal royalties” are two different obligations. The canon is a fixed fee paid per pertenencia to the local mining authority for owning mining concessions, while legal royalties are the mandatory mining royalties that should be paid to the province in connection with effective production (in addition to any contractual royalties that may exist in each particular case).

Submission and fulfilment of a plan containing minimum investment requirements (“Investment Plan”)

The FMC formally requires an Investment Plan to be submitted for each mining property within one year of the date on which the Survey is requested, regardless of whether that Survey is actually made. The FMC does not require a complete plan, just a simple estimation of the plan and its disbursements. This estimation, therefore, may only provide an approximate idea of the investments required.

The investments should be capital investments. Disbursements for wages and expenses for technical assistance conducive to the workings and exploitation of the mine can be included.

The concession-holder may, from time to time, introduce amendments to the investments estimated in the Investment Plan by rendering an account thereof to the Mining Authority, provided that the anticipated aggregate investment is not reduced through such amendments.

The Investment Plan cannot be less than 300 times the canon amount, and the estimated investments committed therein must be effectively made within five years of the date on which the Investment Plan is submitted.

In addition, in each of the first two years of the stipulated term, the amount of the investment per year should not be lower than 20% of the aggregate estimated amount at the time of submission of the Investment Plan. The foregoing tends to avoid concentrating the investments in the last year, following several years of inactivity. Upon an investment of 40% during the first two years, the balance may be completed during the remaining term of the period.

Failure to submit and perform the Investment Plan in a timely manner may result in the loss of the mine.

Avoid abandonment of the works and Mining Activity (the “Lack of Works”)

When the mine has been inactive for more than four years, the Mining Authority may demand filing of an activation or reactivation project, adjustable to the production capacity of the concession, the characteristics of the area, the available means of transport, the demand for products and the existence of farming equipment. A mine is deemed to have been inactive when no exploration, preparation or production tasks have been regularly conducted in it during the above-mentioned term. The demand shall be met within six months, under penalty that the concessionaire’s right may lapse. Once the project is filed, the concessionaire shall comply with each of its stages in the terms respectively provided for, which may not exceed five years taken together, under penalty that the concessionaire’s right may lapse, which penalty is applicable upon the first default.

Mining activity is considered by law to be of public utility and generally has priority over activities conducted on the surface land (with a few exceptions).

Mining exploitation concessions are granted in perpetuity, but may expire as a consequence of lack of fulfilment of certain work and investment obligations to be performed in order to keep title in good standing. Please see 1.6 Granting of Mineral Rights.

Assignment of mining rights and properties acquired through direct concession under the FMC system are not subject to prior approvals by the government.

Oil and gas resources and third category minerals are not part of the mining concession. Ownership thereof is subject to specific regulations. Also, there are specific rules to deal with overlapping situations.

In addition to the main mining-related permits referred to, the development of mining projects requires an environmental permit and different sorts of sectorial permits for performance of prospection, exploration, construction and/or exploitation activities, which should be requested and are granted mainly at the provincial level (nature and scope vary on a case-by-case basis).

Environmental Rules Applicable to Mining Activity

The main environmental regulations applicable to the mining industry are included in the FMC. In addition, the following environmental regulations are also applicable to mining activity: (i) general environmental rules applicable to other industries; (ii) Federal Minimum Environmental Standards Legislation; (iii) supplementary regulations issued by the provinces.

The two most relevant parts of the Minimum Environmental Standards Legislation for the mining industry are the General Environmental Law 25,675 (the “General Environmental Law”) and the National Minimum Environmental Protection Standard Law for the Protection of Glaciers and Periglacial Environment, Federal Law No 26,639 (the “Glacier Protection Law”).

Furthermore, some specific Federal Environmental regulations apply when there is an interjurisdictional activity. The competent authority in charge of applying such regulations is the Federal Environmental Authority.

Glacier Protections

The Glacier Protection Law protects certain glacial and periglacial geoforms that have a proven hydraulic function as water basin suppliers or water reserves. This mainly includes uncovered glaciers, covered glaciers and rock glaciers with hydraulic functions.

Direct intervention in the protected geoforms by new mining projects (those that started after the enactment of the Glacier Protection Law) is forbidden. Projects and activities existing prior to the enactment of the Glacier Protection Law need to undergo a new environmental audit (re-evaluation) to confirm that they do not significantly affect those protected geoforms. A Glacier Inventory was completed and published in 2018.

Environmental Provincial Regulations Affecting Mining Development in Certain Provinces

Some provinces (considered to be anti-mining) have issued local environmental legislation forbidding certain mining methodologies (such as open-pit) and the use of certain hazardous substances for mining processes (such as mercury or cyanide). For that reason, it is very important to review the local environmental standards in each province before deciding on the acquisition and/or development of any mining activity.

Environmental Competent Authorities

National Congress sometimes enacts legislation related to aspects that are not vested upon the federal government nor delegated by provinces and are therefore not applicable in the province unless the province adheres thereto. Such legislation generally contains an express invitation for provincial governments to adhere thereto (adhesion is not mandatory for provinces). In those cases, the competent authority in charge of applying such regulations is the Provincial Authority, which can also enact its own supplementary rules. The National Hazardous Waste Law is an example of both, since it applies to interprovincial activities but also contains an invitation for provinces to adhere thereto.

An important source of environmental legislation, as explained further below, is the local or provincial environmental regulations, issued in exercise of non-delegated powers, or for supplementing the Minimum Environmental Standards Legislation, the FMC and/or other federal legislation applicable in the respective province (eg, federal legislation to which the province has adhered).

Furthermore, in some cases, and based on the Provincial Constitution, municipalities are empowered to issue certain types of environmental regulations or even participate in the provincial environmental impact assessment process.

Provincial authorities

Through interprovincial bodies or councils, provinces may agree on certain standardised environmental principles that are applicable in all provinces that adhere to these sorts of interprovincial environmental agreements.

An example of this is the COFEMIN Supplementary Regulation (Bariloche 1996), which consists of a regulation that further regulates the environmental chapter included in the FMC and was adopted as a supplementary regulation by different provinces. Such regulations contain a description of the content that a mining Environmental Impact Report (EIR) for the prospection, exploration and exploitation stages should include.

The treatment, decision and control of environmental matters in each provincial jurisdiction are the jurisdiction of local/provincial authorities, without any participation from national authorities. The only exceptions to this rule are interjurisdictional or cross-border issues, and regulations arising from treaties.

Accordingly, the rule is that provincial authorities are the competent authorities for enforcing environmental regulations arising from the Federal Minimum Environmental Standards Legislation and the FMC, and of course from any other provincial environmental legislation.

Permits and Insurances

After obtaining the relevant permits, miners may freely exploit their mining concessions, without being subject to rules other than those pertaining to their safety, police and environmental protection. The protection of the environment and the preservation of the natural and cultural heritage in the mining activity field shall be subject to the provisions of the FMC and other applicable environmental regulations. Once the environmental permit is obtained through the pertinent approval of the submitted environmental impact report, the mining concessionaire needs to update that permit at least once every two years.

The General Environmental Law establishes that the environmental evaluation process should include a public participation mechanism prior to the issuance of permits for activities that could generate a negative impact. Moreover, the General Environmental Law also establishes that any person engaged in activities that may endanger the environment, the ecosystems and their elements, shall take out insurance with adequate coverage to ensure the funding of restoration activities intended to repair any damages caused; in addition, depending on the case and possibilities available, it may contribute to an environmental restoration fund allowing the implementation of remedial actions.

There are certain protected areas and reserves that forbid the performance of mining activities, according to their applicable legal framework and/or management plans and rules (eg, certain glaciers, national and provincial parks, etc). In these areas, mining is usually prohibited.

Public participation is mandatory during the procedure to approve the environmental impact assessment of mining projects (according to the Federal Environmental Law No 25,675 and similar provincial legislation). Moreover, the environmental impact report must consider the project’s social impacts and propose mitigation measures.

As regards indigenous people, a prior consultation must be carried out in certain cases (under International Labor Organization Convention No 169 and other regulations).

The General Environmental Law establishes that the provinces shall institutionalise a consultation procedure or public hearing as a mandatory stage to authorise those activities that may have significant adverse effects on the environment. The instance of citizen participation should be carried out prior to the authorisation granted to a natural resource exploitation project (such as a mining project).

This instance of citizen participation is usually fulfilled in the context of the analysis by the government of an Environmental and Social Impact Assessment (ESIA) prior to the granting of any authorisation. Its omission, or its late compliance, could imply the nullity of the authorisation.

The ESIA provides an appropriate framework for the development of citizen participation, since its purpose is to evaluate the possible impact that a project could have on a specific community. The public consultation is the instance at which the authorities and those who will carry out the project must inform the community of all the relevant aspects of the project.

Citizens’ involvement shall be ensured mainly during the environmental impact assessment processes. Previous public consultation procedures are the responsibility of the competent authority, prior to the issuance of the resolution deciding on the approval of the ESIA. The outcome of the consultation procedure is not binding, but it has to be duly addressed by the permit.

According to the Argentine constitution and Convention 169, indigenous communities have the right to be recognised by the Authorities (at federal and provincial level) as entities with legal status. This allows them to act as entities with collective rights, such as community ownership of lands they inhabit and property of the natural resources existing there.

When recognising the legal status of indigenous communities, they are registered in a special registry along with other relevant information such as the structure of their organisation, their authorities, their location and area of interest, and the appropriate consultation procedure that they require in order to give them proper participation in accordance with their own traditions. However, the obligation to grant legal status to an indigenous community when it is requested does not imply that indigenous communities have an obligation to make such a request. Convention 169 and many federal and provincial regulations determine that it is enough for individuals to consider themselves as indigenous for authorities to recognise their ethnic identity and the lands on which they live. National and some Provincial Authorities have issued regulations related to the implementation of Convention 169.

In Argentina, and depending on the province, the instance of citizen participation and the instance of indigenous communities’ participation may be held separately or carried out simultaneously. It is worth mentioning that, in most cases, it is not necessary that the indigenous communities give their consent to a mining project, since this is restricted to some very exceptional cases specifically identified in Section 16 of Convention 169 (when relocation of the indigenous community is required).

Opposition by indigenous communities to the performance of any activity in a public consultation process is not binding on the authorities. In any case, the validity and legality of the approval act will depend on how an authority has responded to the observations and questions of the indigenous communities.

It is not usual to have community agreements for the development of mining projects in Argentina. As a general rule, it is not mandatory to enter into such agreements and these have been entered into with local communities and/or municipalities only in certain cases. It is likely that the negotiation and execution of these agreements will become common practice in the future. In the last few years, local authorities have been negotiating and executing with mining companies’ agreements focused mainly on the contribution to public infrastructure.

Several Environmental, Social and Governance (ESG) guidelines applicable to mining activity have recently been introduced in Argentina. The Federal Government has lately issued (i) guidelines of good practices for mine closure, (ii) guidelines for mine closure with financial guarantees, (iii) guidelines for improvement programmes for mining suppliers, and (iv) guidelines for rational management of mining waste. Also, Argentine regulations include provisions focused on ESG matters, which include consideration of social impacts in the context of environmental impact evaluation of projects, rational use of natural resources, and requirements of minimum local hiring and local procurement, among others.

Illegal mining is not an issue in Argentina.

Mining projects sometimes face social opposition in Argentina, most often related to environmental concerns (mainly, regarding water). It is recommended that community relations be properly handled from the very beginning, to prevent the conflict from escalating. A key tactic is allowing public participation and the early release of public information in a clear and plain manner.

Frequently, when these matters are properly addressed, mining projects are developed as planned. However, there are some examples in Argentina in which social opposition was the main drawback on the development of a project (eg, Chilecito and Famatina, La Rioja and El Desquite, Chubut).

Currently, there are no relevant nationwide climate change initiatives that meaningfully impact the mining industry in Argentina.

No climate change legislation related specifically to mining has been passed nationwide, nor is any currently being discussed. However, it is relevant to mention that Argentina has approved several regulations regarding climate change – eg, the United Nations Framework Convention on Climate Change (Federal Law No 24,295), the Kyoto Protocol to the UNFCCC (Federal Law No 25,438), the Doha Amendment to the Kyoto Protocol (Federal Law No 27,137) and the Paris Agreement (Federal Law No 27,270). Moreover, the Climate Change Federal Cabinet was created in 2016 (Federal Decree No 891/2016).

On 20 November 2019, the Federal Congress passed Law 27,520 setting up the minimum standards for the adaptation to and mitigation of climate change.

During 2020, the Federal Congress was active in discussing bills related to protection of wetlands, which may eventually impact the mining industry.

On 24 September 2020, the Federal Congress passed Law 27.566 approving 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 guarantees the right of all persons to have access to information in a timely and appropriate manner, to participate significantly in making the decisions that affect their lives and the environment, and to access justice when those rights have been infringed. The Escazú Agreement has started to be considered and applied by the courts.

There are several sustainable development initiatives both at the federal and provincial level. They are mostly related to energy efficiency, renewable energy, use of clean technology, improvement of public infrastructure, reduction of the carbon footprint, and the use of good practices on agribusiness, among others. For instance, it could be highlighted that, due to the approval of the 2030 Agenda for Sustainable Development, the federal government has adopted eight goals and 100 standards, which, among other matters, refer to the need to mitigate climate change and its effects.

At the federal level, energy transition minerals are subject to the same concession regime arising from the FMC that applies to first and second category minerals which are granted to the private sector for development. Some provinces such as Jujuy have issued certain specific rules for provincial state-owned companies to have a mandatory interest in companies developing Lithium.

In Argentina, taxes are levied at three different levels by the following authorities: the federal government, the provinces (or states) and the municipalities (or counties).

The main Argentine taxes applicable to individuals, companies, branches of non-resident companies and permanent establishments are as follows.

Federal Taxes

Income tax

The income tax law (ITL) applies to all income from Argentine and/or foreign sources obtained by Argentine residents (on a worldwide basis). Non-Argentine residents are taxed exclusively on their Argentine source income. Permanent establishments are considered as tax residents and taxed accordingly.

The Incentive Regime for Large Investments (RIGI) provides certain income tax (IT) incentives for mining projects qualifying under the regime’s provisions, which encompass a reduced corporate IT rate, accelerated depreciation of significant assets, inflation adjustments for IT purposes and reduced tax rate for dividend distributions, among others.

Value-added tax

Value-added tax (VAT) is levied on the sales of tangible assets in Argentina, on the performance of works and services in general within Argentine territory, and on definitive imports of goods. Under certain circumstances, VAT is also payable on services rendered from abroad which are effectively used or exploited in Argentina, and on leases of real estate (with some exemptions). In addition, digital services rendered from abroad to Argentine tax residents are taxed regardless of the tax status of the recipient of the services.

Regarding exports of goods and services, it is considered that they are subject to a 0% VAT rate as Argentine exporters are allowed to recover VAT paid to their suppliers for the concepts used to manufacture exported goods or to conduct exported services.

The general VAT rate is assessed at 21%, although a reduced rate of 10.5% or an increased rate of 27% could be applicable in certain cases.

RIGI provides certain VAT incentives for mining projects, including the issuance of input credit certificates for the VAT amounts invoiced to the SPVs that qualify under the promotional regime.

Personal assets tax

Personal assets tax is imposed on all existing assets held by Argentine resident individuals and undivided estates by December 31st of each year. Foreign individuals and undivided estates located abroad are subject to this tax exclusively on assets located in Argentina.

Argentine corporate entities governed by the General Corporate Law No 19,550 are required to pay personal assets tax corresponding to their shareholders that are Argentine-resident individuals and undivided estates or foreign resident individuals or corporations, for the tax corresponding to their shares as of December 31st each year. The general rate is 0.50% and is levied on the proportional net worth value of the shares held by December 31st. Pursuant to Law 27,743, those micro, small and medium-sized entities that qualify as “compliant taxpayers” are enabled to apply a reduced 0.375% personal assets tax rate for periods 2023, 2024 and 2025.

Pursuant to the Personal Assets Tax Law, the Argentine company is entitled to seek reimbursement of the paid tax from the applicable local individuals and/or foreign shareholders, even by withholding those amounts from any dividend distribution.

Tax on credits and debits in Argentine bank accounts

Tax on bank credits and debits is levied on any credit and debit in an Argentine bank account and upon other transactions which, due to their special nature and characteristics, are similar or could be used in substitution for a bank account. The general tax rate applicable is equal to 0.6% for each credit, and 0.6% for each debit. There are specific tax rates and tax exemptions applicable for certain cases.

Taxpayers may credit a portion of the tax paid against their IT liability and may deduct the remaining amount from their IT base to the extent certain conditions are met.

Excise tax

Excise tax (or internal tax) is levied on producers, manufacturers or importers of goods expressly designated by the law (eg, insurance, tobacco, spirits, soft drinks, certain automobiles, motors, wine, etc), and applies to only one stage of production. The applicable rates vary according to the goods concerned and, in general, are imposed on the sales price.

Import and export duties and taxes

The definitive importation of goods is generally subject to the payment of import duties and other taxes (unless any exception applies, such as the one stated in the Mining Investments Law (MIL) for import duties). The import duty rate varies, depending on the type of good imported. Also, until 31 December 2024, definitive imports are levied with a 3% statistics fee, subject to certain caps (unless any exception applies, such as the one stated in the MIL for import duties). Financial costs associated with imports are VAT (10.5% or 21%) and payments in advance of some taxes (typically, VAT, IT and turnover tax on goods other than fixed assets). These costs are generally recovered against domestic sales or refunded against exports.

Export duties are assessed according to the tariff number of the goods being exported. The basis is FOB value. Export duties are applicable to some products.

RIGI includes a series of tax incentives that materially reduce the total tax burden for mining projects qualifying under such regime.

Provincial Taxes

Turnover tax

Turnover tax (Impuesto sobre los Ingresos Brutos), which is a tax on gross revenue imposed at the provincial/local level, is the most relevant tax within the general Argentine Provincial Tax system; it is also levied in the City of Buenos Aires. This tax is levied on all kinds of industrial or commercial activities carried out on a habitual basis and for consideration. The tax base comprises gross revenue (or the total amount received in cash, in kind or as a service) accrued from the taxpayer’s commercial activity, and its tax rate varies, depending on the activity and the jurisdiction involved. Exemptions are available for many industrial activities, subject to certain conditions, as a result of a tax agreement entered into between the federal government and the provinces.

Stamp tax

Stamp tax is levied by Argentine provinces and the City of Buenos Aires on acts and documents evidencing transactions for consideration, such as contracts, acknowledgment of debts, incorporation of companies, promissory notes, corporate capital increases, transfer of real estate, and monetary operations, among others. The applicable rates vary according to the transaction and the jurisdiction involved. Some provinces have repealed this tax on financial, insurance and other kind of transactions related to agricultural, industrial, mining and construction activities to the extent certain conditions are met. Pursuant to Supreme Court case law, agreements celebrated through offer letters that comply with certain requirements do not trigger stamp tax.

Mining royalties

Mining royalties are mandatory payments that must be made to the province in connection with effective production (in addition to any contractual royalties that may exist in each particular case). The maximum royalty payable to a province that has adhered to the MIL should not exceed 3% of the “mine-head value” of the mineral extracted. Provinces may increase their royalties up to 5% of the mine-head value of the mineral extracted only after adhering to Article 22 of Law 24,196 (as amended by Law 27,743) and only for mining projects that had not started construction of the exploitation phase prior to 8 July 2024.

In some cases, the provinces negotiate and execute agreements with the mining companies for the purposes of setting up specific methods of calculation and/or anticipated payments of royalties.

Municipal Taxes

Duties and fees on municipal taxes are grouped into various categories, the configuration and amount of which depend on the jurisdiction involved.

Double-Tax Treaties

Argentina has treaties to avoid double taxation in force with the following countries: Australia, Belgium, Bolivia, Brazil, Canada, Chile, China, Denmark, Finland, France (which amendment protocol is pending ratification), Germany, Italy, Mexico, Netherlands, Norway, Qatar, Russia, Spain, Sweden, Switzerland, Turkey, the United Arab Emirates, the United Kingdom and Uruguay (through an information exchange treaty that contains clauses for the avoidance of double taxation). Agreements entered into with Japan, Luxembourg and Austria are not yet in force as of the date of this document, pending compliance of certain requirements under the corresponding domestic laws.

Through the application of these treaties, a non-resident, among other benefits, may be able to considerably reduce IT withheld at source. In general terms, treaties to avoid double taxation follow the OECD and UN Model Convention guidelines (except the treaty with Bolivia, which follows the Andean Model, and the treaty with Uruguay which combines information exchange provisions with clauses for the avoidance of double taxation).

The promotional legislation applicable to mining investment in Argentina includes the following benefits, arising from the MIL:

• mining projects are granted with tax and foreign-exchange regulations stability for a term of 30 years at national, provincial and municipal level;
• the amounts invested in prospecting, exploration and feasibility studies can be deducted from income tax purposes (double deduction), in addition to the deduction allowed under the ITL;
• the costs of any exploration project may be deducted against the profits resulting from another successful project;
• early return of VAT tax credits resulting from exploration works;
• accelerated amortisation of capital goods, with a method to allocate accelerated amortisation intended to prevent losses from becoming statute-barred;
• assets imported to be included in the mining production process are duty free (import certificate required); and
• cap on royalties payable to the provincial government (3% of the production value over pithead value).

It is also worth stating that some provinces have created mechanisms to have a more direct participation in the exploitation of certain minerals that have been considered to be strategic. Such is the case of lithium in Jujuy, which declared lithium to be a strategic resource. Provincial state-owned mining companies have been created to hold mining rights, with the purpose of developing them in association with private investors.

Under Title VII of Law 27,742, the RIGI regime was created (Incentive Regime for Large Investments), which includes mining and which provides for projects qualifying in the regime a relevant reduction of federal tax burden, a limitation on the type of FX regulations restrictions that the central bank may impose, a strong 30-year regulatory, tax and customs duties stability regime, and immediate access to international arbitration in case of violation of the regime by the government.

Argentina law provides several types of legal entities by means of which business activities may be carried out in Argentina. The corporation (Sociedad Anónima or SA), the wholly owned corporation (Sociedad Anónima Unipersonal or SAU) and the limited liability company (Sociedad de Responsabilidad Limitada or SRL) are the most common types of business organisations used as investment vehicles. Act No 27,349 issued on 12 April 2017 created a new type of legal entity, the simplified corporation (Sociedad por Acciones Simplificada or SAS).

Gains derived from the transfer of SA, SAU and SAS shares, SRL quotas and other securities are subject to income tax, regardless of the type of person who obtains the income (unless an exemption applies).

Capital Gains

For tax periods starting on 1 January 2021 inclusive, capital gains obtained by Argentine corporate entities derived from the sale, exchange or other disposition of shares are subject to a progressive income tax rate (from 25% to 35%, depending on the accumulated taxable net income) according to the amendments introduced by Law No 27,630 to the ITL. In certain cases, the cost of acquisition of the shares may be updated using a specific inflation index.

Income obtained by Argentine resident individuals and undivided estates from the sale of shares is subject to income tax at a 15% rate on net income, unless the securities were traded on a stock market or have public-offering authorisation, in which case, under certain conditions, an income tax exemption applies. In certain cases, the cost of acquisition of the shares may be updated using a specific inflation index.

Capital gains obtained by Argentine resident individuals and by non-Argentine residents derived from the sale, exchange or other disposition of shares are exempt from income tax in the following cases:

• when the shares are placed through a public offering authorised by the Argentinian Securities Exchange Commission (Comisión Nacional de Valores or CNV); and/or
• when the shares are traded in stock markets authorised by the CNV, under segments that ensure priority of price-time and interference of offers; and/or
• when the sale, exchange or other disposition of shares is made through a tender-offer regime and/or exchange of shares authorised by the CNV.

If the exemption does not apply, the gain derived by non-Argentine residents from the disposition of shares is subject to income tax at either a 15% rate on actual net income or a 13.5% rate on the gross sales price to the extent the seller resides in, and channelled its funds through, a co-operative jurisdiction. Non-cooperative jurisdictions are those listed under Article 24 of the ITL’s implementing decree.

These income tax rates may be reduced in certain scenarios, due to the application of a treaty to avoid double taxation.

The ITL also provides capital gains taxation on the indirect sale of Argentine assets to the extent certain conditions are met.

Exemptions

The exemption on the sale of Argentine shares applies only to the extent that the foreign beneficial owners reside in, and their funds come from, jurisdictions considered as co-operative for tax purposes. Non-cooperative jurisdictions are those listed under Article 24 of the ITL’s implementing decree.

If the exemption does not apply because the seller resides in a non-cooperative jurisdiction or channelled its funds through a non-cooperative jurisdiction, the gain derived from the disposition of shares is subject to Argentine income tax at an effective 31.5% rate on gross income.

CFC Regulations

It should be noted that in Argentina there are Controlled Foreign Corporation (CFC) regulations by which foreign vehicles could be considered transparent for tax purposes. In this regard, the CFC legislation implemented under Act No 27,430 requires specific and detailed analysis to determine whether the Argentine resident investor should be taxed on an accrual basis, even where no dividend or profit distributions were made by the foreign-controlled vehicle.

Other Taxes

The sale of mining projects could also involve other transfer taxes, such as tax on debits and credits in Argentine bank accounts, turnover tax and stamp tax, as the case may be.

The main features for attracting investment for mining are a stable and long-lasting mining legal framework, the solid title investors can obtain over mineral deposits which have no time limit, and the promotional investment regime applicable to mining embedded both in the Mining Investment Law and under the recently enacted RIGI regime.

Argentine legislation welcomes foreign investments in productive and industrial activities, as well as in those areas requiring the rendering of services. The current legal framework is based upon the principle of non-discrimination among local and foreign investors, clearly evidenced by the fact that no legal authorisation is required to make a foreign investment in productive and industrial activities, foreign companies are not prevented from engaging in productive and industrial activities, and it is explicitly stipulated that foreign investors will not be subject to discrimination.

The legal framework specifically applicable to the development of mining activities in Argentina particularly favours investment, either foreign or local.

Due to the current global and local situation, important foreign exchange-control restrictions remain in place, particularly regarding outflows of funds from Argentina and proceeds from Argentine exports. However the RIGI regime provides interesting exemptions to the restrictive general rules. Moreover the current government is gradually loosening such FX restrictions.

It is worth mentioning that Argentina has entered into Bilateral Investment Treaties (BITs) with several countries, including Australia, Austria, Canada, Chile, China, Croatia, Denmark, Finland, France, Germany, Israel, Italy, Malaysia, Mexico, the Netherlands, New Zealand, Peru, Russia, Spain, Sweden, Switzerland, the United Kingdom and the USA.

Argentina also has an integration and facilitation mining treaty executed with Chile for binational mining projects that require facilitation on both sides of the Argentine-Chilean border.

The main sources of finance for exploration, development and mining are of foreign origin: primarily, financing and equity provided by foreign entities and investors. In the last few years, some local businesses have started to invest equity in small mining projects, but there are no other local sources of financing.

Domestic securities’ markets have no role in the financing of exploration, development and mining in Argentina. There are no mining companies listed in local securities’ markets. Foreign securities’ markets have an important role in the development of mining activities in Argentina, since almost all of the mining investment is made by foreign investors, many of which are listed in foreign securities’ markets.

The most suitable securities available over mining tenements and related assets in the context of exploration, development and mining finance in Argentina are detailed as follows.

Mortgages

A mortgage is a right in rem constituted as security over immovable assets that continue in the control and possession of the debtor. Although mortgages are also created over other types of assets (eg, vessels and aeroplanes), they are typically created over immovable assets, including real estate, mining concessions and fixtures thereto. A mortgage provides an interest to the extent of the secured debt obligation over the real property and the fixtures thereto in respect of which the mortgage is granted. In insolvency proceedings, the mortgagee has a special preference in respect of the real property over which the mortgage is granted.

Pledges

Pledges may be divided into two categories: possessory pledges and registered pledges. Both possessory and registered pledges provide an interest to the extent of the secured debt obligation over the property in respect of which the pledge is granted. In insolvency proceedings, the pledgee has a special preference in the property over which the pledge is granted.

A possessory pledge requires that there be a displacement – actual or symbolic – of the assets over which the pledge is granted such that, when actual, the assets are removed from the possession of the debtor and placed in the control of the creditor or its agent. The displacement must take place as required by the rules regulating the transfer of ownership of a given asset. Tangible moveable property and intangible property can be pledged by means of possessory pledges. Since a displacement is required for a possessory pledge, a possessory pledge cannot be created over after-acquired property.

In contrast to a possessory pledge, a registered pledge does not require the pledged assets to be in the secured party’s possession. Moveable property, such as equipment, motor vehicles, raw materials, products and spare parts, can be subject to registered pledges. Moveable assets that are fixtures as a result of moral accession, including machinery, equipment, instruments, animals and vehicles employed within a mining concession for its development on a permanent basis, can also be subject to registered pledges. No intangible assets can be pledged by means of a registered pledge, except for trade marks.

Fideicomisos (Trusts)

Fiduciary assignments or trusts (fideicomisos) as security under Argentine law, are commonly used as a security arrangement in Argentina. Under a fideicomiso as security, all of the collateral is transferred, usually by means of a fiduciary assignment of the assets to be conveyed into the fideicomiso to a trustee (fiduciario) (the “Security Trustee”), which segregates the assets and holds them as fiduciary property for the designated beneficiaries. The designated beneficiaries would be the secured parties, to the extent of their interests, and the grantor, to the extent of any residual interest. Property acquired after the fideicomiso as security is created can be either directly acquired by the Security Trustee or incorporated from time to time into the trust by means of new assignments.

Fideicomisos may be created by private agreement under Argentine law. Should the trust assets be rights in personam (ie, contractual or legal rights), rules relating to the assignment of rights apply and the obligor must be served notice of the fiduciary assignment. In addition, any registrations or filings normally required to transfer a specific asset (eg, motor vehicles, real estate, shares and mining concessions) must be made to effect a transfer of the assets to the Security Trustee. A fiduciary assignment operates to convey the trust assets (subject to the debtor’s reversionary interest) from the estate of the debtor to the trustee. As a result, no registration of the assignment is required (other than as referred to in the preceding paragraph) to perfect the trustee’s interest against creditors of the debtor.

Fideicomisos as security may permit creditors to have possession of, and to continue to operate, the encumbered assets while the manner of ultimate realisation is decided without the need of judicial intervention, provided that the Security Trustee already holds the assets as fiduciary property for the benefit of the secured creditors.       

Through the enactment of Law 27,742 which contains the RIGI regime (Incentive Regime for Large Investments) which includes the mining sector, Argentina has finally found the key to unlock the construction decision on many projects that were in the pipeline; particularly copper projects. The facilitation and incentives that RIGI offers has helped and will continue to help in the investment decision-making process. Projects qualifying under RIGI have a material reduction of the total tax burden with respect to the federal taxes outlined in 4.1 Mining and Exploration Duties, Royalties and Taxes and 4.3 Transfer Tax and Capital Gains on the Sale of Mining Projects (please see the Argentina Trends & Developments chapter in this guide, which further explains the RIGI regime). It is foreseen that many of the large copper projects will make the submission to qualify under RIGI and make a favourable decision in connection with investing in the construction for the exploitation stage of large copper projects. Given that Argentina is also located in the so-called lithium triangle, Argentina is expected to increase lithium exports by 50% every year.

The authors expect Argentina to go from USD3,8 million to USD15 million in the next six-to-seven years in terms of mining exports and mining investments reaching USD14MM in the next five years.