Argentina: RIGI passes
Further to last weekend’s preview, the debate on Milei’s cornerstone law package, the “Ley
Bases” went ahead in the Senate on Wednesday. The eventual final vote happened that same
evening (which is fairly rapid in Argentine terms) and was tight, with the Senate seats voting 36
to 36 and allowing the head of the Senate, Milei’s Veep Victoria Villarruel, to exercise her
casting vote and the bill duly passed.
Also as expected, the Ley Bases didn’t pass as presented to Senate and the government had to
do some horse trading on clauses and terms. For RIGI, in order to get the votes the
government changed a couple of minor matters, firstly by restricting the plan to fewer economic
sectors and secondly by stipulating that at least 20% of the FDI capex for any project must be
spent with local suppliers. As mining is one of the sectors still included and any project worth its
salt will require large scale capital spending at a local/regional level anyway (away from
imported capital goods), neither of those will greatly affect the plans of big mining. There’s also
a new 45 day revision clause on any project entering RIGI, which allows regional governments
a small period of time to reject any given project before it becomes official, inserted to allow a
veto before the project becomes subject to international tribunal law (e.g. ICSID/CIADI). As for
the terms of RIGI, once signed into law its main benefits for FDI projects of U$200m or more
are:
Corporate tax ceiling of 25% for the next 30 years. At the moment, corp tax
in Argentina is 35%.
Sales tax reimbursement of capital goods brought into the country (and
supposedly on a fast track basis)
Export taxes reduced to zero for all exports that come as a result of the
original capital investment
There are other items, but those are the ones that really matter. The reaction from the mining
sector cannot be called euphoria, with some buying in some Argentina exponed stocks but not
as much as could have bene expected. Aldebaran (ALDE.v, see Stocks to Follow) did okay but
on the whole, reaction was muted though against the
somewhat negative backdrop for mining stcosk last week.
If this news has dropped in late April or early May I
suspect it would have got a more bullish reaction. As for
commentary from South America’s mining people, we
haven’t had much out of Argentina mining authorities yet
but the news of RIGI passing the Senate was welcomed by
the sector. It was left to the General Secretary of the
Chile/Argentina Chamber of Commerce, one Rolando
Dvila Rodrguez, who summed it up well enough and has
a role that will be important as a liaison between the
mining sectors of the two countries in the years to come,
even though he’s not a A-lister. He said RIGI’s approval was (13) “A very important moment for
foreign investment in Argentina.” And that’s true.