FEATURE: Anti-mining groups pose serious challenge to industry - Argentina

FEATURE: Anti-mining groups pose serious challenge to industry - Argentina

29th August 2006

http://www.bnamericas.com/story.jsp?noticia=364840&idioma=I&sector=7

Anti-mining activity by environmental groups is one of the main challenges facing Argentina's mining industry, speakers at a mining conference in Mendoza said Tuesday.

The country's geological potential and legal stability offer many opportunities for mining investment but are overshadowed by the rise of anti-mining campaigns and the deterioration in legal security, said Patricio Jones, president of Deprominsa, the local subsidiary of Canada's Tenke Mining (TSX: TNK).

In addition, the local industry faces international challenges in the form of steep energy price increases, said Jones in the inaugural address of the congress Argentina Mining 2006.

Accusing environmentalist organizations such as Greenpeace of falsifying information to achieve their anti-mining aims, Jones said Argentina's mining industry conforms to the strictest environmental standards, unlike other industrial sectors.

Non-governmental organizations (NGOs) are raising concern among local communities about the dangers of cyanide but its use in mining worldwide has not caused a fatal accident in the last 100 years, according to Jones.

Four hundred mining operations worldwide use cyanide safely to separate gold from ore in their operations, he added.

Meanwhile, the country's judicial security has been in a state of decline since 2003 when residents of the town of Esquel in southern Argentina's Chubut province opposed the construction of Canadian miner Meridian Gold's (NYSE: MDG) gold project in a non-binding referendum, bringing the project to a halt, said Jones.

This was followed by Chubut's ban on open pit mining and the use of cyanide later the same year, and the ban by neighboring Río Negro province on cyanide in mining in 2005. The same year, Mendoza province extended the boundaries of Diamante national park to include Tenke's controversial Papagallos.

NGO claims that cyanide would be used at Papagallos, a copper deposit that would not be processed by cyanide, are an example of the lies told by environmental groups, according to Jones.

"A PROVINCE A YEAR"

Also accusing NGOs of lies, Salta province mining and energy minister Ricardo Alonso said Argentina's mining industry was "losing a province a year" to the anti-mining sentiment predominant in Chubut, Río Negro and Mendoza.

"Now they are knocking on the door of La Rioja province," he said.

Environmentalists in La Rioja have begun attacking Canadian miner Barrick Gold's Famatina project, Alonso told BNamericas after his talk.

"When Barrick wanted to start work at the site, the environmentalist attacks began with absolute lies, saying they were going to pollute the water, to brake investment in the project," said Alonso.

Barrick has already conducted extensive drilling at Famatina with quite successful results, according to the Salta mining minister.

REVIVAL

Argentina's mining industry has been undergoing an intense revival since coming through the country's deep recession of 2001-2002 with mining investment rising from US$220mn in 2002 to an estimated US$1.52bn in 2006, Eddy Lavandaio of Argentina's national geological service Segemar told the conference.

The country expects mining exports this year to reach US$1.68bn from US$1.1bn in 2002 and the gross value of mining production to jump to US$2.01bn from US$1.36bn in 2002, he said.

The country has seen an intense increase in exploration interest with 135,000m of drilling in 2002 growing to a record 400,000m in 2005.

But the growth has been accompanied by a wave of anti-mining protests that have divided Argentine provinces into those regarded as friendly, such as San Juan and Salta, and unfriendly.

The country's federal government has established a mining code that is attractive for investors but the provincial governments are given scope to interpret the laws.

Speakers at the congress said the government promotes mining but does not defend the industry efficiently.

There is a lot of political opportunism but little seriousness, said Deprominsa's Jones.

The weak role of local mining associations in putting forward a positive image of mining was also noted.

"If the current anti-mining situation continues, in five to 10 years Argentina will be left without mining," said minister Alonso.

Emily Russell
Business News Americas