Argentina: Lipsticking the pigLast week in London, Argentina’s Finance Minister Nicolás Dujovne appeared at a conference organized by the Argentina/UK chamber of commerce and the Argentina Embassy called “Plan Minero 2017”, at which those assembled extolled the virtues of the country’s mining sector and the opportunities it affords today (8).“I urge you to find the motivation to invest in Argentina. You will be welcomed”, said Dujovne to the representatives from the world level mining companies at his presentation and he backed up this wish with his ten main points on what has improved in recent times. Here they are:
- Macri has “normalized” the Argentine economy
- There is now one normal, free floating exchange rate
- The bond holdout court case is now resolved, which has allowed Argentina access to the world debt market again.
- Its INDEC stats office now produces reliable data.
- The tax haven forgiveness program which has seen dollar savings held in quasi-illegal offshore accounts come back into the country and bolster reserves.
- The process of “disinflation”, which according to Dujovne has brought inflation back down to 18% annual.
- Economic recovery, which according to Dujovne has seen Argentina move out of recession in 4q16.
- Job creation which, again according to Dujovne, has seen jobs created at a rate of 25,000 per month recently.
- The improvement in public sector accounting (a cute way of saying “less corruption”).
- Lower overall taxes, estimated by Dujovne to be 1.5% less than in 2015.He also told them that the Macri government’s plan was to see Argentina GDP grow in the long-term at between 3% or 4% per annum, a rate that could be sustained over many years.Now some of those points are valid, such as the improvements made to the exchange rate mechanism and the dropping of the 5% export tax for mining products. Others are rather cherry-picked, for example the claim that inflation is down to 18% annualized when that’s just one study from a range that put 2017 inflation forecasts at between 18% and 22% (and there’s a lot of evidence to say it’s at the upper end at the moment, including the latest inflation measurements just out). Others still are rose-tinted specs stuff, such as claiming unemployment is dropping (highly massaged figures there, the truth is that in the 2016 recession plenty of jobs were lost or became lower-paid) or there is less corruption in Argentina today, a bit like saying a standard nuclear bomb is less dangerous than an H-bomb. And in ironic timing, his claim that the INDEC stats office came on the very same day a court of law ruled that the INDEC data during the CFK government was totally reliable (in a case brought against the country by index-linked bonds holders who claimed they were due more money because INDEC rigged inflation data). What’s more, the new INDEC is now at the centre of a small scandal when it was discovered the people collecting price data weren’t bothering to go to the full range of shops and supermarkets and just using numbers they saw in shop windows next to their subway stations on the way to the office. So much for the new capitalist work ethic.But what really amused your author was the total lack of mention of the “Federal Mining Agreement”, the grand plan of the Macri government to bring a level playing field to the whole of the country and by-pass the provincial problems that companies have had forever in the country. That’s because the whole plan, pushed hard all through 2016, has been quietly dropped by the Macri government because it cannot get the “anti-mining” provinces on board. The whole plan (as predicted on these pages) was a total waste of time/money, the ineffectiveness of the country’s Mining Ministry is writ large against this failure and it points once again to the most basic of truths about mining there; whatever national-level advantages Argentina thinks it has, any mining company worth its salt knows that without a welcome and agreements at provincial level you cannot do mining business in the country, period. In real terms, that means Navidad (Pan American), Agua Rica (Yamana), Suyai (Yamana), San Jorge (ex-Coro, now those Russian guys) and a whole host of other projects located in anti-mining areas will never happen.And all this is aside the problems faced by an increasingly unpopular Macri government coming up against the mid-term elections (starts August, big votes in October), because all this good will and future projection of a rosy future would all be for naught if Macri’s party is beaten at the polls later this year, we would be in immediate dead-duck presidency world. In short, IF Macri does well at the polls in October and IF the country shows real signals of macro-economic improvement, you may see big mining companies start to commit to Argentina. Until then all these conference talks and optimistic presentations are an exercise in lipsticking a pig. Argentina is still a basket case country like no other, I care not if you prefer the policies of the current President to the previous one.
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Nolan? Pierre? Randy? You guys like these things, form an orderly queue now.
1) Anyone who has investigated the sector carefully (e.g your humble scribe a few years back, the last time this silly sub-sector was pumped to the mouthbreather end of the market) will know that the producers have no sway at all over the supply side of the Co equation. That's something tightly controlled by the refiners and, the China black box aside, that means Freeport and Glencore. The big players have a good thing going with cobalt and they're not going to let anything as radical as free market economics ruin that for them.2) There are a few dedicated cobalt mines around the world, but the lion's share of the stuff is produced as a by-product, not a product. In that way it's similar to silver, a metal with a price these days driven by the ultra-low costs of being a by-product (we've discussed this before, in August 2016 to be exact). But it's even worse for Co because it's a purely industrial metal, it doesn't even have the rabid guns'n'freedom idiots to back it up. The upshot is that 99.9% of these "cobalt opportunities" that Spott and others will "suggest" to you don't have a snowball's in hell of prospering because they'll never be able to compete on price when the big boys slam the door.
"It’s thus extremely important to speak with a qualified investment professional before jumping into the sector."
Please cast your mind back to this, kind reader:
Now consider this:
Here's the link, here's a translation:
The inhabitants of the municipality of Cajamarca, on the West side of the department of Tolima, voted this Sunday to say No to gold mining in its territories. In this way they have opposed the La Colosa mining project owned by the multinational AngloGold Ashanti.The bulletin number 10 of the national electoral body stated that the No vote had won with 97.92% of votes, i.e. 6,165 votes. For Yes there were only 76 votes. There were 41 blank votes and 14 annulled votes.Since 8am this morning the 18 voting locations were open across the municipality, with a total potential number of voters of 16,000. The result of the vote now obliges the municipal council to adopt the necessary measures to prohibit mining in its territory.
Hoorah, pip pip and top hole old sports, the intrepid AW has regaled us all with another GMO.
Check out this, "Who is The Angry Geologist?"
And this, "Carving Up Anglo".
Both of those are way too cool. Go read.
Dear StanFuck the fuck right off Stan Sudol, you and your worthless website that just scrapes content off other people and gathers all the clicks for itself. Don't you even think of ripping off IKN like you do other sites in your desperate attempt to fill your parasitical den of plagiarism with content. The day that Reuters, Bloomberg, Globe & Mail, Mining Weekly and every other channel you cheat out of traffic slaps a cease and desist order on your sorry, freeloading ass will be a good day for the internet. Fuck the fuck right off and never come back to IKN.Love, Otto.
Pretty damned wonderful post from my favourite blogger. This bit...
The nice thing about SHIT intercepts is that for the FAG (the Fraudulent Angry Geologist) they give you an opportunity to pad your PR with some MAXIMUM IMPACT (tm) BS, by letting you:
- Report a nice high-grade SHIT intercept - everyone loves those
- As a bonus you can call it a new "structure" - have some fun, name it after your girlfriend
- Even better - as you only have a single hole, it is "impossible" to calculate a true width, because, you know, GEOLOGY!!!
...plus my introduction to the word 'chimping' right afterwards, made me laugh so loud it scared the dog. Go see for youself right here.