Argentina: silver mine defeated —but Chevron gets fracking deal

Minera Argenta, the Argentine subsidiary of the Vancouver-based mining company Pan American Silver Corp., announced on Dec. 21 that it was suspending its Navidad silver mining project in the southern province of Chubut and would close its offices in Puerto Madryn and Trelew. The principal reason for the suspension was the failure of the province’s governor, Martín Buzzi, to get the legislature to back his plan to circumvent Law 5001, which bans open-pit mines and the use of cyanide in mining operations in Chubut. Residents of the province had organized popular assemblies to oppose Buzzi’s plan; dozens of mining opponents were injured when construction workers attacked them in Rawson, the province’s administrative capital, on Nov. 27.

Gov. Buzzi had also antagonized Pan American Silver: he proposed a law that would add a 5% net smelter-return royalty to the province’s current 3% royalty on mines and would also give the provincial government’s oil and mine company, Petrominera, at least 4% of total mineral sales. Pan American faces similar problems at its Manantial Espejo silver mine in the southern province of Santa Cruz, where Gov. Daniel Peralta has proposed legislation that would raise the province’s royalties to 8% and give the provincial mining company Fomicruz a 10% equity stake in current and future mines.

The Canadian company says it spent some $82.5 million developing the Navidad project in 2010 and 2011; the mine was expected to produce 632 million ounces of silver and around 3 billion pounds of lead, making it one of the world’s largest mining projects. (Adital, Brazil, Dec. 21;, Tucumán, Dec. 21; Dow Jones Newswires, Dec. 21, via Fox Business)

Just two days before the victory for Argentine environmentalists in Chubut, Miguel Galuccio, president of Argentina’s state-controlled Yacimientos Petrolíferos Fiscales (YPF) oil company, was in Houston on Dec. 19 to sign a letter of intent with Ali Moshiri, Latin America and Africa chief for the California-based Chevron Corporation, for a $1 billion pilot project to drill for natural gas in shale deposits in the southwestern province of Neuquén’s Vaca Muerta region. Experts say the area has the world’s third-largest shale resources. A little more than a week later, on Dec. 28, YPF signed a preliminary agreement with the Bridas Corporation, which is jointly owned by Argentine oil magnate Carlos Bulgheroni and China’s state-controlled China National Offshore Oil Corporation, also for shale exploration in the Vaca Muerta region.

Argentine environmentalists say the extraction of the gas from the shale deposits would be carried out through hydraulic fracturing (“hydrofracking”), a controversial practice with serious environmental side effects. In the US, where it has been used extensively, it is now banned in the state of Vermont, and its use has been suspended in New Jersey and New York. France and Bulgaria have banned hydrofracking, and the United Kingdom has imposed a moratorium on its use.

YPF was privatized in 1992, partly to the Spanish company Repsol, which by 1999 had bought the majority of shares. Center-left Argentine president Cristina Fernández de Kirchner re-nationalized YPF in the spring of 2012 by taking over 51% of the shares. The deal between YPF and Chevron was made despite an Argentine judge’s decision on Nov. 8 to embargo Chevron’s assets in Argentina because of a $19 billion judgment against the company in Ecuador for environmental damage and injuries to the health of indigenous residents in the Amazon rainforest. Chevron’s Moshiri said the judge’s decision was not a problem. “It’s a legal action of Ecuador’s government against Chevron,” he told reporters, “an issue between lawyers trying to sue everyone and not benefiting anyone.”

Meanwhile, Repsol is threatening to sue any company partnering with Argentina over the $10 billion investment it claims it lost in the re-nationalization. (Time, Dec. 19; Kaos en la Red, Dec. 25; Reuters, Dec. 28)

From Weekly News Update on the Americas, Dec. 30.