Mining is a hot topic in Argentina. Amanda Barnes interviews geologist Bruce Smith to learn just what all the fuss is about.
But with strong environmental opposition and messy politics, will Argentina's treasure chest remain firmly buried underground? We speak to New Zealander geologist, Bruce Smith who has been living in Mendoza, trying to tap into Argentina's unexplored natural wealth for 3 years - to find out what it is all about.
So what exactly is Argentina sitting on?
Argentina has phenomenal mineral resource potential. It could be a wealthy country for its mineral resources, and it has huge potential to develop. But it hasn't developed a great resource industry yet, because the politics are complex and it doesn't have a strong tradition or culture of mining. Below the Andes there are huge copper deposits; from the Chilean side they produce 40% of the world's copper (which puts them well ahead of any other country; the next biggest producer only achieves 10%). Argentina shares the Andes with Chile, yet it doesn't even make up 1% of world production and so far there is only one copper mine in the country [Bajo de la Alumbrera in Catamarca]. Mendoza has the San Jorge copper and gold deposit with a total metal value in excess of $10billion ($US) that has already been explored and may go into production. Chubut has the world's largest unexploited silver deposit (Navidad), worth about $40 billion ($US). That one deposit alone contains half the national public debt value in silver. Argentina has a huge potential in minerals. It has the potential be in the top 5 minerals producers in the world.
Wow, that is a lot of money! Where would it all go though? Would Argentina and the communities benefit or just the mining company?
Mining produces jobs (lots of them and very well paid), tax and royalty revenue for the states, infrastructure investment and community development. The state owns the minerals. Landowners own the land. A mining company needs to have agreements with the government, with landowners and with the local community to mine. Some people say that national companies should be the only ones to produce so the benefits remain solely in national hands, but they rarely have the resources or expertise. Mining is a business. There are not many national governments that get involved with exploration and production. Exploration is a very high risk process, 99% of exploration projects fail. Mining is a business that government should regulate and administer, set standards for tax and royalty payments, but not risk taxpayer's money to find or develop mines. Australia and Canada are very wealthy from mining but the government is, not miners. If you look at many of the richest countries in the world – they are built on mining. In South America for example, Chile and Brazil are the richest per person, and both are mining countries. When Chile had the big 2010 earthquake President Piñera thanked all the international offers of aid money, but declined, saying that the country would rebuild using its copper resources.
If there is this much potential, why aren't more people mining here?
There has been mining throughout the history of Argentina but on a limited scale. The military government didn't let foreign companies explore so very little has been done. Argentina did change the law 16 years ago to allow foreign companies to explore, but each province has its own laws and there is little consistency between provinces. There is a national mining law but each provincial government has their own policies. Laws often change and vary between provinces. For example, in San Juan the politics are pro-mining and a lot of money has gone into the region, however in Mendoza politics are still uncertain. The most important thing for mining companies is stable law. A lot of people think that mining companies like to go to third world countries to exploit their resources but that's not the case. Companies prefer stable laws. As it is a big investment.
How has the recent Glacier Law affected mining?
The Glacier Law creates uncertainty and prevents companies from investing money. It can be read and interpreted in many ways. All industry depends on stable, constant legal framework. If a country doesn't have this it pushes out investment, both foreign and local. San Juan and other regions are contesting parts of the law as unconstitutional. The way it was written could leave tens of thousands of people unemployed if it was implemented.
Is this the only controversy? Are there not health and environmental concerns?
Anti-miners say mining contaminates the water supply and that it is poisonous. A big concern for some is the use of cyanide, as cyanide is used to dissolve gold, but was also used as a poison during WWII. Cyanide is made from carbon, nitrogen and salt. Once it is added to water, it disaggregates in sunlight and disappears completely. A common, similar example is chlorine. As a solid tablet for your pool, chlorine is toxic to eat and the concentrated gas will kill you. But add water and sunlight and chlorine disappears just like cyanide. A lot of people don't understand this. In my opinion cyanide isn't a problem. There is more cyanide used in plastics production than in mining. In New Zealand cyanide has been used for more than 100 years with three gold mines in production and no-one has died or become sick. The biggest gold mine in New Zealand is right in the middle of a town, next to a large dairy and kiwi fruit producing area. Mines and farming can and do easily co-exist.
A part of the problem is an image of the past. A mine that was operated 50 years ago has the same similarity as a 50-year old car or car factory. It's a mess. In the past they used to dump the waste in the river. There were no environmental policies. Today, environmental care is very important and most mines operate to the best international mining practices.
And apart from that?
There are impacts and benefits from all large industries. The reality is metals are needed for modern life. Your computer, car, electricity, wine makers vats, all need metals. Argentina can buy from foreign countries all the copper, iron, uranium, silver, zinc, gold to satisfy its needs, or it could develop a world class mining industry and help to satisfy the needs of the world.
What do you do with the left over mines?
The planning for mine rehabilitation should be part of the initial agreement and mine plan. Mines have been turned into lakes or filled in to be turned into farms, left as holes, replanted as forests - there are many possibilities. I believe you need to have the plan and funding in place before you start mining so closure in future is well done.
So, when the mine is gone does the money then disappear?
A lot of people say that mining is not sustainable. Once you have mined it – it's gone. But there are lots of ways to look at it. 10,000 jobs for 30 years creates sustainable education systems. It puts so much money into a community. It's something that will last forever.
What is the future for mining in Argentina?
Argentina has absolutely tremendous mineral potential. The industry is growing slowly and as the economic growth and benefits from mining become more obvious, as has recently become apparent in San Juan, more and more provinces will want a share of those benefits. A strong economy is needed for communities to flourish, to build good schools, hospitals, water infrastructure, to buy good wine. People will come to realise that there are sensible ways and places to mine and that metals are needed for modern life. Mining can easily co-exist with agriculture, communities and form the basis of a strong economy. The main driver of this in Argentina (and anywhere) is the need for good clear and stable laws and their proper implementation.
Bruce Smith is Exploration Manager of the Grosso Group, Argentina.
To read more about mining in Argentina, click here for our article concerning environmental issues in mining (The Green Issue), here for our more information about mining safety (Digging Deep), and here for our report on a recent protest against mining in Mendoza.
