SUMMARY OF THE ARGENTINE MINING LEGAL REGIME
By Hernán M. Zaballa
BRONS & SALAS
1. Sources of information for the present summary – Preliminary clarifications In order to prepare the present summary we have taken into account:
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The Argentine Mining Code (hereinafter “AMC”), with the provisions that modify,
complement or amend it.
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The Mining Investment Law – Law 24,196 (hereinafter “MIL”) with the provisions that
modify, complement or amend it.
It is worth mentioning that the following is just a brief summary and is not intended to cover all
existing provisions and regulations applicable to mines. A reference to exploration permits is
only included in footnotes.
2. Basic notions within the AMC: Discovery Claims and Mines.
2.1. Relationship with land owners
The AMC divides the minerals in three categories. For the first category minerals, the AMC
divides the property of the mine from the property of the surface land and treats them
independently. The mine and the land over it constitute two different properties. This principle
applies to all the minerals included in the first and second category of minerals as established in
the AMC. Mines are considered in the AMC as real estate separately from the surface property
over them.
Minerals are the property of the provinces in which they are located. Private persons can obtain
from the respective provincial mining authorities the exclusive rights to explore and to exploit
minerals via permits and concessions, respectively.
The AMC considers that both mining exploration and exploitation, and the concession of a
mine and related acts, have higher priority than any other activity of the soil (this concept is
called “utilidad pública”). Consistently, surface owners can not prevent the granting of mining
rights and properties or commencement and/or continuity of mining activities thereon, without
prejudice to their right to collect the corresponding indemnity, as a consequence of the use of
their land by the miner and the damages derived from mining activities.
Land over which a mining concession has been granted is legally subject to different types of
easements (e.g. right of way, occupation of land, use of water, etc.) provided that indemnity is
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paid to the owner. However, when no agreement is reached between the surface owner and the
miner regarding indemnity, the same shall be fixed in Court. Meanwhile, in order for the miner
to start or continue with the mining activities and procedures, he can set up a bond or guarantee
to the benefit of the land owner, in a reasonable amount, to ensure that indemnity shall be paid,
once finally determined.
Notwithstanding the aforementioned, in order to avoid discussions and problems,
concessionaires tend to execute agreements with surface land owners.
2.2. Manifestaciones de descubrimientos (Discovery Claims)
These are written applications filed with the Mining Authority in order to obtain the mines,
which vest the applicant with priority vis-à-vis third parties claiming mining rights in the same
areas, provided that the applications concerned do not overlap with other mining rights granted
or applied for before. To claim a discovery, the discoverer must submit to the Mining
Authority, jointly with the discovery claim, a sample of the ore discovered. The manifestación
de descubrimiento must state the point of discovery (which must be the same place as that from
which the submitted sample was taken) using Gauss Kruger coordinates. The discoverer must
also indicate by Gauss Kruger coordinates an area not larger than twice the maximum size of
the exploitation concession (twice the maximum area of the mine claims, named exclusion
area), within which the discoverer will perform his/her exploration works to confirm the
discovery. The area must include the discovery point and must be regular (except as affected by
pre-existing claims or surface obstacles). This area will remain unavailable to third parties until
legal survey approval takes place.
2.3. Mines1
1
We include under this note some explanations referred to the concept of a cateo (exploration permits):
Cateo: this is an exclusive exploration permit granted by the Mining Authority for a certain period of time, covering a specific area. The size of a cateo is
measured in units of 500 hectares (“has.”). The minimum size of a cateo is one unit (500 has.). The maximum size is 20 units (10,000 has.). No single
person or entity (nor its agents) can hold more than 20 cateos or over 400 units (200,000 has.) per province. The term of a cateo begins 30 days following
the date on which the grant resolution issued by the Mining Authority is notified to the applicant. During the 30-day period the applicant must “begin” the
works it has proposed in its application (as used herein “begin” implies physical occupation with equipment and people). The commencement date cannot
be postponed nor interrupted without the consent of the Mining Authority. During the winter a “holiday” is granted.
A cateo of one unit has a duration of 150 days. For each additional unit, its duration is increased by 50 additional days. Cateos exceeding 4 units in size
must be periodically reduced in size. Once 300 days have elapsed, 50% of the area in excess of 4 units must be relinquished. After 700 days, 50% of the
remaining area in excess of 4 units must be relinquished. The application for relinquishment must show the coordinates of the area the applicant is keeping.
Failure to submit the application for release before the expiration of the applicable periods may cause the Graphic Register to request that the Mining
Authority arbitrarily reduce the area of the cateo and impose fines.
Mainly, the steps to be taken to obtain a cateo may be summarized as follows:
*Application
*Graphic Register Certification that the area is available
*Publication of the application and notice to the surface owner
*Grant of the cateo to the applicant
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The steps to be taken to obtain a mine may be summarized as follows:
a) Application (Discovery claim) (46 AMC) (the date, time of the claim is registered- a
sequential number is assigned to the presentation)
b) Graphic Register Certification that the area is available
c) Registration and concession of the mine.
d) Publication of the registration
e) Statutory works (Labor Legal), claim of pertenencias and survey of the terrain (land) by the
interested party
f) Grant of the pertenencias to the applicant (Equivalent to a property title)
(ii)
Mine Concession – assimilation to real estate-property title.
It is worth mentioning that under Argentine law the mines are ore deposits originally owned by
the National or Provincial Government, depending on their location, that are granted through
Concession to privates (individuals or companies) in units called pertenencias (mine claims).
Therefore, a discovery claim becomes a mine once it is registered and granted as such (third
step “c)” mentioned in point “2.3. (i)” above)..
Under AMC the mining concession vests the concessionaire with a property title over the mine,
and therefore mining concessions are also called mining properties.
(iii)
The Pertenencias
The pertenencia is the unit of concession of a mine within whose limits the miner can carry out
exploitation works. It consists of a solid body of rectangular or square base (unless the
conditions of the land make such form impossible) and indefinite depth.
Cateo applications: these are applications filed with the Mining Authority in order to obtain the cateos (first step mentioned in point (i) above), which vest
the applicant with priority vis-à-vis third parties claiming permits for the same areas, provided that the applications concerned do not overlap with other
cateos granted or applied for (second and third step referred to in point (i) above). The applicant must evidence in the application the payment of the canon,
which is paid on a provisional basis and subject to the grant of the cateo; failure to comply with any legal requirement may cause the Mining Authority to
reject the application submitted by the applicant. In case the cateo cannot be granted, the Mining Authority should return the canon provisionally paid by
the applicant.
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Number of mining claims (“pertenencias”) per mine allowed by the Mining Code: The size and
number of pertenencias a discoverer can apply for at the time the measurement and
demarcation is requested depend on the type of mineral deposit discovered and also on the kind
of person the discoverer is (i.e. a company or an individual), as follows:
Lode ore (vein type deposits): the discoverer has the right to obtain a maximum of 30 adjacent
or separated pertenencias whose standard size is 300 by 200 meters each (6 has.), the latter
dimension may be extended to 300 meters (9 has.) depending on the declination of the lode. If
the discoverer is a company formed by two or three persons, the number is increased by an
additional 20 pertenencias (totaling 50 pertenencias). If the company is formed by four or more
persons, the number is increased by 40 pertenencias (totaling 70).
Disseminated ore: the discoverer has the right to obtain 15 adjacent or separated pertenencias
being 100 has. in area, each. If the discoverer is a company formed by two or three persons, the
number is increased by an additional 10 pertenencias (thus totaling 25 pertenencias), and if the
company is formed by four or more persons, the number is increased by 20 pertenencias (thus
resulting in 35 pertenencias in the aggregate).
(iv)
Different legal requirements
The mining properties are, by law, granted in perpetuity under certain conditions (hereinafter
good standing conditions) including:
a) the fulfillment of certain legally required works (that we called in this document
“Statutory Works”) on the mine (minimum mine works, survey and continuous works in
order to avoid abandonment) (Steps “e)” and “f)” described under “2.3. (i)” ) –Please
see the following point “2.3.(v)”-;
b) the payment of “canones” to the province (exploitation fees payable per mine and
calculated on the type and amount of pertenencias of each mine during its life) –Please
see the following point “2.3.(vi)”-, and
c) the presentation and fulfillment of a plan containing minimum expenditure requirements
(Investment Plan) –Please see the following point “2.3.(vii)”.
(v)
Statutory works and Survey - (Steps “e)” and “f)” described under “2.3. (i)”) / Liabilities
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The statutory works must be performed within 100 days counted as from the day following
the discovery registration (Section 68 of the AMC). Lack of its performance of the statutory
works may result in the elimination of the mining claim registration by the Mining Authority.
Also a survey (including claim of pertenencias) must be requested within a 30 day term as
from the time at which statutory works are performed; noncompliance with said obligation
may lead the Mining Authority to arbitrarily locate the pertenencias, and in this case the rights
of the discoverer lapse and the mine is registered as vacant (Section 71 of the AMC)..
Failure to evidence performance of the statutory works or file the claim of pertenencias and
the survey in due time may result in the forfeiture of the concession (sections 71 and 220 of the
AMC).
Following the Survey and pertenencias petition, the Mining Authority resolves the petition.
Both the petition and the resolution are published in the official gazette. After that, if no
oppositions are filed by third parties, said survey and demarcation of the pertenencias is carried
out.
Once the survey and the demarcation of the pertenencias is carried out, the Mining Authority
registeres it in the Registry Book, and a copy is given to the interest party as title of said mining
property (Section 93 of the AMC).
(vi)
Canon (exploitation fee) - Difference with royalties / Liabilities.
The canon is a fee charged on the concession of a mine, payable as from, three years after the
date on which the mine is granted. The canon shall be paid on an annual basis. (213 and 224 of
the AMC)
The annual canon per pertenencia is fixed by law issued by National Congress.
For first category minerals (lode ore) the canon is of $80 per pertenencia. (Section 215 AMC)
For first category minerals (disseminated ore) the canon is of $800 per pertenencia (Section
217 AMC)
Generally the annual canon is paid in advance in two equal instalments on June 30 and
December 31 of every year.
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The mining property (concession) automatically lapses if the canon is not paid at least during
the two months following the end of the year (Section 216 AMC). Still, according to the AMC,
the Mining Authority shall formally notify said circumstance to the applicant, and the latter is
allowed to cure the lapsing of the concession by paying the canon plus fines within a 45-day
term as from the date on which the relevant resolution by the Mining Authority is notified to
the applicant. (Section 219 AMC) If the applicant does not cure the situation in the referred 45day-term, the lapsing is then confirmed with no possible appeal and the mine is registered as
vacant, thus allowing any third party to apply for it.
Royalties (difference with the canon): Since many times both notions are confused it is worth
mentioning that:
The canon is a fix fee paid per pertenencia to the local mining authority and they have nothing
to do with the concept related to royalties.
Royalties are directly related to and calculated taking into account the mineral productivity.
Royalties can be of the following two types:
(a) the mandatory mining royalties that should be paid to the Province; and
(b) the contractual royalties originating in a contractual commitment agreed upon by private
persons.
The maximum royalty payable to a Province that has adhered to the Mining Investment Law
(Law 24,196) will range from 1 to 3% of the “minehead value” of the mineral extracted,
depending on the process that will be employed on the minerals.
Another difference with the canon payments is that the lack of payment of the Royalties does
not have the lapsing effect that the lack of payment of the canon has, as explained in “A)2.3.
(iv) and (vi)”
(vii) Investment Plan / Liabilities
The AMC formally requires, in order to maintain the mining property in good standing, that an
Investment Plan be submitted (for each mining property) within 1 year as from the date on
which the survey is requested, regardless of the fact that said survey is made or not. According
to the AMC the survey must be requested within a 30 day term as from the time at which
statutory works2 are performed3. (Section 217 of the AMC)
2
The statutory works must be performed within 100 days counted as from the day following the discovery registration.
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Concept and contents - amendments
The Investment Plan should include an estimation of the works to be carried out and the
investments that are necessary to such effect (fixed capital assets to be acquired and mining
works to be done).
The items subject to investments in accordance with the provisions of Section 217 of the AMC
are the following:
a) Development of mine workings,
b) Construction of mining camps, buildings, roads and ancillary exploration works,
c) Purchase of machinery, power plants, components, and ore preparation and
exploitation equipment, with indication of their production or treatment capacity, to
be incorporated to the mine on a permanent basis.
The investment is complied by submitting just an estimation of those items. Hence, there is no
need for a feasibility study nor even a work schedule, but for a plan of investments, although in
practice, in order to have the latter properly established, the concession holder should have
prepared the former, at least tentatively.
In other words, the law does not require a complete plan but just a simple estimation of the plan
and its disbursements, since it is impossible to establish in advance and with a certain degree of
certainty, the nature and amount of the required outlays, at a time when the exploration of the
field probably is not yet completed in the short term allowed by law for the submission thereof.
Such estimation, therefore, may only provide an approximate idea of the investments required.
The investments should be capital investments. Disbursements for wages and technical
assistance expenses, conducive to the workings and exploitation of the mine are included in the
legal wording since, in the end, they translate into capital assets, as opposed to any surveillance
expenses of the concession, the expenses of its legal defense and any other expenses not
directly related to mine workings and mine exploitation.
Failure to evidence performance of the statutory works or file the claim of pertenencias and the survey in due time may result in the forfeiture of the
concession (sections 71 and 220 of the Mining Code).
3
Noncompliance with the obligation of requesting the survey may lead the Mining Authority to arbitrarily locate the pertenencias, and in this case the
rights of the discoverer lapse and the mine is registered as vacant
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The concession holder may from time to time introduce amendments to the investments
estimated in the Investment Plan by rendering account thereof to the mining authority, provided
however that through the referred amendments the anticipated aggregate investment is not
reduced.
Minimum amount of investments and term to effectively make them:
The Investment Plan cannot be less than 500 times4 the “canon” (as explained above this are
the fees payable as from the third year following the date on which the mine was granted) and
the estimated investments committed therein must be effectively made within 5 years as from
the date on which the Investment Plan is submitted.
In addition, in each of the first two years of the stipulated term, the amount of the investment
should not be lower than 20% of the aggregate estimated amount at the time of submission of
the Investment Plan. The foregoing tends to avoid concentrating the investments in the last
year, following several years of inactivity. Upon investment of the 40%, the balance may be
completed on any of or along the years of the period.
Failure to submit the Investment Plan with respect to a certain mining property within the year
as from the date on which the survey is requested for same mining property, may result in the
loss of the mine if, in addition its owner does not submit same within 30 days as from the date
on which the submission is demanded by the Mining Authority. In other words, the owner of
the mine does not automatically lose the mine as a consequence of the mere expiration of the
one year term for submitting the Investment Plan, since he has the opportunity to submit the
Investment Plan within the aforementioned 30-day term.
Accounting for the execution of investments before the Authority -- Approval of investments:
Within the term of three months counted as from the expiration of each of the five annual
periods, the concession holder should submit an affidavit before the mining authority regarding
the status of compliance of the estimated investments.
The mining authority may order the performance of the technical and accounting inspections it
may deem appropriate before granting an approval of the investments made and accounted for.
4
In the 1993 Mining Code reform, it was established by Law 24,224 an amount of 300 times the canon in substitution for the amount previously
established of 500 times the canon. Although Section 217 of the Mining Code refers to 300 times the canon, actually Section 218 of the Mining Code
which provides for the events giving rise to the forfeiture of mining rights, kept the reference to the 500 times, thus leading to contradiction between the
referred provisions. Based on such contradiction and considering the possibility of a strict interpretation of the rule on the part of the mining authority, it is
advisable to interpret that the mining investment should not be lower than 500 times the annual canon corresponding to the mine.
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Penalizing system for non compliance of obligations relative to the submission of the
investment plan – forfeiture of the mining concession:
Section 218 of the Mining Code provides for the penalty of forfeiture of the mining claims for
the various events of non compliance with the obligations relative to submission, fulfillment
and accounting for the Investment Plan.
Pursuant to Section 218, the mining concession shall be forfeited:
a) Whenever the investments estimated in the Investment Plan submitted were not destined
to the purpose provided for in Section 2175 and the concession holder did not remedy
such failure or omission within 30 days of the notice served on him to that end by the
mining authority.
b) Whenever the investments estimated in the Investment Plan submitted before the mining
authority were lower than an amount equal to 500 times the annual canon pertinent to
the mine and the concession holder did not increase that amount within 30 days of the
notice served on him to that end by the mining authority.
c) Whenever within the term of one year counted as from the date of the request for the
mining survey, the concession holder had not submitted before the mining authority the
Investment Plan and he did not further remedy such omission within the 30 days of the
notice served on him to that end by the mining authority.
d) Whenever within the term of three months of the expiration of each of the five annual
periods, the concession holder did not submit before the mining authority the pertinent
affidavit on the status of compliance of the estimated investments and such circumstance
were not remedied by the concession holder within 30 days of the notice served on him
to that end by the mining authority.
e) In the event of misrepresentation made in the affidavits submitted to account for the
status of compliance of the estimated investments. In that case the mining authority will
serve notice on the concession holder, which will have 15 days for defense purposes.
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a) Development of mine workings,
b) Construction of mining camps, buildings, roads and ancillary exploration works,
c) Acquisition of machinery, power plants, components and ore preparation and exploitation equipment, with indication of their production or treatment
capacity, to be incorporated to the mine on a permanent basis.
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f) In the event that the investments planned had not been made (implying a breach of the
projected plan). In that case the mining authority will serve notice on the concession
holder, which will have 15 days for defense purposes.
g) In the event that the concession holder had made amendments to the estimated
investments without prior notice, reducing the amount thereof6. In that case the mining
authority will serve notice on the concession holder, which will have 15 days for defense
purposes.
h) In the event that it had removed assets included in the investments already made,
reducing the amount thereof7. In that case the mining authority will serve notice on the
concession holder, which will have 15 days for defense purposes.
In view of the foregoing, it may be asserted that Section 218 provides for a double system for
the issue of an order of forfeiture according to the grounds giving rise thereto.
Thus, in the case of the grounds referred to in paragraphs a), b) c) and d), a forfeiture is ordered
if a concession holder does not remedy any failure or omission within 30 days of the advance
notice that should be served on him by the mining authority.
But in the events referred to in paragraphs e) f) g) and h) notice should be served on the
concession holder in order to enable his defense during the term of 15 days following said
notice.
Upon expiration of the 30-day term following notice without remedying the failure or
omission, or upon expiration of the 15 day term for the concession holder to file his defense, as
the case may be, the mining authority will resolve on the forfeiture. If the forfeiture is passed,
such resolution is subject to appeal and the appeal filed against it will be granted with stay of
execution.8
6
Although, pursuant to Section 217 it is forbidden to make changes reducing the amount of the aggregate estimated investment as well as to make changes
without prior notice to the mining authority, Section 218 at the time of establishing the events which may give rise to the forfeiture of mining claims, only
provides for the event in which changes made without prior notice reduce the amount of the aggregate estimated investment, and it leaves out the events
where the amendments introduced without prior notice do not reduce the amount of the investment. Consequently, in our opinion, for an amendment of
investment to bring about forfeiture it has to involve a reduction thereof. Mere amendment without prior notice, without alteration in the amounts that
would affect the investment, does not give rise to forfeiture.
7
Until the investments are made, the concession holder may change their allocation, without reducing its estimated amount. Once the investment is made
he cannot remove assets, reducing the estimated investment, but he is free to do it provided that the investment is not affected, and he does not need the
permission of the pertinent authorities.
8 Considering the irreparable burden implied by the forfeiture order and its effects, the appeal filed against the forfeiture order is granted with stay of
execution which means that the mere filing of the appeal suspends the effects of the forfeiture order until the final and conclusive resolution of the dispute.
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In all events of forfeiture, the mine will revert to the State, its original owner, and will be
registered as vacant, and be eligible to be acquired in accordance with the provisions of the
Mining Code.
By virtue of what has been set forth above, and exclusively in respect of the obligation to
submit an Investment Plan, it should be noted that the failure to submit the Investment Plan
may result in the loss of the mine if its owner does not submit same within 30 days as from the
date on which the submission is requested by the Mining Authority. In other words, the owner
of the mine does not automatically lose the mine since he has the opportunity to submit the
Investment Plan within the aforementioned 30-day term.
(viii) Lack of works
Section 225 of the AMC is self explanatory on this, as it establishes that:
“When the mine has been inactive for over four years, the mining authority may demand filing
of an activation or reactivation project, adjustable to the production capacity of the
concession, the characteristics of the area, available means of transport, demand for products
and existence of farming equipment.
A mine is deemed to have been inactive when no exploration, preparation or production tasks
have been regularly conducted in it during the above mentioned term.
The demand shall be met within six months, under penalty that the concessionaire’s right may
lapse.
Once the project is filed, the concessionaire shall comply with each of its stages in the terms
respectively provided for, which may not exceed five years in the aggregate, under penalty that
the concessionaire’s right may lapse, which penalty is applicable upon the first default”
(ix)
Environmental Impact Report.
The provisions related to environmental protection applicable to the mining activity were
established in 1995 by Law No. 24,585, as a supplementary title to the AMC. Such provisions
are now included in Title Thirteenth of the referred code, as amended by Decree No. 456/97
(Section 233 and sections 246 to 268 of the AMC).
The new Section 233 of the AMC established that “Miners may freely exploit their mining
concessions, without being subject to rules other than those pertaining to their safety, police
and environmental protection. The protection of the environment and the preservation of the
natural and cultural heritage in the mining activity field shall be subject to the provisions of
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Section Two of this Title and to those laid down in due time as per section 41 of the National
Constitution”.
As regards environmental management instruments, the AMC establishes that the responsible
parties included in Section 248 (those performing the activities described in Section 249) must
submit to the (provincial) enforcement authority, prior to commencing with any activity
specified in Section 249, an Environmental Impact Report (EIR) (Section 251). Likewise, said
Code provides for an EIR assessment procedure, which may conclude with its approval through
the issue by the competent provincial authority of an Environmental Impact Statement (EIS) for
each project or actual implementation stages (Section 252). The EIS must be renewed at least
every two years (Sections 256).
3. Promotional mining regulations within the MIL (Mining Investment Law. 24,196) and
Decrees 2686/1993, 1089/2003, 417/2003 and 753/2005
Argentine legislation welcomes foreign investments in productive and industrial activities, as well
as in those areas requiring the rendering of services. The current legal framework is based upon
the principle of non-discrimination9 among local and foreign investors, clearly evidenced in the
facts that (i) no legal authorization is required to make a foreign investment in productive and
industrial activities; (ii) foreign companies are not prevented from engaging in productive and
industrial activities; and (iii) it is explicitly stipulated that foreign investors will not be subject to
discrimination.
The legal framework specifically applicable to the development of mining activities in
Argentina particularly favors the investment, either foreign or local. In addition to the
aforementioned non-discrimination provisions generally applicable to the foreign investment,
the legislation applicable to mining investment in Argentina includes:
3.1.
Mining Investment Law No. 24,196, as amended and regulated by Decree
2686/1993 and Decree 1089/2003, under which:
(i)
Mining projects are granted with fiscal and foreign exchange control regulations stability
for a term of 30 years at the national, provincial and municipal level (which is counted as from
the filing of a feasibility study for the project)10;
9
The non-discrimination principle with respect to foreign investors is explicitly included within the framework of general foreign investment legislation, and
consequently, its full enforcement is totally guaranteed. This ensures local and foreign investors are treated on equal basis, possessing the same rights, and
obviously subject to the same obligations.
The Companies have the right to execute and file with the Argentine Mining Secretariat, the estudio de factibilidad (the “Feasibility Study”) in respect of
the Project under the provisions of Article 8 of Argentine Law 24,196 (as amended, the “Mining Investment Law”) and Resolution 326/94 of the National
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(ii)
The amounts invested in prospecting, exploration and feasibility studies can be deducted
from income tax. Further, the costs of any exploration project may be deducted against the
profits resulting from another successful project (This deduction is known as the “double
deduction” as it is provided for by the MIL in addition to the deduction allowed by the Income
Tax Law) ;
(iii) The early return of VAT fiscal credits resulting from exploration works is provided. This
benefit entails the return of all VAT effectively paid for all the operations subject to tax and
related to the activities, assets and services that legally allow for the application of the benefit;
(iv) The accelerated amortization of capital goods is admitted, setting forth a method to
allocate accelerated amortization intended to prevent the losses from becoming statute barred;
(v)
The assets imported to be included in the mining production process are duty free;
(vi) A cap is placed on the royalties payable to the pertinent provincial Government at 3% of
the production value over pithead value to all provinces that adhered to MIL;
(vii) Profits stemming from the contribution of mines and mining rights as social capital in
companies are exempted from income tax;
(viii) The assessment of economically exploitable mineral reserves may be capitalized up to
fifty percent (50%).
(ix) Environmental protection costs can be annually deducted from income tax up to an
amount equivalent to 5% of the operative costs of the mine.
3.2.
Delegated Decree No. 753/2004 and Decree 417/2003
Secretariat of Mining. The Mining Investment Law provides that mining ventures included under its regime shall enjoy mining stability benefits for a
period of 30 years counted as from the date of presentation of the Feasibility Study. Said Mining Stability includes fiscal (tax and customs) and foreign
exchange regime (exchange rate excluded) stability at national, provincial and municipal levels (provided the province and the municipality had adhered to
Law 24,196). The referred benefit stabilizes for a period of 30 years counted as from the Feasibility Study presentation: (a) the Total Fiscal Amount
(Aggregate Tax Burden at national, provincial and municipal level) resulting from all applicable taxes in force at the time of said presentation, and (b) the
foreign exchange regime in force at the time of said presentation (excluding the exchange rate). After the presentation of the Feasibility Study the
beneficiary is entitled as of right pursuant to Article 10 of the Mining Investment Law to obtain certificates from the National Mining Secretariat of
Argentina specifying the National, Provincial and Municipal taxes and tax and tariff rates and foreign exchange regime, for purposes of evidencing the
fiscal burden and foreign exchange regime stabilized pursuant to Article 8 of the Mining Investment Law. However, the event which gives rise to stability
for a certain project is the filing of the Feasibility Study with the National Mining Secretariat. The certificate issued by the National Mining Secretariat
pursuant to section 10 of the Mining Investment Law has a merely declaratory nature and only describes the scope of the tax, exchange and tariff stability
obtained by the person availing thereof through the filing of the Feasibility Study for its project. Any failure by the beneficiary of the mining stability to
obtain such certificate, and any failure by the National Mining Secretariat to issue such certificate, shall not affect the project’s right to the stability
regime.;
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Delegated Decree. No. 753/2004 provisions exclude those companies that obtain the stability
rights afforded by the Mining Investment Law –please see 3.1(a) above- from the application
of certain exchange control regulations currently in force. Indeed, under this Decree, mining
companies that obtain the stability rights afforded by the Mining Investment Law in respect of
a new project or an expansion of existing productive units:
(i)
are exempted from the obligation of bringing into Argentina and trading on the Foreign
Exchange Market (FEM) the proceeds from exports of products extracted from the project.
This exemption also allows to collect certain tax returns for the exportation of products without
the need to fulfill the referred obligation (other exporters cannot collect the export tax returns
before evidencing the fulfillment of said obligation).
(ii)
are exempted from restrictions on the free availability (this meaning the obligation of
bringing into Argentina and trading on the FEM) of foreign borrowings for the development of
productive mining ventures in Argentina intended for export.
(iii) Notwithstanding the above benefits to freely use abroad export and financing proceeds
are required to pay disbursements or commitments required to be made or satisfied abroad with
said proceeds. Only in case such funds prove to be insufficient to that end, companies reached
by this Decree are allowed to access to the foreign exchange market under the applicable
foreign exchange regulations.
4. Final Comment
In the serious economic crisis that the Argentine Republic has undergone in recent years, the
legal system applicable to mining activity promotion and investment in such area was kept in
full force and effect and also reinforced and improved by the adoption of several measures,
among others (a) the amendment to the legal system applicable to mining in the Argentine
Republic, making it more clear and granting greater benefits to the mining activity; (b) Decree
No. 417/2003 that clarified the exchange system applicable to mining companies that obtained
the exchange stability benefit before the reinstatement of the exchange control system, thus
excluding them from it; and (c) the hierarchy of the national mining authority, which became a
National Secretariat.
In this regard, the legal system applicable to the mining activity in Argentina enjoys the legal
security needed to make large-scale investments, whether local or foreign, and there is no
difference between the treatments of both.
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