Plummeting Peso, Economic Crisis Hinder Argentina’s Gold-Mining Growth Potential

Gold is the biggest generator of US dollars within the country’s mining industry, and while big investments have been made, the sector falls short of its potential due to the weak peso and the economic crisis

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Buenos Aires — On June 1, the Argentine government announced a major investment in mining, but not in lithium, the mineral that is generating much interest and speculation, but in gold, the metal that generates the most dollars in exports for Argentina.

The investment was announced by global mining giant Newmont, which operates the Cerro Negro project in Santa Cruz province, and which plans to spend $540 million to extend the project’s life until 2034.

According to data from the country’s Mining Ministry, during 2022 Newmont processed 278,000 ounces of gold, generating exports of more than $500 million, which places it as “one of the main gold producing deposits in Argentina, and the most important in the province of Santa Cruz”.

Worth its weight in gold

During 2022, Argentina’s mineral exports totaled $3.85 billion, representing 4.4% of the country’s total exports. Of this total, metalliferous minerals (gold and silver) amounted to $3 billion, to which gold contributed $2.15 billion, or 56% of total exports, a year-on-year growth of 8% in exported volume.

The latest export data, corresponding to April 2023, reflect external sales from Argentina for $275 million, accumulating a total of $1.29 billion during the first four months of 2023. Of the total exported in April, $147 million corresponds to gold (54%), a year-on-year drop of 37% ($86 million less than in 2022).

According to a Goldhub report published in mid 2022, with information from Metals Focus and the World Gold Council, Argentina is the fifth-largest gold producer in South America, behind Peru, Brazil, Colombia and Bolivia.

Where are Argentina’s gold-mining projects, and how much do they export?

            • 6 in Santa Cruz, 44.6% of total mining exports
            • 2 in San Juan, 22.4%
            • 1 in Salta, 7.7%
            • 2 in Jujuy, 19.1%
            • 1 in Catamarca, 4%

Warnings from the mining sector

In March, during the world’s leading mining convention, organized by Prospectors & Developers Association of Canada (PDAC), the Argentine Chamber of Mining Entrepreneurs (CAEM) warned that “it will be at least a decade before we have a new gold deposit producing”, reflecting the deterioration the country’s gold and silver mining is going through.

“A decline in the production of these minerals would have a hugely negative impact, given that gold and silver account for almost 80% of mining exports,” the statement noted.

According to the CAEM, this economic deterioration is due to the “permanent increase of costs in dollars, the disparity of exchange rates, and the difficulties in the provision of imported raw materials”.

This situation would impact mainly the province of Santa Cruz, whose mining exports during 2022 totaled $1.72 billion, 44.6% of the national total.

Alberto Carlocchia, institutional relations and sustainability manager of Patagonia Gold, operator of a project in Santa Cruz, said recently that “for several years now, the economic crisis has hit the sector so hard that it is bleeding it dry”.

Carlochia highlighted, among the aspects affecting the sector, “the different exchange rates, the costs in pesos but evaluated in dollars”, and “the different mechanisms to bring in raw materials that threaten production, despite the fact that it is a sector that has a trade surplus”.