Our First Edition

In recent years mining has developed significantly in Argentina. According to the National Mining Secretariat, regarding the year 2003: (a) mining investments increased over 700%; (b) mining exports increased 241%; (c) direct and indirect employment from mining activity raised 110% and 141% respectively; and (d) meters drilled for exploration increased 201%.

Argentina ranks sixth among the countries with the greatest mining resources. However, there is much work to do since only 25% of 750,000 square kilometers with mining potential has been explored and developed.

Current figures are encouraging as is the general legal framework ruling the mining industry, such as: (a) Decree 815/1992, which establishes the rule of non-discrimination regarding the nationality of individuals or corporations acquiring real or personal rights recognized in the Mining Code; (b) Law 24,402/1994, which provides a special regulation for the financing or reimbursement of Value Added Tax payments made by mining companies; (c) Law 24,228/1993, which approved the Federal Mining Agreement and comprises the commitment on behalf of the provinces to eliminate municipal taxes and provincial stamp taxes from mining companies; (d) Law 24.196/1993 (regulated by Decrees 2.686/1993 and 1.089/2003) comprises the majority of the current benefits for mining investments, such as: (i) 30-year tax stability regarding taxes in force at the time the feasibility report is submitted by the mining company; (ii) the beneficiaries' right to deduct from their income tax statement 100% of the amounts invested in prospecting, special research, mineral and metallurgical tests, pilot plants, applied research and other works aimed at determining the technical and economic feasibility of the project; (iii) the possibility of accelerating (over three years) the depreciation of investments made on housing, transportation, construction of plant and equipment for the necessary infrastructure for the mining activity; (iv) the exemption from paying income taxes derived from profits of the mines and mining rights, used as payment for the subscription of shares of registered beneficiary companies; (v) the exemption from paying taxes on the assets; (vi) the exemption from all import duties and any other tax due to import capital goods; and (vii) 3% cap on royalties, calculated according to the value of the extracted mineral.

Bear in mind that the Argentine mining legal framework has not suffered significant modifications due to legislative changes or administrative decisions adopted in connection with the economic emergency of year 2,002. Although some governmental measures tried to modify the legal framework applicable to the mining industry, Courts have assured the respect for the rule of law.

Basically, Argentina has great mining potential and an encouraging legal framework. Notwithstanding that worldwide economic uncertainty may discourage mining investments, we consider that Argentine mining potential and the current legal framework maintain Argentina as an appealing mining destination. Therefore, we have decided to launch this monthly newsletter which will gather together all of the relevant mining information; considering legal news, Court decisions, as well as new mining investments in Argentina. This entails a great effort since the information is scattered.

Our aim is to provide a useful instrument for those interested and related directly or indirectly to the mining industry. We address all our readers with great enthusiasm, hoping this newsletter contributes in a meaningful way.