New industrial promotion law of the province of Santa Cruz

On November 12, 2009, the Provincial Legislature of Santa Cruz enacted Law No. 3,092 (published in the Official Gazette on 12/21/2009), establishing a system of industrial promotion and development, whose main objectives are job creation, the establishment of new industries, a rational and sustainable promotion and use of natural resources and mainly the development of economic activities.

The promotional system created by Law No. 3,092 establishes a series of important benefits which may turn the province into an appealing destination for mining investment. Some of the benefits are the following:

(a) Refund of up to 40 % of the new investment made (i) or of the extension made, or (ii) of the roads, electrical grids, water supply, sewage and any other infrastructure work made by the companies related to the project, as long as they are permanent, constitute a benefit for the common good, and the investment was previously considered and approved by the Province in the legal instrument. The refund period cannot be superior to 4 years, starting from the first production made.

(b) The exemption of existing or new provincial taxes, for a 10-year period, with a possibility of extending the period to 15 years, of the investments made in main activities. The exemption can be total or gradual, depending on its regulation, starting from the first production made.

(c) A subsidy of up to: (i) 50% of the costs of electrical, water and sewage supply, for a period of up to 4 years, starting from the first production made; (ii) 49% upon the interest rate applied to credits by the Banco Santa Cruz Sociedad Anónima for the companies under industrial promotion.

(d) Provincial non-refundable contribution for workforce from the Province of Santa Cruz.

(e) Transfer of public employees, to whom the Provincial Government will continue to pay its contributions for a 4-year period.

(f) Assignment for the use of the necessary provincial lands for the establishment of the provincial Industrial Park and their productive infrastructure.

(g) Governmental support and participation in the management of tax and tariff exemptions and reductions, promotions and other measures in a national and municipal level.

(h) Provincial non-refundable contribution for activity in the ports of Santa Cruz, for a period of up to 4 years, starting from the first production made. The value of the contribution shall be the equivalent in Argentine pesos of up to 600 units per standard sea container of forty feet or its equivalent; of industrialized raw material effectively leaving the Province by sea.

The law establishes certain requirements to obtain the benefits aforementioned. Therefore, in order to obtain such benefits, industries must comply with the following: (a) use raw material, semi-elaborated products and natural resources originated in the Province; (b) allow the production of necessary resources for the main economic activity of the Province and/or added value to raw materials for their later commercialization at a national, provincial and municipal level; (c) multiply its effect in the provincial economy, trying to achieve a greater workforce level or to settle in provincial areas which ought to be developed; (d) promote and develop new industrial activities or consolidate the existing ones, integrating production procedures with the maximum use of the resources available; (e) develop tourist infrastructure in areas with low or no offer of tourist services, or with a differential or inexistent service in the area.

The Mining industry can easily fulfill the requirements aforementioned, such as points (a), (b), (c) and (d), among others.

The purpose of the law is positive and significant. The Mining industry can celebrate the enactment of this law and undertake projects in the Province of Santa Cruz.