POLITICAL ECONOMY

Boost for gold mining as Argentina's Rio Negro Province repeals cyanide ban

Pan American Silver says changing to mining legislation in the Rio Negro Province will allow the company to advance its Calcatreu gold development project.

RENO - 

With the repeal of provincial laws banning the use of cyanide in gold processes, Argentina's mining industry is continuing to expand with a record $2.57 billion in investment last year.

Pan American Silver announced Thursday that new legislation enacted in the Rio Negro provincial legislature which allows the use of sodium cyanide in mineral processing is a positive development for Pan American Silver's Calcatreu gold development project located in the province.

On Dec. 22, 2011, the Rio Negro legislature passed a bill repealing Law 3981, enacted in 2005, which prohibited use of cyanide and/or mercury in the extraction, exploitation and/or industrialization of metal ores with the purpose of stimulating the growth of mining in the province.

However, environmental, indigenous, unions, political groups and local NGOs are demanding the re-enactment of the law.

Law 4738, which was originally proposed by the late Rio Negro Governor, Carlos Soria, states minerals that constitute a social good should be used to obtain benefits that create a better quality of life for communities. It also stresses the method of minerals extraction ensures environmental protection as well the life and safety of people living in the area of the mine.

The law creates a Provincial Council for Mining Environmental Assessment (COPEAM) under the management of the Undersecretary of Hydrocarbons and Mining in the Rio Negro province.

Membership on the council will be made up of two provincial regulators, three legislators, one local government representative, an environmental sciences representative of the University of Rio Negro, and an indigenous peoples' representative. The council will examine and report about the environmental impact studies submitted for mining projects in the province.

The board will also be charged with drafting an environmental impact assessment procedure which will include a study, an expert opinion or technical report, COPEAM's report, and public hearings.

The new law also allows companies or individuals who already hold title and/or concessions for mineral deposits, in addition to an approved EIS, to resume their work on their projects. All EIA reports submitted before the enactment of Act 3891 in 2005 must be approved by COPEAM.

In a news release Thursday, Pan American CEO Geoff Burns said, "This is a very positive development for Rio Negro and Argentina. "While the previous legislation allowed open pit mining, it banned the use of cyanide in mineral processing, effectively rendering our Calcatreu gold project uneconomic."

"By reversing this ban, the provincial and municipal governments have clearly reaffirmed their commitment to responsible, environmentally sensitive mining development, which will bring significant investment and the associated benefits for all stakeholders, particularly the local communities," he added.

Calcatreu is less than 140 kilometers due north of Pan America's most important silver development project, Navidad, which is in the neighboring province of Chubut. Pan American invested $1.7 million at Calcatreu last year and plans to accelerate development activities at the project this year.

SALTA MAY RENEGOTIATE MINING ROYALTIES
In an unrelated development Thursday, the government of the Salta Province in northwest Argentina announced it is seeking mining royalties increases from companies operating in the province.

Secretary of Mining and Energy Resources Ricardo Salas said he believes the current percent of royalties paid by mining companies operating in the province is too low at 3% of mine mouth value.

He suggested that mining royalties are key to the province's economic growth. The province contains three main mineral resources-lithium, uranium and silver-with some gold mining potential. Mining exploration was expected to exceed $150 million last year. The Salta collected $766,412 in mining royalties in 2010.

Salas said he has had some conversations with the mining sector and has called for a dialogue about possible increases in mining royalties.