January 10, 2012 / 10:42 PM / 6 years ago

Canadian mining projects move ahead in Argentina

BUENOS AIRES (Reuters) - Argentina expects two Canadian miners, Pan American Silver and Goldcorp, to start construction on sizeable projects over the next six months as the sector continues to expand, the country’s mining secretary said on Tuesday.

High metals prices and legal reforms in the 1990s have spurred rapid growth in Argentina’s mining industry since 2003, although it still lags far behind regional heavyweights such as Chile and Peru.

Argentine Mining Secretary Jorge Mayoral told Reuters in an interview that Pan American Silver PAA.TO could start construction before June on its Navidad silver project, which he said would require an investment of at least $1 billion.

“This is one of the most important metals projects to be carried out in the Southern Cone. It is in the last stages of exploratory development, they are defining reserves and doing feasibility (studies),” Mayoral said.

“I think we may be able to make an announcement on the investment in this project before June and construction would start almost immediately,” he added.

Navidad is located in the Patagonian province of Chubut and is being developed by Minera Argenta, a Pan American subsidiary.

Last year, the company questioned the economic impact of Chubut’s laws prohibiting open-pit mining and the use of cyanide in mineral processing. But the firm later said it would avoid cyanide and expected Navidad to be in the permitting stage by 2012, with production seen in mid- to late 2014.

The company expects to produce nearly 20 million ounces of silver a year at Navidad in the first five years of operations.

Another project that will help expand overall output in Argentina is the Cerro Negro gold mine, which Goldcorp (G.TO) will build at an estimated cost of $750 million in the southern province of Santa Cruz.

“Cerro Negro may be the most important gold project that Argentina will set in motion ... they are preparing to start construction” toward the end of this quarter, Mayoral said.

Goldcorp forecasts the mine will produce 550,000 ounces of gold a year during the first five years, starting in 2013.

BURGEONING INDUSTRY

Mining investment in Argentina hit a record $2.57 billion in 2011 and the industry has expanded nearly 2,000 percent since 2002. Provinces such as Rio Negro and Catamarca recently revamped their laws to attract more mining business.

But Argentina is more vulnerable to global price swings than Chile or Peru since it taxes miners more heavily.

One key project, Pascua Lama, will straddle the mountainous border between Argentina and Chile. Mayoral said the roughly $5 billion gold-silver-and-copper mine “could be finished before the scheduled date” of mid-2013.

Pascua Lama is owned by the world’s top gold miner, Barrick Gold (ABX.TO).

Two copper projects run by Xstrata XTA.L, El Pachon and Agua Rica, could also make concrete progress this year.

“I can’t put a date on it, but I’d like to announce that construction will start on Pachon by the end of this year or the beginning of next year,” Mayoral said.

Additional reporting by Guido Nejamkis; Writing by Hilary Burke; Editing by Dale Hudson

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