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Argentina: Mining as a pawn in the Chubut election chess game (From IKN296)

From IKN296, out yesterday.

Argentina: Mining as
a pawn in the Chubut election chess game
Some interesting developments in the Chubut region of
Argentina last week. The need-to-know results of the moves for capitalists us
on the outside looking in and wanting trade info:
  • It’s
    all about provincial governor Martín Buzzi positioning himself for a
    re-election bid
  • It’s
    bad for Yamana (YRI.to) (AUY) and its Suyai project
  • It’s
    good for Pan American Silver (PAA.to) (PAAS) and its Navidad project
There were two pieces of news out of Chubut Argentina for
mining last week, both on January 8th. Firstly the governor of the
province, Martín Buzzi, signed a decree (10) that bans mining activity in the
Western mountainous region of the Chubut province. Secondly (11) he signed a
decree stating that there would be local referendums on mining projects in the
province on October 25th, with each zone affected by a project
allowed an up/down vote on whether it goes ahead, run concurrently with the
national Presidential election set for that day. Those are the facts of the
events, now for the reasons:
1)     
Martín
Buzzi is an ally of presidential candidate Daniel Scioli, is from the
Kirchnerite FpV wing of the Peronist party and is looking for re-election in
October.
2)     
He’s
up against ex-governor of Chubut Mario Das Neves, who is also a Peronist but of
the “traditional” section of the party which is opposed to the Cristina FpV
brand.
3)     
Up
until recently it’s been assumed that Das Neves would beat Buzzi easily in
October and become governor once again, but Buzzi staged a strong comeback in
2014 to the point where he’s a live candidate for re-election in October.
Whatever happens from here, it’s going to be close between the two.
4)     
Therefore
Buzzi has started positioning himself for the campaign by enacting policies
that please local electorate. Hence the two moves on the mining industry last
week.
At this point we step back and explain a little about the
make-up of Chubut province, which can basically be split into three parts. 1)
The eastern Atlantic coast, host to the main cities and majority of the
population. 2) The central “Meseta” zone, sparsely populated and with little
industrial or employment activity, it’s a classic looking Patagonia
semi-desert/semi-tundra region. 3) The western mountainous area, with small
towns and a developed agro/tourist industry (well known for its winter ski
resorts and lakeside retreats, for example).
We can go into other niceties of the province but it’s time
to cut to the chase, keep on-topic and talk mining. The East coast population
tend to be left of centre politically and are normally anti-mining by choice
(though not to a militant level), but the weight of population makes that
moderate anti-mining preference important. The central zone population, though
small, is known to be strongly pro-mining because it offers the only hope of
meaningful and gainful employment and would provide a strong economic boost to
their area. Plus on an enviro level there is less to totally screw up (real
world practical). The West mountain/foothill populations are clearly
anti-mining in the majority (though there is a pro-mining movement among them,
it’s not 100% anti) because they have a good thing going with eco-tourism and
agriculture and putting it bluntly, don’t want to screw up their good thing and
pristine environment (and hey, anyone who’s toured the lakes area will know how
damn pretty it is).
Therefore and playing the political numbers game, Governor
Buzzi knows that anti-mine is a vote-winner in the Andean zone, therefore he’s
decreed the whole zone free of mining. He also knows pro-mining will be a vote
winner in the centre so he’s going to let them vote in a referendum that’s
purely local in nature and doesn’t let the mildly anti-mine East join in to
sway things. Yes it’s blatant political maneuvering to the point of populism,
but what else do you expect from Argentine politics in a key election year?
The upshot of the Buzzi moves last week, apart from the
complaints from the opposition (I particularly liked the anti-mining UCR
party’s call that having local referenda on mining projects was “immoral” (12))
is that some mining projects in Chubut have a more promising future than
others. The Navidad Silver/Zinc/Lead project in the central Meseta zone will
probably get a green light from the people that live there. However the
projects in the Andean foothills such as Yamana Gold’s (YRI.to) (AUY) Suyai
project (previously named Esquel and run by Meridian) has just been handed
another big red light, even though YRI insist that the project is very
different from the one previously blocked by a referendum a decade ago and is
far more eco-friendly. Other mining projects such as certain uranium deposits
are now halted from development in the West, too.

That’s the situation in Chubut province today, but it also
provides a taster of the type of upset and shifting ground that will be part of
the Argentina political scene in 2015. Mining is going to be used as a pawn in
wider election fights in many provinces, of that we should be in no doubt.

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