New Federal Mining Agreement in Argentina
On 9 February 2017, the National Government and the governments of the Argentine mining Provinces signed the New Federal Mining Agreement (the Agreement) which will enter into force once it is approved by the National Congress and the Provincial Congresses. The Agreement introduced the following main amendments:
- Creates an additional contribution of 1% over the total amount of gross revenues accrued in a year, through the commercialization of mineral substances (without deduction other than VAT). These funds will be administered by the National Mining Secretary.
- Authorizes the Provinces to charge an additional contribution of up to 1.5% on the total amount of the gross revenues accrued in a year (without deduction of any amount other than VAT) for the commercialization of mineral substances. That amount shall be contributed to public infrastructure funds to be created by the Provinces.
- Establishes that royalties must not exceed 3% of the total amount of gross revenues accrued (excluding VAT) and without deduction of any amount. This entails an increase of the taxable base, as the taxable base was previously the "mine head" (production minus certain expenses).
- Creates a consultative team in environmental mining management to provide assistance and advice to the Provinces, including issues related to the closure of mines.
- Promotes the employment of local labor and local suppliers, as well as the unification of geological information, through the creation of the National Mining Information Center, and a unified registry and cadaster.
- Forces companies to constitute specific funds or guarantees destined for the conservation and remediation of the environment. The Provinces shall regulate the creation of such funds.
- The canon will be fixed for a maximum term of two years and will be increased by progressive scales while the mine does not register activity. Once the activity is started, the canon will be fixed based on the last scale.
- In case of expiration or abandonment of a mine, for justified reasons, the Provinces may offer the rights derived thereof to private individuals or entities by a bidding process. This must be done within a year of such declaration. With the previous regime, these rights were assigned to the first one that requested them.
- Material breaches to the environmental regulations of the National Mining Code are included as causes for expiration of mining rights.