Gioja: “We want the state-owned mining company to become partner of private investors in new projects”

The governor will promote IPEEM’s participation in new mining projects with a minority stake. He also expects to join the construction of Lama-Pascua (Barrick) with Pachon (Xstrata).

For this year, José Luis Gioja expects an increase in the level of economic activities in the country after a 2012 marked by “a very difficult global scenario, with a very strong crisis in Europe.” Hand in hand with regional economic reactivation, the recovery of agricultural trade and the continuity of mining investment, the governor of San Juan held that “despite the adverse international context, Argentina has managed to maintain an economic course enabling social mobility and a vertiginous domestic market.”

“In this context, I believe that the mining industry has played an important role in this province. We defined the construction of Lama-Pascua (Canadian Barrick Gold) and it has advanced a lot. Today, we are proud to say that this binational project has employed more than 15,400 people,” stated Gioja in an interview with El Inversor Energético & Minero in San Juan at the government headquarters.

“The remaining projects in progress are also developing, such as Gualcamayo (Yamana Gold) and Casposo (Troy Resources), which are starting underground mining with very good prospects,” he added.

In order to develop the sector in the medium term, Gioja said they expect that this year Xstrata (owner of Pachón, a huge copper deposit) submits the Environmental Impact Statement (EIS) to launch the construction of the project, which will require investments of over US$ 3,500 million.

“There are great expectations about the possibility of achieving Pachon’s start up, and we also closely follow the progress in Los Azules and Altars, two copper-gold projects which have been several years under exploration, and that will mean the continuation of the industry in San Juan in the future,” said the governor. “I wish we could join the completion of the construction of Lama-Pascua with Pachón’s start up,” he added.

In 2012, San Juan consolidated the collection of royalties on mining companies’ turnover and created trust funds to build infrastructure. What other action is being considered?

San Juan collects royalties on 3% of the turnover (and not on the pithead value, as set forth in the Mining Code) based on consensual agreements with each company, which will be in full force and effect until the gold price is not less than US$ 1,000. Now, the idea, as expressed by the Ofemi (the organization that gathers the mining provinces), is that the provinces have a stake in new mining projects. We know that each project has unique characteristics, so we will have to analyze on a case by case b asis. But the idea is that when submitting the environmental impact report, the province may require a share stake.

How will this stake be implemented?

When the province has an area for the concession, an equation will be proposed, where, in return for its award, the Provincial mining and exploration agency Instituto Provincial de Exploraciones y Explotaciones Mineras (IPEEM) will retain a percentage that will depend on each project. For such purpose, we must make some regulatory amendments to our provincial mining company. Of course we are not saying that the IPEEM will have a percentage of 50% or a higher stake, but we aim to maintain a minority stake which also grants legal certainty and sustainability to the private sector.