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Miners pull out of Argentina over populist measures

A cautionary tale comes to us from Argentina, where major resource companies are increasingly shying away from investments in light of growing populism on the part of the Argentinian government.

The latest company to pull out of the country is Cameco Corp, a major Uranium producer, announcing the end to a joint-venture exploration project with its partner Calypso Uranium Corp after two years.   Only a week prior Pan American Silver, a Vancouver-based company, said it would “stagger investments in Argentina until the investment climate cleared.”

Miners are growing increasingly concerned over President Cristina Fernandez’s policies, which have so far included the expropriation of a partially state-owned energy company, the forced repatriation of mining export revenue on local markets, and a mandate that companies source equipment domestically.

While certain government policies – such as the removal of red tape leading to permitting delays – are not only welcome but critical in creating a framework conducive to the responsible and effective maximization of a country’s resource potential, the Argentinian government’s approach is a page from the “What not to do” book, and could, according to experts, “push the Argentina onto a list of unfriendly jurisdictions for mining like Venezuela and Bolivia, and drive investors away when the country is most in need of investment.”