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Goldcorp wary of further Argentine gold investment due to export tariff imposition

An export duty tax being levied by the Argentine government has raised the ire of numerous foreign mining companies doing business in the country, including Canadian gold miner Goldcorp.

Author: Dorothy Kosich
Posted:  Thursday , 24 Jan 2008

RENO, NV - 

Bajo La Alumbrera copper and gold mine part owner Goldcorp has joined its operating partner Xstrata in protesting the Argentinean Government's decision to levy new export duties on mining companies operating in the country.

Goldcorp Vice President, Investor Relations Jeff Wilhoit told Mineweb Wednesday that while the Vancouver-based gold miner supports Xstrata in its legal fight against the tax, Goldcorp has not decided to cease conducting business in Argentina.

Five mining companies, including Swiss-based mega-miner Xstrata, über-mining company Rio Tinto, and major South African gold miner AngloGold Ashanti, have asked for an injunction to stop the proposed export duties from being imposed. The nation's mining law guarantees miners stability in their tax burden for 30 years from the time they file their feasibility studies.

Xstrata and Goldcorp are among 14 companies that have been affected by the government's decision to eliminate exemptions from export duties of 5 to 10 percent. Former Argentinean President Nestor Kirchner ordered the tariffs be applied regardless of the tax law just before the administration of new President Cristina Fernandez assumed office. Fernandez is Kirchner's wife. Speculation is that the export tariff could raise as much as $1 billion for the government.

Mining projects now in the country's pipeline include El Pachon, in which Xstrata may invest $2 billion; Yamana Gold's $2 billion Agua Rica project; Barrick's massive $2.4 billion Pascua Lama project, straddling Argentina and Chile; and Rio Tinto's Rio Colorado potash project.

Wilhoit said that--while Goldcorp respects the rule of law in Argentina and has a great relationship with government officials in the country-‘We hope that diplomacy prevails" and that it "gets us where we want."

While Tim Miller, Goldcorp's Vice President in Central and South America, told the Globe and Mail newspaper that Goldcorp will halt exploration spending in Argentina, Wilhoit told Mineweb that most of that exploration is taking place around Alumbrera, which has nine years of remaining mine life. Miller said exploration around the Alumbrera concession has been on hold by the joint venture partners.

Wilhoit explained that exploration programs in Argentina have not been given a high priority by Goldcorp. Miller told the Globe and Mail that the country "was high on its list of countries we would like to expand into."