THE VANCOUVER SUN
La Argentina ordenó a empresas mineras, gasíferas y petroleras, como Xstrata Plc., repatriar todas las ganancias futuras por exportaciones en momentos en que el gobierno se esfuerza por frenar la creciente fuga de capitales desde la segunda economía de Sudamérica.
En su primera medida desde que ganó la reelección este domingo pasado, la presidenta Cristina Fernández de Kirchner modificó un decreto de 2002 para que empresas como Repsol YPF SA, Total SA, Petroleo Brasileiro SA y Pan American Energy LLC conserven en el país por lo menos el 30 por ciento de sus ganancias por exportaciones.
La decisión de Fernández, que nacionalizó el fondo de jubilaciones y pidió límites a la compra de tierras por parte de extranjeros, forma parte del esfuerzo para ralentizar la fuga de capitales, calculada en 3.000 millones de dólares por mes, que está vaciando las reservas del Banco Central.
La medida volverá más difícil la tarea de atraer inversiones directas extranjeras hacia la Argentina, que según Naciones Unidas cayeron un 30 por ciento durante el primer semestre de este año.
“Este tipo de controles sólo desalientan la inversión y perjudican por ende las exportaciones”, opinó Juan Pablo Fuentes, economista de Moody’s Analytics Inc., en West Chester, Pensilvania.
Según un informe de Naciones Unidas que se publicó este miércoles, la inversión extranjera directa en Argentina cayó de 3.500 millones de dólares a 2.400 en el primer semestre de este año mientras que en Latinoamérica en su conjunto aumentó un 54 por ciento, hasta los 83.000 millones de dólares.
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By Christopher Donville
Goldcorp says Argentina revenue rule won't have immediate impact
THE VANCOUVER SUN / Bloomberg
Goldcorp Inc., the world's second- largest gold producer by market value, said it won't immediately be affected by Argentina's order that mining and oil companies repatriate all their export revenue.
Earnings from Goldcorp's 37.5 per cent stake in the Alumbrera gold and copper mine in Argentina are being used to develop its Cerro Negro project, also located in the country, Chief Executive Officer Chuck Jeannes said yesterday in a telephone interview from Vancouver.
"We should be able to manage that in a manner that doesn't run afoul of any of these provisions," Jeannes said. "It's not going to have much of an impact on us, at least in the short term."
Argentine President Cristina Fernandez de Kirchner yesterday changed a 2004 decree that allowed Goldcorp and other miners to keep all of their revenue outside the country. The move is part of an effort to slow capital flight estimated at $3 billion a month that's draining central bank reserves.
Shares of some gold producers with Argentine assets fell yesterday following the announcement. Canada's Extorre Gold Mines Ltd. dropped 21 percent and Toronto-based Yamana Gold Inc. declined 4.7 percent.
"We'll be talking to our friends in the government to try to understand better what's going on," Jeannes said.
Barrick Gold Corp., the world's largest gold producer, said Thursday it's had talks with the government. Barrick CEO Aaron Regent said on a conference call that the Toronto-based company is examining the changes. Barrick operates the Veladero mine in Argentina and is building the Pascua-Lama project on the country's border with Chile.
TSX: Argentina, our new problem
FINANCIAL POST
The sell off in Extorre Gold Mines Ltd. and other Argentine miners on Wednesday may have been overdone, say analysts.
Argentina announced a decree to repatriate mining revenues that “may have been misinterpreted by the market to mean that companies could no longer transfer mining earnings offshore, which we do not believe is the case,” Daniel Earle, an analyst at TD Securities said in a note to clients.
The Argentine government wants export revenues from mining projects to be repatriated and converted to Argentine currency prior to being distributed either locally or overseas.
The payment for goods and supplies from overseas and the distribution of dividends will then require the Argentine currency to be converted to the foreign currency of the transmittal.
Accordingly, this overturns the previous benefits provided by Argentina to oil and mining companies, in 2002 and 2003-04 respectively, that exempted them from the currency repatriation laws that apply to all other primary producers in the country.
Mr. Earle said the change has a slight negative impact on Extorre associated with increased foreign exchange transaction costs, but the 20% drop in the stock on Wednesday presents an attractive buying opportunity.
He reduced his target price on the stock to $13.50 from $14, but maintained his speculative buy recommendation.
“We believe that the change in policy may have a slight negative impact on the value of Extorre,” he said.
“However, we believe that a potential devaluation of the Argentine currency could (possibly more than) offset this by lowering the company’s peso-denominated capital and operating expenditures.”
By Rodrigo Orihuela, Camila Russo and Laura Price, Bloomberg
Argentina orders oil, mining exporters to repatriate funds
THE VANCOUVER SUN
Argentina ordered oil, gas and mining companies such as Xstrata Plc to repatriate all future export revenue as the government struggles to stem accelerating capital flight from South America's second-biggest economy.
President Cristina Fernandez de Kirchner, in her first move since winning re-election Oct. 23, changed a 2002 decree requiring companies such as Repsol YPF SA, Total SA, Petroleo Brasileiro SA and Pan American Energy LLC to keep at least 30 percent of their export revenue in the country.
The decision by Fernandez, who nationalized the US$24 billion pension fund industry and has called for a limit on purchases of farmland by foreigners, is part of an effort to slow capital flight estimated at US$3 billion per month that is draining central bank reserves. The policy may make it harder to attract foreign direct investment to Argentina that the United Nations estimates fell 30 percent in the first half of the year.
"These types of controls only discourage investment and thus hurt exports," said Juan Pablo Fuentes, a Latin America economist at Moody's Analytics Inc. in West Chester, Pennsylvania. "The oil sector is already hampered by controls and regulations. This will only add to those problems."
Extorre Gold Mines Ltd, a Vancouver-based company that explores for gold and silver in Argentina, plunged 25 percent to $7.00 at 12:07 p.m. New York time after falling as much as 26 percent, the most in more than 18 months.
Americas Petrogas Inc, a Calgary-based company that explores for oil in Argentina, declined 21 percent to $1.47 after tumbling as much as 29 percent, the most in three years. Crown Point Ventures Ltd., also based in Calgary with onshore oil and gas projects in Argentina, dropped 16 percent to $1.13 after falling as much as 26 percent, the most in 20 months.
Foreign direct investment in Argentina fell to US$2.4 billion from US$3.5 billion in the first six months of the year, while increasing 54 percent to US$83 billion for Latin America as a whole, according to a UN report published yesterday. Faced with inflation economists estimate at 24 percent, Argentines pulled US$9.8 billion out of the economy in the first half of this year, compared with US$11.4 billion in all of 2010.
Export sales from oil, gas, petrochemicals, gold and copper in Argentina totaled US$10.7 billion in 2010, or 16 percent of total exports, according to the national statistics agency. Argentina places a 100 percent tax on oil exports above about US$45 per barrel, compared with a global price that has ranged from US$75 to US$114 per barrel this year.
The move ensures "equal treatment to all production activities," according to a statement in today's official gazette. Mining companies had been exempt from the policy requiring that 30 percent of export revenue be repatriated since 2004.
"This shows the problems the government is having in trying to stop capital flight," said Walter Molano, an emerging markets analyst with BCP Securities. "The government is willing to take strong measures to stop it."
Capital flight prompted the central bank to sell US$2.7 billion of reserves in August and September to curb a depreciation in the peso, which has weakened 6.1 percent this year. Reserves have fallen to US$47.8 billion this year from a record US$52.6 billion while central banks in Brazil, Mexico and Chile build up savings.
Kristian Rix, a spokesman for Repsol YPF, Spain's biggest oil company, said the company will "respect the law." Coeur D'Alene Mines Corp., a U.S.-based gold and silver producer, will see no immediate impact from Argentina's order and is still "keen" to invest in the country, spokeswoman Wendy Yang said.
Jorge Palmes, chief executive officer of AngloGold Ashanti Ltd's Argentine unit, said the company wasn't aware of the measure. Officials at Vale SA declined to comment. Xstrata spokeswoman Alison Flynn said it's "too early to comment." Pan American Silver Corp "is still assessing the news and how this could affect our Argentinean operations," spokeswoman Kettina Cordero said via e-mail.
Fernandez, 58, has tapped central bank reserves to pay debt and steady the peso, nationalized carrier Aerolineas Argentinas SA and fined economists who question official inflation reports since taking office in 2007. She has also kept caps on utility prices, causing Reading, U.K.-based BG Group Plc and France's GDF Suez to leave the country. Metrogas SA, Argentina's largest natural-gas distributor, filed for bankruptcy.
BP Plc, the U.K.'s second-biggest oil company, said yesterday it may delay completion of its sale of a US$7.1 billion stake in Pan American Energy to Bridas Corp., co-owned by Cnooc Ltd, until next year as it doesn't yet have the necessary Argentine antitrust and Chinese regulatory approvals.
Today's decree in Argentina isn't likely to affect the sale, BP spokesman Robert Wine said in an e-mailed response to questions today.
Bridas, also owned by Argentina's billionaire Bulgheroni family, agreed in November to buy BP's 60 percent stake in Pan American that it doesn't already own. The deal can be terminated by either party if the approvals aren't received by Nov. 1, unless both sides agree to an extension.
Planned Investments
Vale, the world's biggest iron-ore producer, is spending US$5.9 billion to build a fertilizer plant in Mendoza province, western Argentina, to export potash. The mine, which is scheduled to start operating in the first half of 2014, is expected to be the world's largest. Rio-based Vale is building a railway and a port to ship the mineral to Brazil.
Vale Chief Executive Officer Murilo Ferreira told investors May 27 the company's potash project is "magnificent." The construction of the project was halted for more than two weeks in June by the provincial authorities, after arguing that it wasn't complying with required contract demands.
Faced with today's decision, companies "will have to either reinvest in other Argentinian projects or decrease exposure to the country," Luis F. Zapata, head of Latin America Institutional Equity Sales at Canaccord Genuity, said.
