Argentina is a country rich in minerals, and since early times its development has been a source of substantial resources.
The National Constitution determines that the Federal Government has competent jurisdiction to regulate on the matter (Article 75). Accordingly, the regulation for the business is the Mining Code enacted in 1886 and amended on multiple occasions until the present time.
The general principle governing the subject of mining under Argentine legislation is that mines are owned by the Government (national or provincial, as the case may be). However, a private person may obtain a permit or concession to explore an eventually develop minerals found.
Under Argentine legislation, mines are classified into three different types, depending on the minerals developed, and with certain differences in their regulation.
13.1. Exploration Concessions
Any individual or entity may request a concession to explore a specified area.
The concession application must be made to the provincial authority having competent jurisdiction (as the case may be) and specify the area where the exploration will take place, a description of the activities that will be done, and the details of the applicant and the owner of the land. Also, the applicant must disclose a list of the tasks to be done, the equipment that will be used and the work plan to be carried out.
Together with the concession application, the applicant must pay exploration duties, which are reimbursed if the concession is not granted.
Finally, the applicant must enclose the consent of the owner of the land where the exploration is intended to be done.
Note: If the exploration is done by the owner of the land, no prior permission is necessary.
13.2. Development Concessions
Minerals may only be developed with Government authorization, under a concession.
A concession can result from finding a certain mineral in the process of exploration work, or if the development of a certain mine is left vacant.
In all cases, in order to maintain the development, the concession operator must pay an annual royalty, submit an investment plan and not interrupt development. If these requirements are not met the concession may be revoked.
13.3. Tax Incentives
The mining business is strongly encouraged by the Government with various types of tax benefits.
- Tax stability: a mining venture has tax stability for 30 years, from the submittal of the feasibility studies.
- Tax exemption: the Mining Code exempts the concession operator, for 5 years, from any taxes, national and provincial, on the land, products, machinery and other equipment and investment used for the development.
- Income tax: deductions from income tax include 100 % of the amount invested in exploration, feasibility studies, tests and other expenses incurred to determine such feasibility. Likewise, for the purpose of such tax, there are a number of deductions that strongly benefit the business.
In summary, since Argentina is a mineral-rich country, the Federal Government has been careful in its regulation of the business, and seeks to encourage mining via certain tax benefits intended to generate investment in the sector.
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