The Mining Director of Mendoza, Jerónimo Shantal informs about the citizen's perception regarding mining, as well as the reactivation of strategic projects.
By Panorama Minero
How would you define the state of the mining industry in Mendoza?
In Mendoza, mining is a sector with a rich history, as seen in the production from Paramillos de Uspallata, which provided the lead necessary for General José de San Martín's Liberating Campaign to free Chile and Peru. Currently, the province of Mendoza is working on developing the exploration of our mineral resources under existing regulations, as demonstrated by the exploratory campaign of Hierro Indio, the exploration of Cerro Amarillo which is about to commence, and the three recently approved projects of "El Burrero," "Adriana," and "Las Choicas," which will soon begin work on access roads in order to initiate some exploratory drilling this season. Another example of concrete actions in promoting mining activity is the mining project called "Potasio Río Colorado'' (PRC), which a couple of months ago successfully transferred to a private investor, following thorough work by the Government and the State Prosecutor's Office. This involved a transparent, public, and competitive process overseen constantly by the previously mentioned regulatory body, resulting in securing an investor through a Share Transfer Agreement, including a solid investment program with a ring of guarantees.
In Mendoza, we also have significant industrial activity in minerals of 2nd and 3rd categories: historically, we have been producers of gypsum and talc, along with a strong industry in limestones, bentonite, pozzolans, and other minerals, making the province a thriving mining area. In addition to these minerals, we need to advance in the exploration of 1st category minerals, a decision made by the Government under the leadership of the Minister of Energy and Environment, Jimena Latorre, and Governor Alfredo Cornejo, who informed the public throughout his campaign, as well as in the Legislature at the time of his inauguration. It is important to highlight that Mendoza has considerable potential in minerals crucial for the production of essential inputs in the field of renewable energies. The urgency of climate change demands an energy transition towards more sustainable sources, where minerals like copper become indispensable for the manufacturing of electric vehicles, solar panels, and other devices. Departments like Malargüe stand out for their potential, urging us to develop concrete public policies to promote exploration projects of our mineral resources. These resources, which are part of the provincial wealth, need investors willing to invest in their exploration in the vast available territory. In the near future, we aim to develop our mineral resources sustainably to generate new employment opportunities with competitive salaries, create local companies, and strengthen the influx of foreign currency into our province.
Beyond the time elapsed since the enactment of Law 7722, do you consider electromobility to represent a unique opportunity for Mendoza?
I believe we need to advance with the mining industry: much time has passed since the enactment of Law 7722, and we find ourselves in a different reality than 15 years ago. It is important to note that people are also involved and active on social media, and it's not a matter of "mining yes or mining no." People understand the need for this industry, which is as noble and legitimate as any other. After many years of education against mining activity, where malicious groups instilled fear in the community with incorrect and lacking information about the industry, the people of Mendoza have taken a concrete stance on mining, acknowledging the need to harness its benefits but requiring trust in the controls, which are usually in place but now need to be shown to the communities. Our challenge is to reinforce existing controls, display them, and involve the communities.
What is the political and community perception of mining in Mendoza?
Recently, the provincial Legislature approved, almost unanimously, the three projects of the company Geometales S.A. from the Mindlin group (El Burrero, Adriana, and Las Choicas), as well as the copper exploration project called Cerro Amarillo, and the transfer of shares of PRC to Compañía Minera Aguilar, indicating society's approval through the indirect representation exercised by the Province's Deputies and Senators. I have had the opportunity to speak with residents of the department where I was born and raised, San Carlos, one of the cities that was most opposed to mining, and many of them, after being informed, begin to discuss the benefits of the activity and engage in discussions about its controls. We believe that we cannot impose any activity, as demonstrated in La Rioja, where a certain part of society opposed a specific project without any law restricting the activity. That's why the approach must be comprehensive, with community participation and clear information; nothing can be imposed, with or without a law. And territorial commitment is important.
How is the dissemination of mining activity approached by the public sector in terms of achieving credibility?
The Mining Directorate of Mendoza plays a central role in its promotion; we believe that promotion should primarily involve informing about the benefits of the industry, displaying the controls, and also communicating when sanctions are imposed, so people are aware. Therefore, the first measure of the actions of this institutional improvement or strengthening program involves the work on a new regulation that controls the mining procedure, which is up to the current circumstances, and the necessary controls that every activity requires. In Mendoza we have a Mining Procedure Code from 1945: at that time, there were no environmental or social responsibility regulations in place; that's why we are working on its modernization to generate not only environmental control tools but also social responsibility, including communities in all stages of the project, and inviting them to be part of the control.
What is the current status of the Potasio Río Colorado project? Is there a work plan with the private investor?
Before assuming the position at the Mining Directorate of Mendoza, I was in charge of the Legal Affairs area of PRC, and from that company, we worked on a share transfer agreement that the province signed with the winning company of the public auction process; it was a competitive Merger & Acquisition process through an investment bank -UBS-, which was also hired through an international public tender. The process lasted for 2 years, with legal engineering aimed at accessing international markets in the most transparent and competitive manner, always without violating the principles of the Provincial Financial Administration Law of Mendoza, considering that PRC was a Sole Proprietorship, with the Province of Mendoza being its sole shareholder.
This process was audited at all times by the State Prosecutor's Office, and it concluded with a transfer that was previously analyzed by an Evaluating Commission of the Union of Swiss Banks UBS LLC. The report presented by UBS led to the decision to transfer the shares, which was later ratified by law. This contract includes a series of 5 guarantees for the fulfillment of the obligations that the company Compañía Minera Aguilar Potasio S.A. committed to; it comprises several investments, with a first stage of detailed engineering or FEL3 to be completed within one year, an 18-month stage from the signing to fine-tune the pilot plant -even to start production-, and after the approval of FEL3 an investment program of up to US$1.058 billion to be invested within 5 years, with the guarantee valid throughout the entire process.
The Board of Directors consists of two members representing the Province of Mendoza with veto power over this engineering plan. PRC is a very important project for the Province of Mendoza, a strategic reactivation. Of course, it is a smaller project than the one contemplated by Vale at the time, but it will also depend on the project engineering results, initially designed for a single production line, also with a production of 1.5 MT annually, when Vale had considered 3 production lines of up to 4.5 MT annually. At that time, maritime logistics was the only viable option, and at least at the time of the share transfer it was something discarded, but now we are considering transportation by railway and trucks from Mendoza to ports in the Pacific Ocean or Atlantic Ocean, depending on whether the buyer of the product is China or Brazil.
