Case Number: 410

Case Mnemonic: ARGMINE

Case Name: Argentina Mining

• IDENTIFICATION
• LEGAL CLUSTERS
• GEOGRAPHIC CLUSTERS
• TRADE CLUSTERS
• ENVIRONMENT CLUSTERS
• OTHER FACTORS

I. Identification

1. The Issue

In 1995 Argentine mining exports jumped 33%.¹ Those exports, fueled by government initiatives, however, will continue to increase steadily. Mining and petroleum exploration will continue to increase as long as the money keeps pouring into the country. Carlos Magarinos, Argentina's secretary of mining and industry, speaking in Washington, D.C. in May 1996, said that "mining exports and foreign direct investments into the country have increased since free market reform began in 1991."² and that "stable politics, consistent regulations, dynamic market and vast natural resources"³ were to be crucial ot continued investment. Furthermore, Magarinos explained that the removal of exchange controls and the placing of the local currency on an equal basis with the U.S. dollar had also helped to stabilize Argentina's economy, increasing both exports and investments. What Magarinos never mentioned, and, what the Argentine government has yet to address fully, is that mining causes extremely damaging effects to the environment of any ecosystem. Chubut's territory, now being mined for gold, copper, and zinc is currently being contaminated by the affects of mining on the environment such as groundwater pollution and the release of mercury from mining techniques.

2. Description

Chubut, Argentina is comprised of 224,686 square kilometers or about 6% of the national total. Most of this territory is known around the world for its beautiful wildlife and forestry. Known also as Patagonia, this region expresses it beauty every day with its mass abundance of colors, forms, and amazing life. The area encompasses enormous glaciated crags of the Andes Mountains, dense subantarctic forests, an ancient seabed that is now the barren steppe, and a wide array of both plant and animal life.

Throughout the centuries this land has remained relatively untouched by man's hand. It is the earth's most southerly landmass above the Antarctica and the farthest Southern reach of the Americas. Its terrifying extremes have kept man away while its clues of evolution remain hidden within a petrified forest, volcanoes, glaciers, and coastal cliffs containing an amazing display of fossilized marine life.

Some wildlife found in this region includes the magnificent Andean condor (the largest land bird in existence in the world), the southernmost hummingbirds and parakeets, the southern right whale (the largest of the marine mammals), and a myriad species of sea birds, southern sea lions and fur seals, and enormous amounts of plankton, algae, crustaceans and fish (food for the largest breeding areas of marine life on earth).

A century and a half ago, Charles Darwin in his The Voyage of the Beagle, wrote: "The plains of Patagonia are boundless, for they are scarcely passable, and hence unknown: they bear the stamp of having lasted, as they are now, for ages, and there appears no limit to their duration through future time."⁵

What Darwin once termed "scarcely passable" will soon be known more for its mining industry. Governor Carlos Maestro as of June of 1996 has opened Chubut to fourteen international companies that will be working in the province. These include U.S., Canadian, British and South American companies.⁶

Mining figures for 1994 showed Chubut to contribute 16% of Argentina's oil production or 6,134,154 m3. However, oil proven reserves were estimated at 18.5% of the country or sixty-six million m3. Also, for the same year Chubut produced 357,500 tons of pebbles, 305,447 tons of limestone, 49,330 tons of clay, 31046 tons of kaolin, and a combined 4,857 tons of polymetals (gold, silver and lead). Furthermore, natural gas production estimates for 1994 in Chubut showed that it contributed 1.8% of the country's total output (487 million m3) with 5,958 million m3 of proven reserves or 1.11% of the total country output. All these figures, however, will surely raise considering Governor Carlos Maestro's initiative to push for a greater mining sector.⁷

Atomredmetzoloto, the Russian mining company, is considering mining for oil and other minerals in this region of Patagonia. Vyacheslav Krotkov, president of the mining company, has stated that some local companies in Chubut had generously offered to collaborate on geological studies and land analysis's and by providing the best equipment.⁸ Atomredmetzoloto's intentions are to mine mostly for silver, copper and other metals in the Andes mountains in Chubut, an area that creates a habitat for creatures unlikely anywhere else.

Some animals that live in this region include Patagonia's two native deer, the pudu'. This is the world's smallest deer. It inhabits the stocky cane forests in this region as the Andean condor, the largest land bird in existence, watches from above. Furthermore, this region encompasses some of the earth's oldest living trees, not to mention glaciers that have been in relapses since the end of the Ice Age and beautiful glacial lakes and streams that are part of Bariloche's lake district.⁹ These creatures, however, along with many others will be placed at environmental risk since mining camps along with the actual mining itself will inadvertently pollute their surroundings.

In 1995, Chubut's mining ministry reported that fifteen international mining companies had stated that their efforts to extend mining activities to Patagonia were feasible. Of these is Trelleborg-owned Boliden which has teamed-up with Vancouver-listed Oro Belle Resources Corporation. "Boliden and Oro Belle are initiating grass-root exploration after base and precious metals, mainly gold, in the western sections of Chubut Province in Argentina. The area covers more than 50,000 square kilometers, comparable to the size of Denmark or Switzerland, and borders on Chile."¹⁰ Domestic companies in this region include Argentine Aluminums S.A.I.C. located in Madryn Port, Chubut whose product is aluminum and Black stone Water Mining Settling ponds (YMAD) located in Farallon Negro, Hualifin and Belen in Chubut whose main product is gold and silver.

Despite any environmental concerns, the Argentine government seems very pleased at the amount of foreign investment being poured into its lap. Argentina's Economy Ministry claimed late in 1996 that during the next four years the monetary rise in investment for mining in the region is expected to reach US$1.8bn. The annual investment in mining exploration should reach US$100mn. Exports should also increase to approximately US$1 by the year 2000.¹¹

3. Related Cases

CORAL case
JAPAN case
BOLIVIA case
COBALT case
COPPER case
GEDDES case
BAUXITE case
BRAGOLD case
CEMEX case
YELLOW case
IRIAN case
PAPUA case
DIAMOND case
LEONE case
MEXWHALE case
ASBESTOS case
NITRATE case
ANGDIAM case
SAFRGOLD case
ZAMBCOP case
GHANGOLD case
BOLSEA case
LIGNITE case
SUMMIT case
PERUMINE case
VENGOLD case

Keyword Clusters

(1): Trade Product = MINERALS
(2): Bio-geography = TEMPERATE
(3): Environmental Problem = HABITat Loss

4. Draft Author:

II. Legal Clusters

5. Discourse and Status:

6. Forum and Scope:

7. Decision Breadth: 2

Argentina and Chile signed a mining trade agreement on June 25, 1996. This agreement would make it easier for mining companies to conduct their business'on both sides of the Andes. Essentially, the accord allows companies freely to move mining equipment and services between the two countries. The accord was signed to attract more foreign companies to explore their mining capabilities in this region.¹² Link Americas Ltd. writes that among the beneficiaries of this agreement are the companies Minera Pachon Pelambres, owned by Canada's Cambior Inc. and Argentina's Compania Minera San Jose S.A.. "Because of the mining area's high altitude and mountainous terrain, it is impossible to mine without crossing the borders daily. Pachon, a gold and copper mining area, is in Argentina, while the Los Pelambres copper mine is in Chile."¹³ The production is expected to begin by 1999.

Other "outsiders" involved in mining projects in Argentina include Cerro Vanguardia of South Africa, Minefinders Corporation Ltd. Of Vancouver, Canada, Bajo de la Alumbrera that is owned by Australia's MIM Holdings, Rio Algom of Canada, North Ltd. Of Australia, Oro Belle Resources of Vancouver, Canada, Trelleborn-owned Boliden, Viceroy Resource Corporation of Vancouver, Canada, Atomredmetzoloto of Russia, and Northern Orion Explorations Ltd. Of Toronto, Canada, among others. Moreover, these foreign companies are combined with approximately fifteen Argentine-based companies to create an enormous mining capability. The main sought after minerals are gold and copper.

8. Legal Standing:

Argentina is a party to many international treaties concerning the environment that include the Antarctic-Environmental Protocol, Antarctic Treaty, Biodiversity, Climate Change, Endangered Species, Environmental modification, Hazardous Wastes, Marine Dumping, Nuclear Test Ban, Ozone Layer Protection, Ship Pollution, Wetlands, Whaling; signed but not ratified, Decertification, Law of the Sea, and Marine Life Conservation.

III. Geographic Clusters

9. Geographic Locations

a. Geographic Domain: South America

b. Geographic Site: Southern South America

c. Geographic Impact: Argentina

10. Sub-National Factors:

11. Type of Habitat:

IV. Trade Clusters

12. Type of Measure:

13. Direct v. Indirect Impacts:

14. Relation of Trade Measure to Environmental Impact

a. Directly Related to Product: YES MINERALS

b. Indirectly Related to Product: NO

c. Not Related to Product: NO

d. Related to Process: YES HABITAT Loss

15. Trade Product Identification:

16. Economic Data

Carlos Magarinos, Argentina's secretary of mining and industry, speaking in Washington, D.C. in May 1996 that "mining exports and foreign direct investments into the country have increased since free market reform began in 1991."¹⁵ He went on to state that credit goes to "stable politics, consistent regulations, dynamic market and vast natural resources."¹⁶

Mining figures for 1994 showed Chubut to contribute 16% of Argentina's oil production or 6,134,154 m3. However, oil proven reserves were estimated at 18.5% of the country or 66 million m3. Also, for the same year Chubut produced 357,500 tons of pebbles, 305,447 tons of limestone, 49,330 tons of clay, 31046 tons of kaolin, and a combined 4,857 tons of polymetals (gold, silver and lead). Furthermore, natural gas production estimates for 1994 in Chubut showed that it contributed 1.8% of the country's total output (487 million m3) with 5,958 million m3 of proven reserves or 1.11% of the total country output. All thesee figures, however, will surely raise considering Governor Carlos Maestro's initiative to push for a greater mining sector.¹⁷¹⁸

17. Impact of Trade Restriction:

18. Industry Sector:

19. Exporters and Importers:

V. Environment Clusters

20. Environmental Problem Type:

21. Name, Type, and Diversity of Species

Diversity: Argentina is one of the richest countries in dinosaur fossils.

22. Resource Impact and Effect:

Mining, as previously mentioned has many impacts, both direct and indirect. Some direct impacts of mining, in any environment, but especially in a region such as Patagonia, housing some of the world's most unique populations of both plant and animal life, include soil disturbance, interference with animal migrations, and interference with local flora and fauna populations. Some indirect impacts include damage to water quality and the effects of human settlements (mining camps, towns, ports, etc.). Furthermore, there is the issue of current mining techniques, involving the use of mercury to extract minerals from sediments. The process itself first involves taking the sediments from river bottoms and land mining sites. Second, these sediments are forced through a number of sieves that are coated with mercury so that gold may be extracted. Many mining experts claim that for every pound of gold produced, two pounds of mercury enters the environment. ¹⁹ This is harmful to the environment because mercury then mixes with ground water supplies and streams that pollute not just peoples' drinking water, but their food such as shellfish and fish.

The effect of human settlements (mining camps, towns, ports, etc.) is another aspect of mining that will eventually harm the environment. "Very few wild species can live with humans. If the mining development is temporary (and all mining developments are), then care must be taken to reduce the long term effects in these areas as well as the actual mining areas. If there are several minable areas, then the best approach would be to place these facilities in a central location, rather than building new facilities for each mine."²⁰

Other environmental damage caused by mining involves increased turbidity resulting from suspended sediment. This, in turn, decreases primary productivity by blocking out light reaching photosynthetic plants. "In coal mining areas, for example, increased turbidity can be the major impact on waters receiving wastes. Iron mining and aggregate extraction frequently increase turbidity of waters downstream."²¹

Mining also effects the food webs of ecosystems. A decrease in plants obviously caused by mining in a given area will naturally affect the animals that eat them. "For example, the reduction of epiphytic lichens noted by Tyler et al. (1989) is likely to affect the caribou, which use them for winter food."²²

Of the environmental impacts caused by mining, probably the most severe of them is the obvious impact on landforms and vegetation during the construction of opencast operations. Furthermore, as microclimates are changed, vegetation may also be destroyed indirectly. "Toxic wastes added to the atmosphere, soil, groundwater, and surface waters may kill vegetation or destroy part of it, such as forestry canopy. The physical alteration of habitat, including vegetation structure, in turn alters the available sites and food for animals."²³

Another area of the environment disturbed by mining pertains to biogeochemical cycles. This relates to the removal of an element from a site. Obviously, this will have some environmental consequences since "we" leave a hole where there was once something.²⁴ Moreover, during this process, waste materials are placed in the atmosphere, in the soil, and in water. An example of atmospheric changes was observed by Johnston (1971) who noticed that "thirty-one different reactions involving stratospheric ozone alone are likely to occur in the atmosphere."²⁵ Water problems also result. The main effects include runoff from disturbed areas as well as acid rain drainage caused by the oxidation of sulfated minerals.

23. Urgency of Problem:

24. Substitutes:

VI. Other Factors

Environmental Effects of Mining St. Lucie Press: Click Here

1. Http://www.atamericas.com/pages/news/960514/export1.htm

2. Http://www.atamericas.com/pages/news/960514/export1.htm

3. Http://www.atamericas.com/pages/news/960514/export1.htm

4. Http://gurukul.ucc.american.edu/ted/BRAGOLD.htm

5. Http://www.tc.umm.edu/n1home/mo27/bonzi/pw/steppe.htm

6. Http://www.atamericas.com/pages/news/960617/chubut.htm

7. Http://www.ar-w3.com/cfi/ingles/chu.html

8. Http://bario.cenet.cl:80/atamericas/pages/news/960521/russia.htm

9. Http://www.tc.umn.edu/n1home/m027/bonzi/pw/patamap.htm

10. Http://www.trellgroup.se:80/NEWS23.html

11. Http://barrio.cenet.cl:80/atamericas/pages/news/960725/invest1.ht m

12. Http://www.atamericas.com/pages/news/960515/accord1.htm

13. Http://www.atamericas.com/pages/news/960515/accord1.htm

14. Http://www.atamericas.com/pages/news/960514/export1.htm

15. Http://www.atamericas.com/pages/news/960514/export1.htm

16. Http://www.atamericas.com/pages/news/960514/export1.htm

17. Http://www.ar-w3.com/cfi/ingles/chu.html

18. Http://barrio.cenet.cl:80/atamericas/pages/news/960725/invest1.ht m

19. Http://gurukul.ucc.american.edu/ted/BRAGOLD.htm

20. Correspondence with DWOOD@mail.wsu.edu

21. Http://www.slpress.com/shopping/catalog.../html/chapters/9-09-96/ envireff-min.html

22. Http://www.slpress.com/shopping/catalog.../html/chapters/9-09-96/ envireff-min.html

23. Http://www.slpress.com/shopping/catalog.../html/chapters/9-09-96/ envireff-min.html

24. Http://www.slpress.com/shopping/catalog.../html/chapters/9-09-96/ envireff-min.html

25. Http://www.slpress.com/shopping/catalog.../html/chapters/9-09-96/ envireff-min.html

May, 1997