Austral Insights #01

Welcome to Austral Insights, your go-to source for understanding Argentina's key developments. Each week, we bring you concise, business-focused insights into the country’s politics, economy, and strategic sectors—providing the local perspective you need to make informed decisions.

Argentina by the numbers:

*_{Emerging Markets Bond Index (JP Morgan)}
**_{The S&P MERVAL Index tracks the largest, most liquid stocks on Argentina’s exchange, meeting size and liquidity requirements}

This week’s highlights:

• Salta (northwest province) registers first lithium carbonate exports, highlighting momentum in the industry but persisting logistical challenges.

• Río Negro (southern province) seeks a 1% oil royalty from the “Vaca Muerta Sur” pipeline, escalating tensions with companies.

• Milei announces plans to join Trump’s reciprocal trade tariff scheme, though implementation remains unlikely.

• Milei appoints two Supreme Court justices by decree, bypassing Congress and sparking controversy.

• Prosecutor opens investigation into Milei over the $LIBRA crypto scandal; political fallout remains limited.

• Inside Congress: PASO primaries suspended, benefiting the government; Senate blocks $LIBRA probe; anti-mafia law approved.

• What do Argentines think about..? Government confidence dips after the crypto scandal but remains stronger than past administrations.

Mining

Salta has completed its first lithium carbonate export, marking a milestone for Argentina’s lithium industry. Eramine, a subsidiary of France’s Eramet, shipped 40 tons from the Salar Centenario-Ratones project via the Rosario port after a 1,580 km logistics journey by truck due to the lack of an effective railroad system. While future shipments are expected, long transport distances and inadequate infrastructure remain critical challenges for investors.

Energy

Río Negro’s provincial government plans to charge the equivalent of a 1% royalty on crude oil transported via the Vaca Muerta Sur pipeline, which is currently in construction and will link the Vaca Muerta shale formation to an Atlantic port. The move has angered participating companies, as the pipeline was the first oil & gas project under the new RIGI (Large Investment Incentives Regime), which guarantees fiscal stability. To secure compliance, the province is leveraging pending permits as bargaining chips. Tensions escalated after the governor’s social media post demanding companies prioritize local workers over relocations.

Foreign Policy

President Milei attended the world’s largest conservative conference in Washington, D.C., where he announced plans for Argentina to adopt Trump’s reciprocal tariffs scheme. However, Argentina’s Mercosur membership complicates such a move, making a shift unlikely unless the bloc undergoes significant changes or Argentina exits—both improbable scenarios.

Supreme Court

By decree, Javier Milei appointed two Supreme Court justices he has long sought to appoint. Set to last until December 2025, the appointments are legally permitted under certain conditions but controversial for bypassing Congress. Critics see this as an attempt to stack the judiciary with loyalists, a concern heightened by the inclusion of a particularly contentious nominee whose qualifications have been questioned across political lines.

Politics

A prosecutor has launched an investigation into President Milei and several businessmen over their involvement in the $LIBRA scandal. The controversy began on February 14 when Milei promoted $LIBRA on social media, claiming it would finance small businesses. Hours later, he deleted the post. The token’s value briefly surged before collapsing as developers withdrew approximately USD 100 million, sparking accusations of a “pump and dump” scheme.

Will this impact Milei? Legally, significant consequences appear unlikely. Politically, the fallout is mixed— public reactions largely split along partisan lines, underscoring Argentina’s deep polarization. While this marks the first major hit to Milei’s credibility, a fragmented opposition is unlikely to capitalize on it ahead of this year’s midterms.

Inside Congress

• Primary elections (PASO elections) suspended: in its first major legislative victory of 2025, Milei’s administration secured the suspension of primary elections (PASO) for this year’s midterms. The move benefits the government by:
  1) Aligning with Milei’s spending cut narrative,
  2) Buying more time for economic recovery, as elections now take place in October instead of August,
  3) Hindering the formation of a broad opposition front that could have been structured through primaries, thereby strengthening the government’s position.

• Senate blocks $Libra investigation: The Senate rejected a proposal to create an investigative commission on the $LIBRA cryptocurrency case.

• Anti-mafia law and criminal code amendments approved.

What do Argentines think about…?

The Government Confidence Index, published by Universidad di Tella (Buenos Aires), fell 1.8% in February compared to January, driven by declines in key areas such as “Officials’ honesty” (-1.1%) and “Concern for the general good” (-7.2%). Year-over-year, the index remains nearly unchanged (-0.6%) and is significantly higher than the ratings of former Presidents Alberto Fernández (left-wing Peronist) and Mauricio Macri (center-right PRO Party) at the start of their second year in office.

What does this indicate? While Milei’s reputation for honesty and transparency has seen a relative decline, overall confidence remains strong. Unlike recent administrations, he has maintained robust public support one year into his term. The key question now: Will the $LIBRA scandal amplify this trend? Next month’s index will provide a clearer answer.

Are you interested in the risks and opportunities that Argentina presents? Is there an issue you’d like to discuss or understand in greater depth? Reach out for a free 30-minute talk at [email protected].

See you next week with more insights!