Austral Insights #02

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:

• Rio Tinto applies for RIGI benefits after announcing a USD 2.7bn lithium plant in Salta (northwest provice), but regulatory delays persist.

• Neuquén (southern province) Governor calls for infrastructure improvements to boost Vaca Muerta oil & gas exports.

• Despite Milei’s enthusiasm and reports on Trump’s considering a free trade deal with Argentina, legal and political obstacles make it unlikely.

• Inside Congress:  In his address to Congress, Milei announces a new IMF agreement and judicial and migration reforms, setting the stage for a tense legislative year ahead of the October midterms.

• What do Argentines think about..?  Polls show Milei’s image took a hit after the $LIBRA scandal, but his party still leads midterm voting intentions.

Mining

Rio Tinto has applied for RIGI (Large Investment Incentives Regime) benefits after announcing a USD 2.7bn lithium carbonate plant in Salta, designed to produce 60,000 tons annually using direct lithium extraction technology. While this signals growing investor confidence in Argentina’s lithium sector, approval remains pending—just like other recent RIGI applications. The reasons for these delays are unclear: miners argue that authorities are overcomplicating the process, while market sources suggest the government is hesitant over the free currency availability clause. Others point to bureaucratic mismatches between the Central Bank and tax authorities. Regardless of the cause, the delays highlight the regulatory uncertainties that still weigh on Argentina’s mining sector—a key factor for investors to assess when considering opportunities in the country.

Energy

Neuquén Governor Rolando Figueroa opened the provincial legislative session with a speech centered on Vaca Muerta, stressing the urgent need for export infrastructure but stopping short of announcing specific legislation. He criticized the overvalued exchange rate, arguing it harms energy-exporting provinces like Neuquén, and emphasized the importance of highways and electricity grids for scaling up production. To tackle these bottlenecks, he has created the Vaca Muerta Infrastructure Fund in partnership with operators. The speech reflects Neuquén’s push for export-friendly policies and logistical investments, two key challenges for Argentina’s oil & gas sector.

Foreign Policy

After a recent press conference, several Argentine media outlets reported that Trump is considering a free trade deal with Argentina. However, a closer analysis suggests he carefully avoided committing to such an agreement. Beyond speculation, the feasibility of an FTA faces major roadblocks—US Congress would need to approve it, making it a politically complex process, and the State Department’s Special Envoy for Latin America has already stated that the US is not seeking new free trade agreements. Instead, a bilateral investment promotion agreement appears far more realistic. While the idea of a trade deal has gained media traction, significant legal and political constraints make its realization unlikely.

Inside Congress

On March 1st, President Javier Milei delivered the traditional presidential speech, officially opening Congress' ordinary sessions. While media focused on controversial remarks and clashes with opposition members, here are the key legislative takeaways:

• New IMF Agreement: Milei announced a pending IMF deal, calling it essential for "healing the Central Bank" and lifting currency controls. He pressured Congress to approve it, stating lawmakers had backed similar agreements under previous administrations. As financial conditions tighten globally, IMF financing is becoming more urgent for Argentina.

• Judicial Reform: The government will propose a new criminal procedure code, aiming to increase sentencing severity, lower the age of criminal responsibility, and speed up trials.

• Migration Reform – The administration will seek to introduce a new immigration policy, focusing on restricting foreigners' access to free public services (including health care and universities).

These announcements were delivered against a heavily assertive campaign backdrop, signaling Milei’s push to consolidate support ahead of this year’s midterms. This dynamic could complicate his legislative agenda, as opposition to his policies may not come solely from Peronists but also from centrist Radicals and even from some factions within Macri’s PRO Party that could adopt a more strategic stance in an election year. 

What do Argentines think about…?

A new Proyección poll, published by Clarín, shows that while the $LIBRA crypto scandal has damaged Milei’s image, it has not significantly affected his administration’s electoral standing ahead of the 2025 midterms.

• 14% of respondents say they now trust Milei less following the scandal, and 45% believe he sought to benefit himself or his inner circle through $LIBRA. Two key attributes—honesty and credibility—were the most impacted.

• However, 30% of respondents still trust him, a figure that aligns with his 2023 primary and first-round voter base, indicating a resilient core of support.

• Despite the controversy, La Libertad Avanza (Milei’s party) leads voting intentions for the 2025 midterms with 29% support—a strong position as the administration enters its second year in office.

While it is still early in the election cycle, this poll suggests that Milei's base remains solid despite reputational setbacks, reinforcing his political strength. This year’s economic performance will be key to determine how well LLA will do in October, as midterm elections are widely seen as a “plebiscite” on the administration’s approval. 

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!