Austral Insights #03

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 completes Arcadium Lithium acquisition, becoming Argentina’s largest lithium producer and reinforcing its commitment to local operations.

• Severe storms in Salta (north western province) cut off key mining routes, reigniting debate over urgent infrastructure upgrades.

• Milei issues a decree to negotiate an IMF agreement, bypassing Congress; faces strong opposition criticism, but overturning it seems unlikely.

• Inside Congress – Deputies launch investigations into Milei’s involvement in the $LIBRA scandal, while impeachment efforts stall; Senate prepares to vote on controversial Supreme Court appointment.

• What do Argentines think about..? – Argentines favor Western countries over China; EU (72%) and Spain (65%) lead approval ratings, while US (62%) is seen as a strategic partner and China (57%) remains politically divisive.

Mining

On March 6, Rio Tinto completed its acquisition of Arcadium Lithium, forming Rio Tinto Lithium and becoming the world’s third-largest lithium producer—and Argentina’s largest. The new entity now controls major operations in Argentina, including Rincón Lithium and Arcadium’s projects at Salar del Hombre Muerto, Olaroz, Sal de Vida, and Cauchari. Additionally, Rio Tinto’s copper operations in San Juan further strengthen its footprint in Argentina. Following the acquisition, Rio Tinto’s CEO visited Argentina, touring operations and engaging with high-level officials in lithium-producing provinces. He expressed optimism about the country’s investment climate and reaffirmed Rio Tinto’s commitment to further expanding operations.

Meanwhile, severe storms triggered landslides and flooding in Salta (northwest province), cutting off multiple mines and stranding dozens of trucks and worker transport buses. This crisis underscores the long-standing infrastructure challenges in Argentina’s lithium mining corridor—particularly along National Highway 51, a critical route for operations in the Puna region. With over 30 roadblocks halting production, the need for urgent investment in road infrastructure is once again at the forefront. How this issue is addressed—whether through maintenance or a full redesign—will be a key debate in the coming years, with companies needing to proactively engage provincial and national stakeholders to protect their operations.

Energy

Tecpetrol (Techint Group) confirmed it will apply for RIGI (Large Investments Incentives Regime) benefits for its USD 2.5bn oil project, Los Toldos II Este, in Vaca Muerta. Already a top-four shale gas producer in Argentina, the firm now aims to expand its competitive edge in the oil sector. The RIGI application would cover USD 1.5bn for pipelines and processing infrastructure, marking a major step in scaling operations. The firm’s CEO expressed optimism about Vaca Muerta’s investment appeal, particularly for “second-tier” operators, and highlighted the basin’s resilience to oil price volatility—even compared to US shale formations.

IMF deal

On March 10, President Milei issued a decree authorizing negotiations for a new IMF agreement under an Extended Fund Facility (EFF). The deal is primarily aimed at canceling National Treasury debt with the Central Bank, a move intended to stabilize monetary policy and combat inflation. However, the bypassing of Congress as well as the lack of transparency regarding the agreement’s total amount has drawn sharp criticism from opposition parties, who labeled the decree illegal and a “blank check” for the administration. Despite this backlash, the decree is now in force and will remain so unless explicitly rejected by both chambers of Congress—an unlikely scenario given current political dynamics

Inside Congress

In the Chamber of Deputies, the opposition successfully pushed for investigations into Milei’s involvement in the $LIBRA crypto scandal. However, efforts to advance impeachment proceedings against Milei stalled, as requests to debate them in committee failed.

Meanwhile, congressional committees debated a range of policy issues, including juvenile criminal law reform and lowering export taxes for the agriculture sector.

In the Senate, a key moment for the Supreme Court dispute is set for today, as the Agreements Committee will meet to determine whether Milei’s newly appointed Supreme Court Justice García Mansilla—who was appointed by decree—secures enough signatures to bring the nomination to a full chamber vote.

What do Argentines think about…?

This week, we take a step back from Argentina’s domestic political landscape to explore how Argentines perceive key global powers. The “Creencias Sociales 2024” poll reveals how different international actors are viewed across the country:

• 🇪🇺 European Union & 🇪🇸 Spain – The most positively viewed foreign actors, with broad approval across all political and demographic groups. The EU holds a 72% favorability rating, while Spain follows at 65%.

• 🇺🇸 United States – Viewed favorably by 62% of Argentines. Perceptions vary significantly by political affiliation, but the US is widely seen as a strategic partner and a role model in economic development and technology.

• 🇨🇳 China – Has a 57% favorability rating, but opinions are highly polarized. Support is strongest among Peronist voters, younger demographics, and less-educated groups, while other segments remain more skeptical.

Argentines generally lean toward Western countries, particularly Europe, which they admire not only for its economic model and technological advancements but also for its culture and way of life. For European and US investors, this cultural affinity is a strategic asset—especially in sensitive sectors like oil & gas and mining, where public perception and community relations play a crucial role in project success.

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!