Austral Insights #11

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:

• Southern Energy’s floating LNG plant approved under RIGI, set to boost exports and Vaca Muerta output.

• Lundin Mining announces world-class copper, gold and silver discovery at San Juan.

• New Argentina-Paraguay deal raises Yacyretá electricity price to USD 28/MWh to reduce fiscal burden.

• Six governors meet in Entre Ríos to discuss federal development; discussions around fiscal reform and need for investment in critical infrastructure like routes and ports.

• Inside Congress: Senate rejects “Clean Record” law, barring CFK from running; $Libra probe stalls; treaties with France, Serbia, and Switzerland ratified.

• What do Argentines think about..? In Buenos Aires City’s legislative race, Peronism leads a fractured field, with Milei’s LLA and Macri’s PRO locked in a tight contest for second.

Oil & Gas

The Economy Ministry has approved Southern Energy’s Natural Gas Liquefaction Project for inclusion under the RIGI regime (Large Investment Incentives Regime). The consortium—formed by a mix of domestic and international firms—will install a floating liquefaction plant off the coast of Río Negro. This facility will process non-conventional gas from Vaca Muerta into LNG, enhancing Argentina’s energy security and enabling a substantial scale-up in export capacity. The move positions Argentina as a rising LNG exporter in global energy markets.

Mining

Lundin Mining released its Initial Resource Estimates for Vicuña Corp. in San Juan, and the numbers were striking. Vicuña—a joint venture between Lundin Mining and BHP—is now confirmed to contain one of the world’s largest copper, gold, and silver deposits, and represents the biggest greenfield copper discovery in over three decades.

Geological data points to further expansion potential, reinforcing the project's long-term strategic value. Argentine officials welcomed the announcement, highlighting Vicuña’s potential to transform the national mining landscape and attract sustained foreign investment.

Energy

Argentina has reached a new agreement with Entidad Binacional Yacyretá (EBY) and Paraguay’s Secretary of Energy to revise the operational and commercial terms for electricity from the Yacyretá Hydroelectric Plant, a key binational infrastructure project. Under the updated scheme, the cost of supplied energy rises to USD 28/MWh, up from roughly USD 17/MWh. The adjustment seeks to make the entity financially self-sustaining and reduce its dependence on Treasury funding, aligning with President Milei’s broader push for market-oriented reforms and fiscal discipline in the energy sector.

Politics

As the Milei administration advances its tax reform agenda, including a proposed overhaul of the VAT system that could significantly affect provincial revenues, a group of six governors from different political parties met for a summit in Entre Ríos. Held under the banner "A Roadmap to a Federal Future", the meeting gathered governors from Buenos Aires, Santa Fe, Entre Ríos, Chubut, Catamarca, and La Pampa.

While political alignments varied, the governors found common ground on several strategic priorities: the need for federal-provincial dialogue, a balanced fiscal reform, and urgent investment in logistics infrastructure, particularly in roads and ports. The meeting sends a clear message—regardless of party lines, the provinces are organizing to ensure their voices are heard in shaping Argentina’s economic future.

Inside Congress: your weekly legislative monitor

• Senate rejects the “Clean Record” bill, delivering a major setback to Milei’s administration. The proposal aimed to ban individuals with second-instance convictions—most notably Cristina Kirchner—from running for public office.

• Senate rejects motion to summon Karina Milei and Economy Minister Caputo in connection with the $Libra crypto scandal.

• Senate ratifies three international treaties with France, Serbia, and the Swiss Federal Council, reinforcing bilateral cooperation on legal and economic matters.

What do Argentines think about…?

In ten days, residents of Buenos Aires City—commonly referred to as porteños—will head to the polls for local legislative elections. These contests are drawing national attention, as analysts see them as an early barometer of public sentiment toward President Javier Milei’s administration.

The City of Buenos Aires has been dominated by PRO (Republican Proposal) since Mauricio Macri’s mayoral victory in 2007. However, recent polls show PRO is losing ground to its national ally, La Libertad Avanza (LLA), Milei’s party. The poll shows the following breakdown:

• Leandro Santoro (left-wing Peronism): 28%

• Manuel Adorni (LLA, President Milei’s spokesman): 22%

• Silvia Lospenatto (PRO, backed by Mauricio Macri): 20.8%

Other candidates—including former mayor and 2023 presidential candidate Horacio Rodríguez Larreta—poll well below the 5% threshold.

This poll signals a fracturing of the right-wing electorate, with Milei’s LLA pulling support from the traditional PRO base in what has historically been the party’s most important district. As a result, Peronism now leads in a city where it has long struggled to gain traction.

While these results won’t directly predict the outcome of the national midterms in October, they offer early insight into voter sentiment, the evolving Milei–Macri dynamic, and whether a divided right might give Peronism a renewed path to electoral 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!