Argentina targets mining firms in import crackdown
BUENOS AIRES |
BUENOS AIRES (Reuters) - Argentina's government tightened controls on imports of equipment and supplies by mining companies on Monday in a new measure to boost the trade surplus and foreign currency stocks.
Mining companies operating in the South American country, which include Xstrata XTA.L, Barrick Gold Corp (ABX.TO) and AngloGold Ashanti (ANGJ.J), will have to get prior approval for overseas purchases and submit import plans 120 days in advance.
They will also have to consider swapping imports for locally produced goods, a government statement said.
"(The controls will help) safeguard jobs, create new employment opportunities and intensify the import substitution process," it said.
Earlier this year, President Cristina Fernandez's centre-left administration launched a new system to pre-approve, or reject, nearly every purchase from abroad.
Latin America's No. 3 economy has also been pushing importers to match their purchases abroad with exports, leading to quirky deals such as one whereby carmaker BMW exports rice.
Fernandez says such policies are needed to protect a local manufacturing industry gutted during a burst of free-market policies in the 1990s.
They are drawing intense criticism from abroad, however, and the European Union filed a suit against the import restrictions with the World Trade Organization on Friday.
Mining companies had been working with the government on a program of import substitution, but an industry source said Monday's resolution was unexpected.
The latest measure could deepen uncertainty among potential investors.
Brazil's Vale SA (VALE5.SA) is reviewing a $5.9 billion (3.76 billion pounds) potash project in Argentina, partly due to concerns about political uncertainty related to import controls and the recent renationalization of energy company YPF (YPFD.BA).
It is one of the biggest investments planned by Vale, the world's second-largest mining company, which declined to comment on the latest government measure.
Compared with neighbouring Chile or Peru, Argentina's mining industry is relatively undeveloped. That has drawn interest from global companies in recent years and overall investment reached a record $2.6 billion in 2011.
Soon after her re-election last year, Fernandez ordered energy and mining firms to cash in export revenues in the local market and ordered tax officials to approve dollar purchases on a case-by-case basis.
Both measures were designed to counter galloping capital flight and bolster the central bank's foreign currency reserves, which the government has earmarked for debt repayments for a third straight year.
(Reporting by Guido Nejamkis in Buenos Aires and Jeb Blount in Rio de Janeiro; Writing by Helen Popper; Editing by Kenneth Barry)
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