Industry Trend Analysis - Positive Mining Outlook Holds, But Downside Risks Emerge - MAY 2017

BMI View: Argentina ' s mining industry is set for solid growth over the coming years, supported by a strong project pipeline, significant regulatory improvements and rising mineral prices. Nonetheless, we highlight two key downside risks to our otherwise positive outlook for the country's mining industry, namely a derailment of policy reform and tightening environmental regulations.

Argentina's mining industry value remains on track for substantial long-term growth following President Mauricio Macri's shift toward macroeconomic orthodoxy and the recovery of mineral prices ( see ' Mining Investment To Pay Off In Long Term ' , December 6 2016). Our long-held view for Macri's economic reform agenda to drive foreign investment in the mining industry continues to play out, with significant deals in the precious metals and lithium sectors over 2016 and into 2017 bringing the country back into the spotlight. For instance, in April, Barrick Gold sold a 50% stake in the Veladero gold mine to Chinese firm Shandong Gold Corp for USD960mn. Argentina's mining chamber expects more than USD1.1bn in mining investment for the year and USD1.7bn in 2018.

Near-Term Downside Risks Emerging

Veladero Deal Dwarfs Past Investments
Argentina - Mining Merger And Acquisition Activity (USDmn) & Deal Count
2017 = accurate as of May 2. Source: Bloomberg, BMI

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