What's Happening?
Barrick Mining, trading on the NYSE under the ticker symbol B, and Shandong Gold are planning a significant investment in the Veladero gold mine located in Argentina. The joint venture, which began in 2017 when Shandong Gold acquired a 50% stake from Barrick, aims to invest $400 million between 2025 and 2028. This investment is part of Argentina's Large Investment Incentive Scheme (RIGI), which seeks to attract substantial foreign investments by offering tax, customs, and foreign-exchange benefits, along with a 30-year guarantee of legal stability. The Veladero mine, operational since 2005, produced 504,000 ounces of gold last year and is expected to produce between 380,000 and 440,000 ounces in 2025. The new investment will fund the construction of additional mining phases, increasing the mine's capacity by 89.2 million tons for stockpiling and processing new ore.
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Why It's Important?
This investment is crucial for Argentina's mining sector, which heavily relies on gold as its primary export, accounting for 68% of the sector's total shipments last year. The Veladero mine's expansion is expected to generate $3.8 billion in export revenue through 2033, significantly contributing to the country's economy. The project also supports local employment, with 91% of the mine's 3,800 employees hired from the San Juan province. For Barrick and Shandong Gold, this investment represents an opportunity to capitalize on high metal prices and expand their production capabilities, potentially increasing their market share and profitability.
What's Next?
The project is set to proceed under the RIGI framework, with construction and expansion activities expected to commence soon. The investment will likely attract attention from other mining companies considering similar ventures in Argentina, given the favorable conditions provided by the RIGI scheme. Additionally, the success of this project could influence future economic policies in Argentina, encouraging further foreign investments in the mining sector.
Beyond the Headlines
The investment highlights the strategic importance of Argentina's mining sector in the global market, particularly in the context of rising demand for precious metals. It also underscores the potential for international partnerships in resource extraction, which can lead to economic growth and development in resource-rich regions. The project's success could set a precedent for sustainable and mutually beneficial mining operations in other parts of the world.
