NEW FORMS OF STATE PARTICIPATION AND RISKS IN MINING PROJECTS (ARGENTINA) (ENGLISH AND SPANISH VERSIONS)

• Jurisdiction: Derecho Internacional

Mining and Oil and Gas Law, Development, and Investment - Book 1
(Apr 2007)
CHAPTER 4C
NEW FORMS OF STATE PARTICIPATION AND RISKS IN MINING PROJECTS (ARGENTINA) (ENGLISH AND SPANISH VERSIONS)
Luis E. Lucero
Attorney
Cárdenas, Di Ció, Romero, Tarsitano & Lucero Abogados
Buenos Aires, Argentina

LUIS E. LUCERO

Luis E. Lucero is a partner in the law firm of Cárdenas, Di Ció, Romero, Tarsitano & Lucero, in Buenos Aires, Argentina. He earned a law degree from the Universidad de Buenos Aires in 1983. Then, in 1986 and 1987, he did a postgraduate course in Corporate Law, organized by the Universidad Argentina de la Empresa, and other specific courses, including the Program of Instruction for Lawyers organized by the Harvard Law School in 1993, the Fundamentals of Management Program, organized by the Columbia Business School in 2000, and the Global Issues in Corporate Mining Strategy and Government Policy held at the University of Dundee in 2001. Mr. Lucero worked as a Foreign Legal Consultant for Pillsbury, Madison & Sutro (currently Pillsbury Winthrop Shaw Pittman) in their offices in San Francisco, California. Since 1994, he has uninterruptedly represented and advised some of the major mining companies operating in Argentina, and has been acknowledged as an international mining lawyer by International Who's Who of Mining Lawyers in 2005 and 2006, Latin Lawyer in 2005 and Chambers Global in 2007. Also, he was, and still is, a member of the Board of Directors and internal auditor of several mining, gas distribution, industrial and financial services companies. He taught Commercial Law at the Universidad de Buenos Aires between 1988 and 1990, Natural Resources Law at the Universidad del Salvador between 1995 and 2001, and postgraduate courses at the Universidad de San Andrés and the Universidad de Buenos Aires; since 2005, he teaches at the Instituto Tecnológico de Buenos Aires. He has been a speaker at the following conferences: Energy in Latin America, organized by the International Bar Association (Buenos Aires, 2005), the VI Encuentro Latinoamericano y del Caribe de Legislación Minera (Buenos Aires, 2005), Mining Law and Investment in Latin America, organized by Rocky Mountain Mineral Law Foundation and the Section on Energy & Natural Resources Law of the International Bar Association (Lima, 2003), the III Conferencia Latinoamericana sobre Legislación Minera (Buenos Aires, 1999), the international conferences organized by the International Bar Association (Vancouver, 1998; Washington, 1999), Argentina Minera 2000, organized by the Institute for International Research (Buenos Aires, 1997), and the Inter-American Bar Association conference held in Buenos Aires in 1987. He is a member of the City of Buenos Aires Bar Association, the International Bar Association, the American Bar Association, the Australian Mining and Petroleum Law Association, the International Mining Professionals Society, the Rocky Mountain Mineral Law Foundation and the Congress of Fellows of the Center for International Legal Studies.

Luis E. Lucero es socio del estudio jurídico Cárdenas, Di Ció, Romero, Tarsitano & Lucero, en Buenos Aires, Argentina. Obtuvo su título de Abogado en la Universidad de Buenos Aires en 1983. Entre 1986 y 1987 realizó un curso de postgrado en Derecho Empresarial organizado por la Universidad Argentina de la Empresa, así como otros cursos específicos, incluyendo el Programa de Capacitación para Abogados organizado por Harvard Law School en 1993, el Fundamentals of Management Program, organizado por la Columbia Business School en 2000 y el Global Issues in Corporate Mining Strategy y Government Policy en la University of Dundee en 2001. Actuó como Abogado Consultor Extranjero para Pillsbury, Madison & Sutro (actualmente Pillsbury Winthrop Shaw Pittman) en sus oficinas de San Francisco, California. Ha representado y asesorado ininterrumpidamente a algunas de las principales compañías mineras que operan en la Argentina desde 1994, y ha sido reconocido como referente internacional por International Who's Who of Mining Lawyers en 2005 y 2006, Latin Lawyer en 2005 y Chambers Global en 2007. Asimismo es y ha sido miembro del Directorio y Síndico de varias compañías mineras, de distribución de gas, industriales y de servicios financieros. Ha sido profesor de Derecho Comercial en la Universidad de Buenos Aires entre 1988 y 1990, profesor de Derecho de los Recursos Naturales en la Universidad del Salvador entre 1995 y 2001 y de cursos de post-grado en la Universidad de San Andrés y en la Universidad de Buenos Aires, y es desde 2005 profesor en el Instituto Tecnológico de Buenos Aires. Ha sido orador en las conferencias Energy in Latin America, organizada por la International Bar Association (Buenos Aires, 2005), el VI Encuentro Latinoamericano y del Caribe de Legislación Minera (Buenos Aires, 2005), Mining Law and Investment in Latin America, organizada por Rocky Mountain Mineral Law Foundation and the Section on Energy & Natural Resources Law of the International Bar Association (Lima, 2003), la III Conferencia Latinoamericana sobre Legislación Minera (Buenos Aires, 1999), en las conferencias internacionales organizadas por la International Bar Association (Vancouver, 1998; Washington, 1999), en la conferencia Argentina Minera 2000, organizada por el Institute for International Research (Buenos Aires, 1997) y en la conferencia organizada por la Inter-American Bar Association (Buenos Aires, 1987). Es miembro del Colegio de Abogados de la Ciudad de Buenos Aires, de la International Bar Association, de la American Bar Association, de la Australian Mining and Petroleum Law Association, de la International Mining Professionals Society, de la Rocky Mountain Mineral Law Foundation y del Congress of Fellows del Center for International Legal Studies.

(I) Introduction

The subject of this paper and of the panel in which it is presented, as determined by the organizers of this new joint meeting held by the International Bar Association's Section on Energy, Environment, Natural Resources and Infrastructure Law, and the Rocky Mountain Mineral Law Foundation in Latin America, is the new forms of state participation in mining, the risks entailed by such participation and the search for balance in the government share of mining benefits.

(II) The Present Situation¹

In my opinion, this is a very important topic, closely related to others to be discussed on other panels and presentations. It should be noted that the General Opening Session of this Special Institute will deal with the current trend towards the nationalization of hydrocarbons in Bolivia, the so-called social license and, particularly, the meaning this concept will acquire in the practice, policies and development of Latin American natural resources.

Throughout history, the state has always been, to a greater or lesser extent and in one way or another, present in the activities of exploration, working, processing and sale of non renewable natural resources in general, and mineral resources in particular. As a natural consequence, it fixed its own share of the benefits provided by the exploitation of such resources, which are considered by the state, in almost all countries of the Western world at least, as originally belonging to it.

The method of fixing the state's share of working benefits has varied over the centuries, but usually one or more of the following were adopted:

(a) establishing a percentage of the mineral extracted for delivery by the miner to the Treasury, either in kind or in money (generally called royalty);

(b) levying taxes;² and

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(c) direct state participation in mining activities through entities created by the state for such purpose, or nationalization of originally private entities or of the deposits themselves.³

Now, so far, this description of the state's economic intervention in mining is very essential and nothing new is to be found in it.

Reality takes on a different meaning when, as it happened so quickly in the last few years, the concept of "social license" and, simultaneously, increasing opposition to mining activities loom large, sometimes in reference to a specific project, others indiscriminately.

For a number of years now, environmentalist opposition to the development of mining activities and the industry's answers to such complaints (whether or not legitimate and honest, or charged with partisan and ideological bias) has evidently become a subject of worldwide analysis and debate in the industry.⁴

There is no world forum on mining without panels discussing how to proceed in the face of such opposition. Expressions of such industry's self-analysis are the Mining, Minerals and Sustainable Development (MMSD) Project, the creation of the International Council on Mining and Metals (ICMM) and the Extractive Industries Review. The issue is now part of the agenda of the main industry's entities, and is included in the sessions of professional organizations such as the RMMLF itself, IBA, PDAC, and CIM, in bibliography and academic activities, in the agenda of international entities and agencies, and, of course, in the agenda of central, or state or provincial governments of countries in which mining activities are carried out. In any case, analysis, evaluation and considerations on how to rise to the challenge facing the extractive industries are becoming a well-established practice, and it might be said that they will never stop.

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Which, in any case, is the specificity that this global situation is acquiring in Argentina?⁵

What I am trying to discuss in this instance is that the persistent state intention to be present in mining activities, whether directly (as we shall see) or indirectly (through general taxes), in combination with a stand --in the face of certain community complaints-- which is sometimes half-hearted and at other times clearly hostile to mining, means that any evaluation...