Loans, guarantees and interest rates: How the US wants to finance Argentina’s mining industry

The United States wants to help finance Argentina’s critical-minerals projects, putting long-term loans, guarantees, political-risk insurance and assistance for projects that cannot yet access credit on the table.

Heidi Gómez Rápalo, the chargé d’affaires at the US Embassy, said Washington is “ready to help and support Argentina” as it seeks to become a supplier of critical minerals. She made the remarks at the U.S.-Argentina Critical Minerals Forum, organized by AmCham Argentina and the US Chamber of Commerce.

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ready to help and support Argentina

Speaking to officials, governors, mining companies, banks and multilateral institutions, Gómez Rápalo said investors would seek “clear and predictable” rules. She also renewed the call for ratification of the bilateral agreement signed in February, known as the Reciprocal Trade and Investment Agreement, or ARTI.

The political signal opens a possible route, but the next step is financial. Representatives of the US International Development Finance Corporation, the Inter-American Development Bank, Citi and the International Finance Corporation agreed that capital exists, while stressing that each project must show it can repay the money.

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Capital exists today, but by itself it is not enough

“Capital exists today, but by itself it is not enough,” said Viviana Alva-Hart, the IDB Group’s representative in Argentina. She said the RIGI investment regime had provided fiscal, foreign-exchange and regulatory stability, but could not replace resource certification, environmental permits, strong shareholders or technical feasibility.

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like building a house on shifting sand

Humberto Pereira, DFC’s investment adviser for the Southern Cone, said financing an Argentine mine had once been “like building a house on shifting sand.” Under RIGI, he said, it could be built “on rock.” Even so, lenders would assess the asset, the company, committed capital and potential buyers for the output.

William Husband, Citi’s global head of metals and mining corporate banking, placed the global benchmark cost for mining projects at 5% to 7% and said some Argentine projects had secured similar terms. The challenge begins above 8%. “The holy grail is to obtain cheap, long-term capital,” he said. Public and multilateral institutions can lower costs by covering part of the risk, while projects must compete for capital with developments in Chile, Peru, Canada and Australia.

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The holy grail is to obtain cheap, long-term capital