Posco Argentina obtains up to US$ US$ 411,900,000 Financing for the Construction and Development of a Lithium Project
Legal counsel to BNP PARIBAS Seoul Branch, Citibank N.A. Hong Kong Branch, Crédit Agricole Corporate and Investment Bank, JPMorgan Chase Bank, N.A., The Hongkong and Shanghai Banking Corporation Limited, and Korea Trade Insurance Corporation (Korean export credit agency) in a facility worth up to US$ 411,900,000 to Posco Argentina S.A.U. to finance the construction and development of the first phase of Sal de Oro lithium brine project, located in Salar del Hombre Muerto, in the provinces of Catamarca and Salta, in Argentina, one of the most important lithium brine projects in the country. The funds under the financing will be used for the development of the lithium plant, including financing of infrastructure and imports. Plant construction completion is expected for Q2 2024.
The facility is guaranteed by Posco Holdings Inc., a South Korean company and one of the major lithium producers worldwide, and by K-Sure, in its landing in Argentina. Disbursements under the facility are subject to certain conditions precedent.
Legal Advice in Petrolera Aconcagua Energía S.A.’s Class II Notes Issuance
Counsel to Petrolera Aconcagua Energía S.A. and Banco de Servicios y Transacciones S.A. in the issuance of Petrolera Aconcagua Energía S.A.’s 5.5% Class II Notes for US$ 15,000,000 issued on January 23, 2023, and due January 23, 2026, under its US$ 100,000,000 Global Notes Program.
Banco de Servicios y Transacciones S.A. acted as arranger and placement agent, and Banco Mariva S.A., Banco Supervielle S.A., SBS Trading S.A., Consultatio Investments S.A., Allaria Ledesma & Cía. S.A., AdCap Securities Argentina S.A. y Portfolio Investment S.A. acted as placement agents.
Creation of the National Housing Labeling Program (PRONEV)
Resolution No. 5/2023, enacted by the Secretariat of Energy on 9 January 2023, (the “Resolution”) established the creation of the National Housing Labeling Program (“PRONEV”, for its Spanish acronym, Programa Nacional de Etiquetado de Viviendas) and the National Informatic Application of Housing Labeling (the "Application") (Aplicativo Informático Nacional de Etiquetado de Vivienda).
Relevant aspects of the Resolution
PRONEV goal is to implement an energy efficiency labeling system to classify the housing’s degree of efficiency, upon their global primary energy requirement. The Application, on the other hand, will issue an Energy Efficiency Label (Etiqueta de Eficiencia Energética) showing the technical information of the houses, once such information is loaded.
The Resolution will allow the government to measure the energy requirement of homes and living places throughout the national territory and set a baseline for the development of new programs for improving energy performances and reducing energy consumption in homes.
In this sense, the National Directorate of Electricity Generation of the Undersecretariat of Electricity is empowered to issue all necessary acts for the execution of PRONEV.
Finally, the Resolution invites the Provinces and the City of Buenos Aires to enter into agreements with the federal government to promote the PRONEV and the Application and to provide basic standards to be considered in their local Building Codes.
For additional information, please contact Nicolás Eliaschev, Pablo Arrascaeta, María Eugenia Muñoz and/or Rocío Valdez.
Creation of the Environmental Crime Analysis and Prevention Unit and the Environmental Crime Assessment Board
Resolution No. 19/2023, issued by the Ministry of National Security on 16 January 2023 (the "Resolution"), set up the Environmental Crime Analysis and Prevention Unit (Unidad de Análisis y Prevención de Delitos Ambientales) and the Environmental Crime Assessment Board (Mesa de Evaluación de Delitos Ambientales) aimed at generating mechanisms for the prevention and fight against environmental crimes.
Relevant aspects of the Resolution
A. The Environmental Crime Analysis and Prevention Unit (the “Unit”)
The Unit -created within the scope of the Undersecretariat for Criminal Investigation and Judicial Cooperation-, is entitled to:
- assist in the detection and prevention of environmental crimes that may take place within the national territory, whether they affect the flora, fauna, soil, air, water and/or maritime spaces subject to national jurisdiction;
- collect and systematize information on environmental crimes committed in the national territory, from both non individualized sources and the Federal Police and Security Forces;
- develop indicators and prepare periodic reports as an input for the work of the Board (as such term is defined in section B below) and upon the request of other areas of the Ministry of Security;
- prepare a location map to detect "hot zones" and propose measures aimed at preventing environmental crimes;
- coordinate the exchange of information between the Federal Police and Security Forces for the generation of early warnings regarding the commission of environmental crimes;
- provide technical-administrative support for the operation of the Board and the supporting documentation related to the tasks accomplished in the field related hereto, and manage the appointment of representatives of the Federal Police and Security Forces that participate in the Board; and
- Analyze legal cases regarding environmental crimes to improve the procedures followed by the Federal Police and Security Forces.
The Resolution authorizes the Secretary of Security and Criminal Policy to appoint the head of the Unit, who will oversee the Board. Likewise, it provides that the Unit will convene the Board to hold periodic meetings to fulfil its goals.
B. Creation of the Environmental Crime Assessment Board (the “Board”)
The Board -created within the scope of the Undersecretariat for Criminal Investigation and Judicial Cooperation- is meant to detecting and preventing environmental crimes -as well as other close related crimes that concur with the main crime foreseen and punishable by the Penal Code of the Argentine Nation (Código Penal de la Nación Argentina)-, for a comprehensive approach to the investigation.
The Board will be composed of representatives of the Unit, the National Criminal Investigation Directorate, the Federal Crime Investigation Directorate, the National Criminal Intelligence Directorate, the environmental divisions of the Argentine Federal Police, Argentine National Gendarmerie, Naval Prefecture Argentina and Airport Security Police, and all other personnel from federal, national or provincial entities and/or civil society organizations competent in environmental matters.
For additional information, please contact Nicolás Eliaschev, Pablo Arrascaeta, María Eugenia Muñoz and/or Rocío Valdez.
Issuance of PyME CNV Guaranteed Class I Notes for $ 234,000,000 and Class II Notes for U$S 424,000 of Frigorífico General Pico S.A.
Counsel in the issuance of the PyME Guaranteed Class I Series I Notes for $2 34,000,000 and Class II Series I Notes for U$S 425,000, by Frigorifico General Pico S.A. due on January 13, 2025.
Adcap Securities Argentina S.A. acted as arranger of Class I Series I and Class II Series I Notes. Adcap Securities Argentina S.A. and Banco de Servicios y Transacciones S.A. acted as placement agents of the Notes. Fid Aval S.G.R., Crecer S.G.R., Integra Pymes S.G.R., Potenciar S.G.R., Acindar Pymes S.G.R. and Mills S.G.R. acted as guarantee entities of the Notes.
Lithium export reimbursement has been finalized
On January 16, 2023, Resolution No. 15/2023 (the "Resolution") was published in the Official Gazette whereby the Federal Ministry of Economy (the "Ministry") proceeded to waive the export reimbursement of the goods classified as lithium, hydroxide and lithium oxide, lithium chloride, and lithium carbonate.
The Resolution orders the secretaries of the Ministry to design the required administrative measure to waive the export reimbursement. Specifically, the Resolution impacts the following tariff positions: 19.90; 2825.20.10; 2825.20.20; 2827.39.60, and 2836.91.00 of the Mercosur Customs Tariff Code (N.C.M).
The Resolution will become effective on January 16, 2023.
Background information
As a reason for the issuance of the Resolution, the Ministry established that the lithium sector has registered exponential growth, both in terms of mineral prices -driven by a great global demand- and in the progress of the numerous projects that are located in the country.
Consequently, it considered that "taking into account the electro-mobility that caused a change in the market and that the international scenario had an abrupt growth in the demand for lithium that produced an exponential increase in the price and also in the profitability of the projects, it is understood that a stimulus such as the reimbursement has fulfilled the objectives for which it was opportunely established".
Before the enactment of the Resolution, the sector's companies received export refunds from the Federal Government ranging from 2.5% to 5% of sales. Meanwhile, the export duty of 4.5% for lithium compounds is maintained.
Data from the Federal Mining Secretariat ("FMS") regarding lithium
According to the FMS, Argentina has a lithium mining investment potential of approximately US$ 6,473 million. From 2020 to the second quarter of 2022, capital investment announcements for an approximate amount of USD 4,579 million have been registered. Current production is approximately 33,000 tons per year.
Regarding lithium export data, the latest Monthly Report (December 2022) of the FMS, states that "in the first 11 months of 2022 lithium sales abroad reached USD 620 million, growing 235% year-on-year and representing 18% of total mining exports. This export figure in historical terms represents this year's number one position for the first 11 months of a year, being 139% above the accumulated of the first 11 months of 2018 (the second historical year with the highest exported amounts). As for the quantities exported of lithium, in the accumulated so far this year they exhibited a growth of 4.5%."
For further information or questions on these issues, please contact Marcos Moreno Hueyo and/or Dolores Reyes.
Regulation of Distributed Generation Law of the Province of Buenos Aires
On January 11, 2022, Decree No. 2371/2022, complementary of Law No. 15,325 of the Province of Buenos Aires (the “Decree”), was published in the Official Gazette of the Province of Buenos Aires. Following the publication of the Decree, User-Generators of the Province of Buenos Aires, authorized to generate energy from renewable sources for self-consumption, may register in the Registry of Users-Generators of Renewable Energy of the Province of Buenos Aires (the “RUGER”, for its Spanish acronym, Registro de Usuarios-Generadores de Energía Renovable de la provincia de Buenos Aires) and benefit from tax exemptions related to Stamp Tax and Gross Income of such Province.
I. Legal Background
Law No. 27,424, passed by the National Congress on November 30, 2017, approved the federal regime that promotes distributed generation of renewable energy integrated into the public electricity grid (for additional information on Law No. 27,424, please see https://www.trsym.com/renewable-energy-regulation-of-distributed-generation-law-no-27424/?lang=en). Article 40 invites the provinces and the City of Buenos Aires to adhere to such law and pass any specific regulation.
Within such framework, Law No. 15,325, passed by the Congress of the Province of Buenos Aires on April 21, 2022, adhered to Law No. 27,424.
Law No. 15,325 declares of provincial interest distributed generation renewable energy generation, for self-consumption and eventual injection of energy surplus into the provincial grid.
Furthermore, by Law No. 15,325, the Province of Buenos Aires adheres to the promotional, tax, fiscal and financing benefits scheme set forth by Law No. 27,424.
II. Relevant aspects of the Decree
The most relevant aspects of the Decree are described below:
a. Enforcement authority
The Decree designates the Ministry of Infrastructure and Public Services (or any legal successor thereto) as the enforcement authority of Law No. 15,325. The enforcement authority will determine the technical, legal, economic, contractual, rate terms, and all other necessary matters that are necessary to allow the application of the distributed energy generation scheme in the Province of Buenos Aires.
Likewise, the enforcement authority is entrusted to enter into agreements with the Bank of the Province of Buenos Aires (Banco de la Provincia de Buenos Aires) to offer special promotional credit lines.
b. Definition of User-Generator
“User-Generator” is defined as the user of the public electricity distribution service of provincial or municipal distributors that installs renewable generation equipment for self-use, that may inject any surplus thereof to the grid, and meets the technical requirements determined by the enforcement authority. Large Users or self-generators of the Wholesale Electricity Market (WEM) are not included, as they are ruled by Law No. 27,424.
c. Creation of RUGER and issuance of a tax exemption certificate
The Decree creates the RUGER. The RUGER will be implemented for the registration of User-Generators, as determined by the enforcement authority, through the organization of a data base that enables access to the provincial tax exemptions established by Law No. 15,325 and special credit lines, as well as any other benefit or tax incentive that may be foreseen in the future.
For the purposes of processing the provincial tax exemptions set forth in article 4 of Law No. 15,325, the RUGER will issue a User-Generator certificate. In addition, the RUGER will notify ARBA of any certificate that is issued and receives from User-Generators, under the concession area of federal jurisdiction. Such certificate must contain surname and name, or company name, tax id (CUIT), NIS, address, code of the activity included in that benefit (according to the corresponding Nomenclator of Activities of the Tax on Gross Income, of NAIIB 18 approved by ARBA) or their equivalents codes under the Nomenclator of Economic Activities of the Federal Collection System (NAES) of the Arbitration Commission of the Multilateral Agreement (Comisión Arbitral del Convenio Multilateral), details of the respective exemption and term for which it is granted.
d. Taxes for which the exemption is granted and term
User-Generators registered under the RUGER are exempted from the following taxes for a period of twelve (12) years:
- Stamp tax: only applies to the power purchase agreements entered into by the distributor and the User-Generator, as long as the latter is registered in the RUGER, and such inscription is detailed in that agreement; and
- Tax on Gross Income: with respect to the injection of surplus renewable energy into the distribution network by the User-Generator.
For additional information, please contact Nicolás Eliaschev, Javier Constanzó and/or Rocío Valdez.
MSU Energy S.A.´s US$ 15.100.000 Series VII Notes Offering
Counsel to MSU Energy S.A. in the issuance of its 7.5% Series VII Notes for US$ 15,100,000, denominated, integrated and payable in U.S. dollars, maturing 24 months from the issuance date, under its US$ 285,000,000 Global Notes Program.
“San Cristóbal Servicios Financieros I” Financial Trust for AR$ 422,500,000
Deal counsel in the issuance and placement in Argentina of trust securities for AR$ 422,500,000 issued under the “San Cristóbal Servicios Financieros I” Financial Trust, in which San Cristóbal Servicios Financieros S.A. acted as trustor, TMF Trust Company (Argentina) S.A. acted as trustee, Banco Macro S.A. acted as arranger, First Corporate Finance Advisors S.A. acted as financial advisor and Macro Securities S.A.U. acted as placement agent.
“Wenance II” Financial Trust for AR$ 481,538,000
Deal counsel in the issuance and placement in Argentina of trust securities for AR$ 481,538,000 issued under the “Wenance II” Financial Trust, in which Wenance S.A. acted as trustor, servicer and collection agent, Adcap Securities Argentina S.A. as arranger, structuring agent, financial advisor and placement agent, and Rosario Administradora Sociedad Fiduciaria S.A. acted as trustee.