Federal Mining Secretariat launches the "Federal Program for the Systematic Disclosure of Mining Activities (ProNDSAM)"

On 08/07/23, Resolution 96/2023 (the "Resolution") was published in the Official Gazette, by which the FMS sets -within its authority- the "Federal Program for the Systematic Disclosure of Mining Activities (ProNDSAM)"..

ProNDSAM has five objectives:

1. Prioritize the systematic dissemination processes of mining information.

2. Regulate the operation of the Argentine Mining Information System Open to the Community ("SIACAM"), while ensuring its continuous operation.

3. Promote compliance with international standards for the dissemination of information on the mining sector.

4. Standardize the monthly and weekly publication of reports and the updating of the project portfolio, containing information on exports, employment, international prices, and the development of mining projects.

5. Establish the methodology for the handling and disclosing of information on employment, international trade, and the evolution of mining projects.

According to the Resolution, Section 3, the Transparency and Mining Information Directorate will be in charge of:

(a) Ensuring the continuous updating of SIACAM indicators, reports and open data;

(b) Publishing monthly reports on mining exports, the trade balance of the main mining projects and the provincial origin of mining exports, in accordance with the methodology set out in Annex I to the Resolution;

(c) Publishing monthly reports on mining employment and employment by province in SIACAM, applying the methodology applying the methodology set out in Annex II to the Resolution;

(d) Publishing monthly reports on international prices of the most relevant minerals in SIACAM;

(e) Publishing special reports in SIACAM that deepen the analysis of specific aspects of the mining sector;

f) Publishing the portfolio of mining projects in Argentina produced by the National Directorate for the Promotion and Mining Economy, applying the methodology for determining the state of evolution of mining projects approved by the Federal Mining Council (COFEMIN), applying the methodology of Annex III of the Resolution; and

g) All those functions entrusted to it by the FMS.

Likewise, the Resolution empowers the Transparency and Mining Information Directorate to issue the complementary regulations that are necessary to carry out the corresponding actions for the implementation, execution and control of ProNDSAM.

The Resolution indicates that the expenditure demanded by the measure will be met according to the budgetary availability, for the Fiscal Year 2023, under Program 32 – "Formulation and Execution of the Geological-Mining Policy".

Background information

The Resolution is the result of several measures taken by the FMS in terms of transparency. Particularly, the Resolution contemplates:

(a) Decree 50/2019: established the goals of the FMS, among which is observed to assist the Ministry of Economy in "... the design and implementation of mining policies, in terms of interaction with investors and companies in the sector, and in all actions aimed at promoting the development of mining in the country".

(b) Resolution 47/2020: established the strategic objectives for the "Argentine Mining Development Strategic Plan" for the next 30 years. Among those, it is noted to favor the access to information related to the activity and the National Mining Policy, guaranteeing the transparent management of the sector.

(c) EITI Initiative: Argentina has been part of the EITI since 2019. According to the 2022 Progress Report, issued in April 2023, Argentina received a score of 73/100. Within the EITI Argentina portal, the objective of facilitating access to information and transparency of the extractive sector is observed.

(d) Resolution 89/2022: created SIACAM, which must periodically report on the economic, geological, geographic, social, health and environmental aspects of the mining activity.

(e) Administrative Decision No. 449/2023: delegated to Transparency and Mining Information Directorate the responsibility of assisting the Undersecretariat of Mining Development in the creation, consolidation and administration of the Single National Mining Information System, the Mining Transparency System and the Mining Communication System, referring to environmental, economic, social, legal aspects, geological, cadastral mining projects and their territorial environments.

Prior to the Resolution, the FMS provided reports and studies on mining, without establishing the methodology used for such publications. Previously, the FMS, through its website, published:

(i) Weekly reports: they monitor the latest developments in Argentine mining projects and the evolution of international prices of the main commodities linked to the sector.

(ii) Monthly reports: reports on international prices, mining exports, and other topics.

(iii) Archive of studies: repository of documents made between 2016 - 2018.

(iv) Mining Development Studies Series: reports focused on mining sector research from various angles. The objective of these is to contribute information and perspectives to the debates around mining in Argentina and the world.

(v) Series of studies on mining markets: documents that provide specific analyses linked to the different minerals of interest and the geological potential of Argentina.

(vi) Bilateral mineral trade reports: reports focused on the investigation of mineral trade between Argentina and different countries.

(vii) Catalogues of mining projects: portfolios aimed at investors. They collect information on the projects with the greatest export potential.

(viii) Series of statistical studies: documents and reports on different variables.

(ix) Gender indicators: Reports and studies on indicators on gender equity and existing gaps in the mining sector.

 

For more information or inquiries on these topics, please contact Marcos Moreno Hueyo and/or Dolores Reyes.

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“Total Assets II” Financial Trust for AR$1.000.070.978

Deal counsel in the issuance and placement in Argentina of trust securities for AR$ 1,000,070,978 issued under the “Total Assets II” Financial Trust, in which Crédito Directo S.A acted as trustor, TMF Trust Company (Argentina) S.A. acted as trustee, Banco de Servicios y Transacciones S.A. acted as arranger and placement agent, and Macro Securities S.A.U., Banco Supervielle S.A., Banco Patagonia S.A. and Banco de Valores S.A. acted as placement agents.

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Albanesi Group´s US$24,496,862 Notes Offering

Counsel to Generación Mediterránea S.A. and Central Térmica Roca S.A. in the co-issuance of 9.50% Class XXIII Notes for US$9,164,613 due January 20, 2026, and 5.00% Class XXIV Notes for US$15,332,249 due July 20, 2025, issued under the Notes Program for an amount up to US$1,000,000,000.

SBS Trading S.A., Banco de Servicios y Transacciones S.A., Invertironline S.A.U., Balanz Capital Valores S.A.U., Nación Bursátil S.A., Bull Market Brokers S.A., Banco de la Provincia de Buenos Aires, Macro Securities S.A.U., Facimex Valores S.A., Banco Hipotecario S.A., BACS Banco de Crédito y Securitización S.A., Banco Supervielle S.A., GMA Capital S.A., Petrini Valores S.A., Allaria S.A., Becerra Bursátil S.A., Latin Securities S.A., Don Capital S.A., Cocos Capital S.A., Global Valores S.A. and Buenos Aires Valores S.A. acted as placement agents of Class XXIII Notes and Class XXIV Notes. SBS Capital S.A. and Banco de Servicios y Transacciones S.A. acted as arrangers of the issuance, and Banco de Servicios y Transacciones S.A. also acted as settlement agent of the issuance.

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Argentine Government seeks bids for 3,000 MW new/revamped thermal facilities

The Argentine Government announced on July 27, 2023, by Resolution No. 621/2023 of the Secretary of Energy (“Resolution 621”), a bid seeking 3,000 MW of new/revamped thermal power facilities. Preferred bidders will enter into long-term US Dollar-denominated Power Purchase Agreements (“PPA”) with CAMMESA (the wholesale electricity manager, for its Spanish initials, Compañía Administradora del Mercado Mayorista Eléctrico S.A.).

The PPA provides for a fixed capacity/availability payment capped at US$ 18,000/MW-month and a variable inflow based on dispatch of the facility.

Offers may be for any type of thermal power generation or cogeneration, and the projects may include associated transmission and/or fuel infrastructure works. Power facilities shall be new or have less than 15,000 fired hours.

Below are the key takeaways of Resolution 621 and the request for proposals:

1. Projects included

  1. Line 1 “Thermal Generation for reliability and supply of the SADI” (“Line 1”): includes: (a) 1.0. Repowering – repowering existing combined cycles; (b) 1.1. Improvement of the supply reliability in critical areas; (c) 1.2. Improvement of efficiency and regional reserve; and (d) 1.3. Improvement of reliability of the wholesale electricity market. Line 1 seeks offers aggregating 3000 MW with a minimum goal of 2250 MW.
  2. Line 2 “Thermal Generation to replace, modernize and improve efficiency of the Tierra del Fuego power system” (“Line 2”): Line 2 seeks offers aggregating 70 MW with a minimum goal of 30 MW.

2. Authorized bidders

Bids may be submitted (individually or collectively) by legal entities incorporated in Argentina or abroad. SPVs (sole purpose vehicles), trusts and collective associations are also permitted.

3. Main aspects of the PPA

Selected bidders will enter into a PPA (in the form attached thereto), that, among other aspects, foresees:

  • Target date for COD: The target date to achieve Commercial Operation Date (“COD”) is: (a) Line 1.0, 1/1/2025; (b) Line 1.1 and Line 2, 10/1/2025; and (c) Line 1.2 and 1.3, 4/1/2026.
  • Long-Stop COD: The long-stop date for COD is: (a) Line 1.0, 06/30/2027; (b) Line 1.1 and 2, 03/31/2028; and (c) Line 1.2 and 1.3, 09/30/2028.
  • PPA Term Commencement Date: The PPA shall commence upon the later to occur among (a) the COD effective date or (b) six (6) months prior to the target date for COD.
  • PPA Expiration Date: The PPA expiration dates are as follows: (a) for Line 1.0, 12/31/2034; (b) for Lines 1.1 and 2, 9/30/2040; and (c) for Lines 1.2 and 1.3, 3/31/2041.
  • Tenor of the PPA: The tenor of the PPA is as follows: (a) for Line 1.0, 10 years, and (b) for the other lines, 15 years.
  • Partial COD: Partial COD is allowed, with a reduced remuneration scheme until COD is obtained for the total committed capacity.

4. Deadlines to be considered

Questions are permitted until August 29, 2023, whereas bids shall be submitted no later than August 31, 2023. Award of bids is targeted for October 10, 2023, and the PPAs shall be entered starting on October 15, 2023.

 

For additional information, please contact Nicolás Eliaschev, Javier Constanzó, Daiana Perrone, María Eugenia Muñoz, Pablo Arrascaeta, Florencia Martínez, Luciana Tapia Rattaro and/or Rocío Valdez.

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Relevant aspects of the National Energy Transition Plan to 2030 and the Guidelines and Scenarios for the Energy Transition Plan to 2050 of Argentina

Argentina has issued the National Energy Transition Plan to 2030 (“NETP 2030”) and the Guidelines and Scenarios for the Energy Transition Plan to 2050 (“GSET 2050”). Such documents were made public by Resolution No. 517/2023 and Resolution No. 518/2023 of the Secretary of Energy. These plans aim to change the country’s energy matrix towards cleaner and more sustainable sources, thereby reducing greenhouse gas emissions responsible for global warming.

Below is a summary of the key takeaways of the NETP 2030 AND GSET 2050.

1. NETP 2030

1.1. Scenario and variables considered

The NETP 2030 is based on the following main assumptions:

  1. Growth of gross domestic product (GDP) of 2% per year.
  2. Electricity demand growth of 1.5% on a yearly basis, and natural gas demand growth of around 1.1%.
  3. Fuel demand growth of 2.3% on a yearly basis.
  4. Growth in natural gas production for local consumption between 2.4% and 3%, and in oil production between 3.4% and 6%.
  5. Reduction in the share of thermal generation from 59% to 35% (however, it contemplates 3,000 MW of the future tender soon to be called).

1.2. Quantitative targets

The NETP 2030 proposes the following quantitative targets:

  1. Not to exceed the total aggregate net emissions of 349 million tCO2.
  2. Reduction through energy efficiency and responsible energy use of at least 8% of energy demand.
  3. Share of more than 50% of renewables in electricity generation (currently, this percentage is around 14%, therefore this would require approximately 7.5 GW of new installed capacity).
  4. Electric car penetration of 2% of the vehicle fleet.
  5. Target of 1,000 MW of renewable distributed generation (currently, there is slightly more than 20 MW of distributed generation capacity installed, on the applicable legislation and additional considerations, see our report here).
  6. Expansion of the high voltage electricity transmission grid by 5,000 km of new lines (see our reports on the National Grid Expansion Plan here and on the recent call for expressions of interest for transmission works, here).

1.3. Qualitative targets

The NETP 2030 also proposes the following qualitative targets:

  1. Enabling conditions for the local development of the clean energy technology value chain, including new non-conventional and emerging technologies.
  2. Creation of new local and sustainable jobs related to the sector.
  3. Reduction of energy poverty as the needs associated with this concept are established.
  4. Facilitation of a sustainable energy transition.

1.4. Investments required

To meet the goals outlined in the NETP 2030, the document estimates that significant investment by the private and/or public sector will be required, totaling approximately 86,642 MM US$. It is estimated that around 23,362 MM US$ will be for new electric power; 3,817 MM US$ for transmission and 10,272 MM US$ in electric distribution; 10,000 MM US$ in LNG; 27,777 MM US$ in energy efficiency; 911 MM US$ for distributed generation, and 503 MM US$ in low emission H2.

We understand that given the magnitude of capital needed to comply with the NETP 2030 guidelines, the participation of the private sector and multilateral entities will be essential, alongside appropriate sectorial and macroeconomic base conditions.

1.5. Actions to meet the NETP 2030 objectives

The following actions are envisioned to comply with the targets set forth in the NETP 2030:

  1. Updating Laws 26,190 and 27,191: The need to update these laws is under study, in line with the technological developments of renewable sources. As this regime ends in 2025, an eventual reform should consider the necessary amendments in terms of fiscal and tax benefits during the additional term.
  2. Distributed Generation Law: The possibility of revising the regulatory decree of the law, to allow a higher participation and adhesion by the provinces.
  3. New regulatory frameworks: Such as the energy efficiency, promotion of low-carbon H2 (for additional information on H2 and the bill, see here), LNG, and e-mobility bills.

Among other actions, the PTE 2030 assumes the continuity of RenovAr auctions and the development of MATER, as well as other specific programs.

2. GSET 2050 - scenarios and key figures

The GSET 2050 considers three scenarios, referred as baseline, optimistic and ambitious. The three scenarios share a similar evolution until 2030, after which they diverge. Of these three scenarios, we highlight the following:

2.1. New installed capacity

Under the base scenario, 54 GW of new installed capacity is considered; 58 GW under the optimistic scenario; and 69 GW in the ambitious scenario. Of these overall values, a large share of renewables stands out: 34 GW in the baseline scenario; 38 GW in the optimistic scenario; and 45 GW in the ambitious scenario.

According to the GSET 2050, investments would total 101,536 MM US$ under the base scenario; 107,016 MM US$ under the optimistic scenario; and 113,679 MM US$ under the ambitious scenario.

Likewise, investments in distributed generation of around 2,273 MM US$ are considered in all scenarios.

The high share of electricity from renewable sources in the matrix stands out: 80% in the base scenario; 84% in the optimistic scenario; and 87% in the ambitious scenario.

2.2. Transmission grid expansions

Regarding transmission network expansions, an investment of around 7,594 MM US$ is considered in the base scenario; 8,829 MM US$ in the optimistic scenario; and US$ 10,688 in the ambitious scenario. To date, the GSET 2050 does not establish quantitative targets in terms of new transportation capacity.

2.3. LNG

Regarding LNG, although the GSET 50 does not establish quantitative targets, it assumes investments of around 22,500 MM US$, 30,000 MM US$ and 40,000 MM US$ in each respective scenario.

2.4. H2

Finally, investments in low-emission H2 are considered in extremely significant amounts, namely 9,574 MM US$, 21,440 MM US$ and 31,545 MM US$ in each scenario.

 

For additional information, please contact Nicolás Eliaschev, Javier Constanzó, and/or Rocío Valdez.

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Legal Advice in the Issuance of Series XIII Notes of MSU S.A. for US$ 25,000,000

Counsel to Banco de Galicia y Buenos Aires S.A.U. as arranger, placement agent and settlement agent, and Balanz Capital Valores S.A.U., Banco Supervielle S.A., Banco de Servicios y Transacciones S.A., Facimex Valores S.A., Puente Hnos. S.A., Banco de la Ciudad de Buenos Aires, and Invertir en Bolsa S.A. as placement agents, in the issuance of MSU S.A. 6.50% Series XIII Notes for US$ 25,000,000 issued on July 17, 2023, and due July 17, 2026, under its US$ 150,000,000 Global Notes Program.

Banco de Galicia y Buenos Aires S.A.U. acted as arranger, placement agent and settlement agent, and Balanz Capital Valores S.A.U., Banco Supervielle S.A., Banco de Servicios y Transacciones S.A., Facimex Valores S.A., Puente Hnos. S.A., Banco de la Ciudad de Buenos Aires, and Invertir en Bolsa S.A. acted as placement agents.

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Municipality of Río Cuarto’s Series XXXVI Treasury Notes Issuance for AR$850,000,000

Legal counsel to the Municipality of Rio Cuarto, as issuer, Banco de la Provincia de Córdoba S.A., and Puente Hnos. S.A., as arrangers and placement agents and Banco de Galicia y Buenos Aires S.A.U., Adcap Securities Argentina S.A., Balanz Capital Valores S.A.U., y GMA Capital S.A. as placement agents in the issuance of Municipality of Río Cuarto’s Series XXXVI Treasury Notes (the “Treasury Notes”), under the Municipality of Río Cuarto’s Treasury Notes Issuance Programme. The transaction closed on July 7, 2023, and the Treasury Notes are secured by the Municipality's credits for contributions levied on commercial, industrial and service companies' activities, and subsidiarily by the resources derived from the Federal Co-participation Regime. The Treasury Notes were issued for AR$850,000,000 at an annual floating interest rate equivalent to Badlar plus 12%, due on April 7, 2024.

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Call for Expressions of Interest to Manage and Finance Extensions of Transmission Facilities

The Secretary of Energy has launched a call for expressions of interest to manage and finance (in whole or in part, with other interested parties, or with the National Government) extension works of the high-voltage transmission facilities (“EOIT”).

On July 6, 2023, Resolution No. 562/2023 issued by the Secretary of Energy (“Resolution 562”) was published in the Official Gazette. This regulation has initiated the EOIT and sets forth the main rules to be complied by interested parties in submitting non-binding proposals before the Secretary of Energy.

The call seeks proposals to ramp-up investments in the power generation and transmission sectors. The call is aimed to (among others) high-consuming power industries (e.g., mining projects), that may be interested in expanding the existing transmission facilities.

Resolution 562 expressly states that there has been a continuous growth in the power generation sector, yet such increase has not been matched by the necessary transmission works.

Reference is also made to the mining projects located in the north of the Province of San Juan (copper and gold, among others) and in the northwestern provinces (lithium) -many of them in areas that as of the date hereof are off-grid. According to Resolution 562, such projects could improve their feasibility and accelerate FID status if they were able to offtake electricity from the grid.

1. Key aspects of the EOIT

Under the EOIT, interested parties are invited to submit expressions of interest related to:

  1. the expansion of transmission capacity that would allow new power supply to be supplied to high-demand areas, in which the Government may provide funding up to 50% of the investment; or
  2. the supply of energy to mining projects that are currently off-grid, in which the funding is to be entirely provided by private investors or assumed by the sponsor.

2. EOIT requirements

EOITs must comply with certain requirements, such as, inter alia: provide details of the company or group of companies submitting the EOIT, describe the works to be undertaken, and the financing structure envisioned.

With respect to works that involve the expansion of the transmission grid, the submitting party will have a right of priority of dispatch over such facility, pursuant to the terms of Resolution 360/2023 (for additional information on this regulation, please click here).

EOITs shall be submitted no later than October 4th, 2023.

 

For additional information, please contact Nicolás Eliaschev, Javier Constanzó, and/or Rocío Valdez.

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Legal Advice in Crédito Directo S.A.’s Class XXIV Notes Issuance

Counsel in the issuance of Crédito Directo S.A.’s 6,00% Class XXIV Notes for $ 550,000,000 issued on June 26, 2023, and due December 26, 2023, under its US$ 24,000,000 Global Notes Program.

Banco de Servicios y Transacciones S.A. acted as arranger and placement agent, and SBS Trading S.A., Banco de la Provincia de Córdoba S.A and Industrial Valores S.A. acted as placement agents.

 

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Approval of the final text of the Contract for the Transportation of Natural Gas – President Néstor Kirchner Gas Pipeline

On June 26, 2023, Resolution No. 532/2023 of the National Energy Secretariat ("Resolution 532") was published in the Official Gazette, approving the final text of the Contract for the Transportation of Natural Gas through the President Néstor Kirchner Gas Pipeline (the "Contract" and "GPNK", respectively) between Energía Argentina S.A. (ENARSA or the "Transporter") and the Wholesale Electricity Market Administrator Company (CAMMESA or the "Shipper").

For background, it should be noted that, on one hand, Emergency Decree No. 76/2022 empowered ENARSA (with the approval of the Ministry of Economy) to freely negotiate contracts regarding transportation capacity with producers and/or shippers for the construction or expansion, in whole or in part, of the GPNK. Notably, the contracted transportation capacity will not be subject to the natural gas transportation rates approved by the National Gas Regulatory Entity (ENARGAS, for its Spanish acronym, Ente Nacional Regulador del Gas), which will apply to the uncommitted transportation capacity.

On the other hand, for background to the Contract, Resolution No. 828/2023 of the Ministry of Economy had approved its execution with the ultimate goal of replacing liquid fuels used in the generation of electricity and other industries, as well as facilitating the eventual export of natural gas.

Main provisions of the Contract:

  1. Purpose: The Shipper agrees to deliver or have delivered natural gas to the Transporter for transportation, and the Transporter agrees to receive, transport, and deliver natural gas to the Shipper or on behalf of the Shipper to whomever the Shipper designates, in quantities of cubic meters equivalent to 9,300 kcal/m3 between the point(s) of receipt at the entrance of the GPNK near Tratayén, Province of Neuquén, and the point(s) of delivery that will enable the entry of natural gas into the gas pipeline called "NEUBA II" in the TGS system, in the locality of Salliqueló, Province of Buenos Aires, in a first stage, and subsequently to the locality of San Jerónimo, Province of Santa Fe.
  2. Character of Supply: The transportation service will not be subject to reductions and will be firm and uninterrupted. It may only be reduced and/or interrupted in exceptional operational and/or natural gas supply situations.
  3. Term: The Contract will come into effect on June 20, 2023, and will remain in force and effect until June 20, 2058. The Contract will be renewed for successive periods of 1 year until either the Transporter or the Shipper expresses its intention to terminate it.
  4. Contracted Daily Quantity (CDQ): Up to 25,000,000 m3/day, distributed as provided in Article 6 of the Contract.
  5. Right of Priority: CAMMESA will have the right of priority for contracting with ENARSA for any new capacity suitable for operation, for partial quantities and up to the total additional capacities that the GPNK Project (as defined in the Contract) will contribute, in which ENARSA obtains rights to transport natural gas.
  6. Price: (i) during the first 15 years, equal to $1.023 USD/m3 per month of daily capacity, and (ii) starting from year 16, equal to $0.023 USD/m3.
  7. Assignment: The Shipper, with the prior authorization of the Transporter and the Regulatory Authority, may fully and/or partially assign the rights arising from this Agreement to the Generator(s) Agent(s) of the Wholesale Electricity Market (WEM) that it deems appropriate.
  8. Jurisdiction: The Contract shall be governed by and construed and interpreted in accordance with the laws of the Argentine Republic. Disputes may be referred to the Secretary of Energy at the administrative level, and judicially the Federal Civil and Commercial Courts of the Argentine Republic with jurisdiction in the Autonomous City of Buenos Aires is established.

 

For additional information, please contact Nicolás Eliaschev, Javier Constanzó, and/or Rocío Valdez.

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