Resolution No. 161/2021 of the Ministry of Productive Development, Federal Mining Secretariat: general guidelines for the closure of mines secured by financial guarantees in Argentina.
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Mining Department report | Resolution No. 161/2021 of the Ministry of Productive Development, Federal Mining Secretariat: general guidelines for the closure of mines secured by financial guarantees in Argentina
Dear Sir or Madam,
Ministry of Productive Development, Federal Mining Secretariat (FMS) Resolution No. 161/2021 (the “Resolution”), published in the Official Gazette on June 10th, 2021, establishes the General guidelines for the closure of mines secured by financial guarantees in Argentina (the “Guidelines”).
Prior to the issuance of the Guidelines, the FMS: (i) in 2019 prepared the Mine closure good practices resource guide; and (ii) in 2020, through Resolution No. 47/2020, approved the Strategic Plan for Argentine mining development, through which it identified mine closure as one of the key initiatives in terms of environmental sustainability.
The aim of the Guidelines is to ensure that all mines operating in Argentina generate the benefits associated with responsible mine closure. To this end, the Guidelines focus on two key aspects:
1) Planning through official closure plans -established from the initial stages of the project- that are constantly updated and elaborated in such a way as to comprehensively cover engineering, environmental, social, economic, and financial matters.
2) Guaranteed availability of the necessary and sufficient funds, through suitable financial instruments, to carry out the closure operations, regardless of the circumstances and the time at which operations end. Accordingly, the Guidelines envisage the establishment of a financial guarantee that the mining company must provide in favor of the State to ensure the availability of sufficient funds to carry out the corresponding mine closure tasks (the “Financial Guarantee”).
The Guidelines establish that the amount of the Financial Guarantee must be equivalent to the total cost of executing the mine closure plan, including the direct and indirect cost estimates foreseen in the plan and excluding the progressive closure measures that have already been carried out.
The Guidelines establish a simple non-exhaustive list of instruments available in Argentina that are relevant for the provision of Financial Guarantees for mine closure. Among them, it is noted: (i) unilateral guarantees payable on first demand, pursuant to the Argentine Civil and Commercial Code, sections 18103 to 1814; (ii) pledges on deposit balances; (iii) bond insurance issued by an insurance company authorized to operate in Argentina by the Argentine Superintendence of Insurance; (iv) other instruments (e.g., certificates of deposit, fixed-term certificates of deposit, bank guarantees, irrevocable standby letters of credit).
The FMS, under the Resolution, Section 2, invites the Provinces, the City of Buenos Aires, and the provincial Municipalities to incorporate the Guidelines within the scope of their own jurisdictions.
Additionally, the Resolution establishes in section 3 that the Directorate of Federal Mining Affairs under the Undersecretariat of Mining Policy of the FMS, within the scope of the Federal Mining Council (COFEMIN), shall provide assistance to the Provinces for the enforcement of the Guidelines.
Please, do not hesitate to contact us should you require any further information on this matter.
Sincerely,
Marcos Moreno Hueyo
Dolores Reyes