Next week will be very interesting - Gold will get its resolution from the consolidation pattern with the Greece vote and Miners in Argentina should receive the more clear picture on the country investment climate. We can have the very explosive situation for some oversold sectors and junior miners particularly in case if Greece disaster will be averted and Argentina will confirm its mining friendly status. Risk On trade can change the mood overnight. Medicine from the disaster has been prescribed the same:
Gold: Reuters: Central Banks Preparing For Coordinated Action To Provide Liquidity After Greek Election If Needed GLD, SLV
The Wall Street Journal:
--Miners haven't shipped goods for a month due to foreign exchange rules
--Talks with the government to resolve problem are set for next week
--Mining sector struggling amid regulatory uncertainty
By Shane Romig
BUENOS AIRES--Argentina's mining exports have virtually ground to a halt and companies are stockpiling gold, copper and other minerals due to foreign exchange rules that are impossible to comply with, a top industry executive said Tuesday.
Exports have been stalled for the last month, said Martin Dedeu, the president of Argentina's mining chamber, Caem.
The government has assured miners that it will address the problem and talks are set for next week, but for now companies are holding back on exports, he told reporters at a Caem event.
The mining industry ships about $5 billion worth of minerals a year, and each day that goes by without exports carries a huge cost in terms of lost royalties for provincial governments and dollars that would have fattened the central bank's international reserves, Dedeu said.
"It doesn't make sense for anyone," he said.
Under new regulations, mining companies have just 15 days to exchange their export revenues for Argentine pesos on the local foreign exchange market.
But many companies need at least 180 days to ship minerals, receive payment and repatriate the funds, Dedeu said.
There are signs that the government may be aware of the problem and willing to compromise. In recent weeks a number of companies in other sectors have been granted longer time periods to bring their export proceeds home.
The administration of President Cristina Kirchner has tried to bolster international reserves by blocking imports and speeding up the repatriation of export sales.
At the same time, the government is trying to stem capital flight by severely limiting the amount of dollars businesses and individuals can buy on the regulated foreign exchange market. That's fueled a black market for Argentines desperate to get their hands on greenbacks.
The dollar was selling for about 6 pesos on the black market Wednesday, compared with the official rate of around ARS4.50 pesos to the dollar.
The export freeze comes at a difficult time for Argentina's mining industry, with new investment grinding to a halt due to a host of factors.
Investors have slammed the doors shut on mining companies looking for project financing because of worries about the global economy and Argentine policies.
Miners were surprised in November when the government said they would now have to bring all cash from export sales into the country and convert the foreign currency into pesos.
Those doubts were amplified in April after the government moved to nationalize oil and gas producer YPF SA (YPF, YPFD.BA), a unit of Spain's Repsol YPF SA (REPYY, REP.MC).
The regulatory uncertainty also comes amid stiff resistance from environmental groups wielding a strict federal glacier-protection law.
The law threatens to stall a number of projects by limiting economic activity in areas near glaciers. Miners are currently challenging the constitutionality of the glacier law with the Supreme Court expected to weigh in on the issue soon.
-Write to Shane Romig at email@example.com"