The country's largest deposits hold some 25 million ounces of gold (without counting other minerals). We're talking about a gross turnover of US$15,600,000,000 / 15.6 BILLION DOLLARS.

Over the next fifteen years this amount could be used to build:

ONE THOUSAND (1,000) fully-equipped HIGH-TECH HOSPITALS
THREE THOUSAND (3,000) fully-equipped interdisciplinary schools
FORTY THOUSAND (40,000) KMS of PAVED ROADS

You can make other comparisons yourself.

If we imagine for a moment that large-scale metal mining DOES NOT POLLUTE THE ENVIRONMENT, DOES NOT CONSUME HUGE QUANTITIES OF WATER and DOES NOT DISPLACE OTHER TRADITIONAL AND SUSTAINABLE ECONOMIC ACTIVITIES, then, and only then, can we begin to think about and calculate the ECONOMIC BENEFITS that mining could bring to communities, and even to compare these with the profits made by the multinational corporations which operate these concessions.

Meridian Gold in the Esquel Range:

During 2002, MERIDIAN GOLD provided the following data on the Esquel Range project in its Environmental Impact Study (pages 30-50):

Length of operation: Eight (8) to nine (9) years.
Total production over 8 years:
• Gold: 2,400,000 troy ounces (on 30th June 2006 the international price for a troy ounce of gold was US$624.30)
• Silver: 4,800,000 troy ounces (on 30th June 2006 the international price for a troy ounce of silver was US$11.60).

Total Investment, the first big lie

The company said that their total investment in the country and in the region would be one hundred and eighty-one million dollars (US$181,000,000) (including financial costs).

Most of the investment (70%) would consist of IMPORTED mechanical equipment, on which the company would PAY NO TAX. If we take into account that for an ordinary investor the import tax rate is around 15% of the value of the goods imported, the State would lose out on nineteen million dollars (US$19,000,000) in taxes.

The GREAT local workforce

The total cost, from the initial extraction of minerals to forming the resulting ingots of gold or silver, would be two hundred and sixty-five million dollars (US$265,000,000).

The report stated that the mining operation would employ 381 people, of whom only 30%, or 115 employees, would be from Esquel. If we allow an average salary of US$915 a month per employee, we see that the operation's EMPLOYMENT COSTS make up just 12% of the total cost. This means that the salaries paid by large mining corporations make up a very small part of the overall income generated.

What's more, these large mining corporations exploit small- and medium-sized enterprises (SMEs) through contracting and subcontracting, which enables them to get their hands on a large proportion of workers' salaries and even of the profits made by the SME owners.

Let's turn over a few million

Production data shows that the company would turn over around US$1,554,000,000 USD. If you can't read such a large figure, we'll help you. That's ONE BILLION FIVE HUNDRED AND FIFTY-FOUR MILLION DOLLARS.

We're so poor that it's very difficult for us to imagine what such a figure represents. Let's make a few comparisons:

ESQUEL MUNICIPALITY has an annual budget of thirteen million eight hundred and forty-three thousand six hundred and forty-eight dollars (US$13,843,648). This means that the turnover of the Esquel Range mining operation would be the equivalent of the municipal budget for the next ONE HUNDRED AND TWELVE (112) years.

At last...the long-awaited PROFITS

Taking the Gross Turnover of: US$1,554,000,000
MINUS:
The total costs: (US$265,000,000)
MINUS:
The total investment: (US$181,000,000)

The PROFIT would be: US$1,108,000,000
(More than one billion one hundred and eight million dollars)

This means that in its first year of operation alone the mining corporation would recover THE WHOLE OF ITS INVESTMENT and would MAKE A 54 MILLION-DOLLAR PROFIT.

But here lies one of the most important elements in swelling the profits.

Multinational mining corporations pocket the income which should go to the province or the country as the owners of these natural resources, as set out in the constitution.

Well, at least we get...the royalties

Corporations should pay Chubut province a certain amount in ROYALTIES. This is not a tax; it simply represents a payment in exchange for goods which are used up by the extraction operation (that is to say, a NON-sustainable activity). This amount is equal to 2% of the value of the mineral being extracted, after deducting the costs incurred by the extraction itself. Using the numbers we've got, we can calculate the following:

Gross Turnover: US$1,554,000,000
MINUS:
The total costs: (US$265,000,000)

Approximate value at the minehead: US$1,289,000,000

ROYALTIES TO BE PAID 2% US$25,780,400

But you'd better believe it, THE BEST IS STILL TO COME

If the company chooses to EXPORT the gold out of Comodoro Rivadavia port, the State has to REIMBURSE the company to the tune of 2.5% of the TURNOVER value of the goods being exported.

So if the Gross Turnover was US$1,554,000,000, 2.5% would be US$38,850,000.

It'd be even worse if the gold were exported out of any of the ports located south of Comodoro Rivadavia, because the State would have to reimburse the company between 5% and 7% of the mineral's market value.

This means that ARGENTINIANS HAVE TO PAY THE MINING CORPORATIONS TO TAKE AWAY OUR MINERALS.

We can EXPORT our minerals, so that's something at least:

Once extracted, the gold and silver are taken OUT OF THE COUNTRY as there is no domestic market.

The existing legal framework allows the mining companies to BILL 100% OF THEIR SALES OUTSIDE THE COUNTRY, CHARGE FOR THEM OUTSIDE THE COUNTRY AND THEY ARE NOT UNDER ANY OBLIGATION TO PUT THE MONEY THEY MAKE BACK INTO THE ARGENTINIAN ECONOMY.

If we add to this the fact that gold and silver are NOT SUBJECT TO EXPORT DEDUCTIONS (as wool, meat, oil, etc. are), we need to ask ourselves whether we are really exporting our minerals or just GIVING THEM AWAY.

On top of all this, mining laws allow the companies to draw 100% of their CAPITAL and PROFITS out of the country whenever they like and without having to pay any taxes.

Side note

At this point we would like to take a moment to look at the OTHER COSTS the PEOPLE OF CHUBUT would have had to PAY to this company if they had set up their operation:

a) The cost of water:
The company said it would use some 18 liters of water per second over the 8 years of extraction. The approximate cost of untreated water is 15¢ per 1,000 liters (US$0.15/m3). A simple calculation shows that the company would have paid US$681,000 for its water. It is however exempt from these costs.

b) Taxes on fuel:
The company said it would use around 114 million liters of fuel. If we take into account that taxes make up 40% of the price of oil, and that mining companies are exempt from paying these taxes, Argentinians would have lost out on US$23,000,000.

What happens at national level?

Bajo La Alumbrera in Catamarca:

There is a symbolic case of mega-mining in Argentina. It's called Bajo La Alumbrera, and it was the first copper and gold deposit to put mining laws to the test. Extraction began in 1997, and reserves are expected to last another ten years. The consortium has turned over more than US$1.4bn, but their balance sheets show a loss, so they did not have to pay any tax on their profits until 2005. The Federal Court in Rosario is still investigating suspected documentation irregularities and the illegal exportation of metals by the Minera Alumbrera company. The district attorney considered that the company and its officials contributed to the exportation of non-declared metals and to evading payment of taxes. These huge profits were made close to the communities of Andalgalá and Belén. Both places have high levels of poverty and malnutrition and are seriously lacking in basic public services such as drinking water, sewers and paved roads.

Cerro Vanguardia in Santa Cruz:

The Cerro Vanguardia gold and silver deposit has some of the lowest production costs and the longest productive lifespan in the country. In 2005 its turnover was close to US$2m. The operation is controlled by the British-South African corporation Anglogold, while the province holds 7.5% of its stock capital. All the profits from the deposit have already been taken out of the country. The benefits that Cerro Vanguardia S.A. receives come in large part from the substantial tax subsidies granted to it by mining laws.

Although Santa Cruz Province has part control of the company, its presence is barely felt. It does not appear to voice an opinion either as a partner or a controlling body. In May 2006 Cerro Vanguardia sacked 35 workers. The company did not fulfill its obligation of conciliation: the management ordered the daily buses running between Río Gallegos and the mining complex not to allow the fired workers to board, and the authorities...sent the police to the bus station at the explicit request of the mining company.

Let's meet the people responsible for the legal framework governing these activities

In 1990, based on a proposal by the World Bank, the then Minister Kohan and Senators Gioja (San Juan) and Maza (La Rioja), together with Carvallo, drove through the laws governing LARGE-SCALE MINING.

Those negotiating on behalf of the mining corporations and their officials were very keen on gaining legal recognition for four particular points:

1) A TOTAL ban on the Argentinian State carrying out extraction of minerals.

2) SPECIAL rules for mining investments, limiting the amount of royalties to be paid to the provinces and exempting mining corporations from local and provincial taxes.

3) The signing of a treaty with Chile which takes PRECEDENCE over national law in the areas where extraction is to take place, the corporations having already identified the largest deposits in the Andes, from Jujuy to Santa Cruz, during the Menem era.

4) Lastly, and perhaps most importantly: this legal framework GUARANTEES for transnational mining companies ALL OF THESE BENEFITS for 30 years, without anyone being allowed to make any changes, unless the changes favour foreign companies. This means that the multinationals cannot be made to pay more national, provincial or local taxes. Exchange rates and tariffs are also guaranteed.

If for some reason Chubut Province or a municipal authority dared to increase taxes for the mining companies, the excess amounts paid by the poor foreign corporations would be deducted from provincial or municipal funds.

Within this legal framework the mining corporations CAME TO ARGENTINA...and it's up to all of us to GET THEM TO LEAVE.

Self-Organized Community Members of Esquel
(Asamblea de Vecinos Autoconvocados de Esquel)