Australia's largest stock trading and investment forum Australia's #1 stock forum

GXY

Click for more information

0.00%

$5.28 galaxy resources limited

Supply Mt Marion another Greenbushes, page-18

First 18 Last

Share
Profile

Follow
Royal_Viking

1,508 Posts.

791

19/02/17

14:47

Post #: 22731302
Share

Originally posted by airconditioner ↑

Hi Gino

"Do the miltary still run argentina?"

Here are a few of my notes on Argentinian politics and how it effects Galaxy's plans at SDV.
They may be handy for you to do some further research.
The simplest explanation of the recent political climate is that Chile and Argentina have sort of had a polarity switch.
Chile was dominated by Pinochet's right wing militarist govt for a long time.
Argentina - a left-wing socialist state.
Now that has switched over. Chile now has swung very left and Argentina to the centre-right.
Basically a more conservative, business oriented coalition gained a lot of support after years of economic down-turn and isolationism.

The new Mauricio Macri govt has been installed on the basis that it would bring Argentina's economy back into the 21st century. Reform without austerity. They floated the Argentine peso (making their currency and labour cheaper) instead of pegging to the USD, and swept out a number of taxes and bureaucracy that were impacting international investments - particularly in mining.

Macri tackled inflation, removed duties, put in place a limit on the amount that mining companies could be taxed by local govts to 3%, modernised taxation, allowed profits to be off-shored easier, got rid of duties on imported mining machinery, set laws to limit the impact of any new legislation on firms already committing to investment, increased infrastructure spend in the mining areas (roads, power etc), removed a 5% lithium export tax.
There is still a lot of reform to get through and the next period may involve trimming back the public sector. Even still, the govt still has generally high approval and they are predicted to pick up further seats at the October mid-term elections.
All very positive stuff as far as SDV is concerned.

Basically they got bi-partisan support to accelerate the local lithium sector, and mining in general. They aren't stupid and realised that over the border, Chile has become less attractive to investment.
Even Chilean-based SQM have taken more of an interest in Argentina and are now investing in LAC's Cauchari operation.
Obama praised the recent govt as an example of one of the least protectionist governments and set the stage for US trade deals (that I believe Trump is following up on soon). They are expecting to attract $20b of mining investment over the next 5 years.

The indigenous population you'd expect to be a lot of very traditional indian people out of Peruvian stock or similar. But there are lots of blood-lines running through Argentina.
It was a popular escape route for Germans and Japanese post WWII. AT told me that there is even an area where the local people speak Welsh - of all weird things. He described Argentina as being similar to China pre-modernisation. Some areas are wealthy and teched up and modern, some are existing as they have done for 100s of years. Some local govts are anti-mining and have restrictions on activities, others are very pro-mining. The new govt is doing a lot to remove the corruption that existed in many of the provinical governments.

The immediate upside for Galaxy was that labour and build costs came down with the most recent DFS as the peso had devalued by nearly 40% post float and they could import some of the plant equipment much more cheaply because of lower duties. Unfortunately some of the consumables (chemicals etc) just got marked up again by the opportunist suppliers to match the previous USD value.

SDV is in the Catamarca province. FMC run a brine operation on the same salar - Salar del Hombre Muertos. (Salt of the Dead Men).
One of the driest regions on the planet. Also useful for NASA training and background for movies about Mars. The geological records show that there are places up there in the Atacama that have gone centuries without rain. Handy to be stuck between 2 high cloud-busting mountain ranges if your main gig is drying out brine ponds.
There is a long history of mining in Catamarca and can be considered as one of the pro-mining jurisdictions. Mostly copper - but lithium is the future.

SDV is also near to the border of Salta province which is lot more modern. Salta is the province capital with a modern city with airport and the base for FMC. They have their hydroxide plant based there. From memory I think the recent announcement said that Galaxy has set up an HQ beside the local Mining Dept offices.
It also outlined a bunch of good strategies of engagement with the local population - training programs, working with local schools and a special training program for the local ladies. Setting up a good amount of solar power there is important too to lessen the demands it places on local power infrastructure. Makes perfect sense for a lithium company to get it's operations off the grid.

I read that average Argentinian mining wages are approx $1800/month which is a good deal higher than the average Argentinian annual income of $13,700. In Catamarca, one of the poorest regions - the annual incomes are closer to $5300. Sal de Vida should be very welcome as a means to bring good wages and jobs to the area.
Without being too exploitative about it - it certainly is a major factor in the lower opex for Argentinian brine plants vs the very high wages of Australian miners and FIFOs.

Hope to see some good announcements soon about the construction program.
The SDV management team are certainly full of brine men who have worked in this area most of their lives. Hopefully they can turn this experience into a smooth-running and well-planned operation that starts flowing profitable carbonate/hydroxide as soon as possible. The test plant won't produce a large amount but a smaller scale operation can actually generate brine much quicker and this may be handy in offsetting at least some of the capex going forward.

Expand

@airconditioner i think you should visit Argentina. If you do, you will find one of their biggest economic problems is INFLATION, currently running over 40% ! Yes fourty per cent, imagine living under those conditions (so what does an annual income mean if you live under an inflation rate of 40% and PRC China was not running an inflation rate of those levels pre modernisation) ?! Imagine how people and local corporates have to deal under such an environment (has far more reaching consequences than we can imagine, not living under such) !?

GXY Price at posting: 54.0¢ Sentiment: None Disclosure: Not Held
4 Upvote

0 Great analysis

Reply

Top Stories

MLS

Metals Australia kicking off plant study at Lac Carheil; Canadian tariff tailwind potential

MM8

Medallion Metals kicking off 15,000m drill run at Ravensthorpe gold play

VUL

Vulcan appoints investment bank and M&A veteran to board

MKG

Mako sniffs gold at 170 g/t at Cote d’Ivoire's Napié play

NAM

Olam Agri raises Namoi takeover offer to 75 cents a share and receives shareholder backing

Week 37 Wrap: HotCopper likes Cuban oil; markets shrug debate off for Putin; firebrand quant says social media a market threat

AZY

Antipa divests its Citadel interest to JV partner Rio for A$17M, refocuses on Minyari Dome

ASN

Utah authorities sign off on Anson's lithium extraction plans at Green River

ENV

Enova Mining unveils "high-grade" REE drill hits at Coda North, Brazil

Dale Gillham's weekly wrap: US fracking support boosts outlook for Australian gas stocks

There are more pages in this discussion • 18 more messages in this thread...

First 18 Last

Add GXY (ASX) to my watchlist

SPONSORED BY