Y P F Sociedade Anon (NYSE:YPF)
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Mining companies with operations in Argentina will be required to submit requests to the government 120 days before importing goods and set up an "import substitution" department to boost buying of locally made goods, the planning ministry said in a statement Monday.
The mining companies will have to submit quarterly estimates of their purchasing needs, which will be vetted by a special working group at the Mining Ministry, according to the statement.
The new measures come amid a host of formal and informal barriers to imports thrown up by the government so far this year. The barriers are designed to safeguard the country's international reserves by limiting imports of goods and services and to protect local manufacturers from competition from cheaper imports.
Since February, companies have had to receive approval from a myriad of government agencies before they can import goods or buy services offshore, causing imports to plunge.
The country posted a trade surplus of $1.83 billion in April, up from $1.08 billion in March, according to the national statistics agency, Indec. Imports fell 14% on the year to $4.86 billion, while exports were down 6% at $6.69 billion.
Those barriers, however, have stoked intense trade friction.
On Friday, the European Union filed a complaint at the World Trade Organization challenging Argentina's import regulations
"The trade and investment climate in Argentina is clearly getting worse," EU trade commissioner Karel De Gucht said in a statement Friday. "This leaves me no choice but to challenge Argentina's protectionist import regime."
European officials are also up in arms over Argentina's decision last month to nationalize oil and gas producer YPF SA (YPF), a unit of Spanish oil company Repsol YPF SA (REP.MC).
The nationalization sent a chill through the local mining industry.
Brazilian mining company Vale SA (VALE, VALE5.BR) is currently reconsidering its plans to develop the $6 billion Rio Colorado fertilizer project in Argentina following the YPF nationalization and skyrocketing inflation of about 30% a year, the company's chief executive Murilo Ferreira said recently.
While the mining industry enjoys broad support from authorities in provinces such as San Juan and Santa Cruz, projects frequently face stiff resistance from environmentalists.
About eight provinces have banned open-pit mining and the use of chemicals common in the industry such as cyanide, effectively putting them off limits to large-scale mining projects.
At the same time, a strict federal glacier-protection law threatens to stall a number of projects by limiting economic activity in areas near glaciers.
-By Shane Romig, Dow Jones Newswires; 54-11-4103-6738; email@example.com