Category: Argentina

Argentina’s Rosario Futures Exchange and China’s Dalian Commodity Exchange have signed a memorandum of understanding (MoU) to develop new commodity derivatives products, in particular in the area of soybean trading. China imports more than 50% of its soybean from the US, Brazil and Argentina. The agreement is part of ongoing negotiations between the two markets which are also seeking to establish an international soy market to include Brazil that will act as a parallel market to the Chicago Board of Trade, which currently sets the world price for the commodity.

Buenos Aires-based oil and gas exploration company Geopark is to seek a listing on London’s Alternative Investment Market (AIM). The company, which has assets in Argentina and Chile, hopes to raise around $50 million from the IPO. The funds will be used to expand its exploration and development program in those two countries. Geopark has 27 million barrels of oil equivalent in proven and probable reserves, of which almost two-thirds is in gas and one-third oil.

The International Finance Corporation (IFC) has announced that it is “continuing to evaluate the proposed financing” of the two cellulose plants on the Uruguay River on the Uruguayan border with Argentina. The IFC had been planning to commit $400 million to the building of two new pulp and paper mills which have been the source of increasing conflict and tension between the two countries. The evaluation process may involve carrying out further environmental and social impact studies on the pulp mills projects. Yesterday, Wednesday, the IFC published its impact study – carried out by a panel of experts – which concluded that while Argentina’s concerns of widespread environmental damage were “unsupported”, further information was needed to answer questions about health impacts, the affects on tourism and environmental management plans.

Paraguay’s first-quarter inflation this year was the highest rate in Latin America, according to figures published by La Nación newspaper in Argentina. As of the end of last month, Paraguay’s inflation registered 4%, against Chile’s rate of 0.6% (the lowest in the region). Neighboring Argentina came in second in the ranking, with 2.9% inflation; however, the country is also experiencing high growth rates. Completing the top three places is another Mercosur country: Uruguay, which recorded first-quarter inflation of 2.4%. In contrast and despite political upheaval, Ecuador witnessed inflation of 1.8%, Peru of 1.5% and Brazil of 1.4%.

Uruguay was due to officially hand in a complaint against neighbor Argentina to the International Court of Justice in The Hague claiming that the failure of the government to halt blockades by Argentine environmentalists of the border between the two countries has been a “violation of the rule of international law” and has caused millions of dollars’ worth of damage to its economy. The complaint is the latest phase in the long-running dispute between Argentine environmentalists and the Uruguayan government regarding the building of two paper and pulp plants on the border between the two countries. Attempts to resolve the conflict at a presidential or governmental level have failed in recent months and Uruguay has felt compelled to seek international intervention.

The long-running conflict between Argentina and Uruguay regarding the building of two paper plants in Uruguay continues to deepen with Uruguay announcing that it is to abandon direct talks between the presidents of both countries. It says it is looking to Mercosur to arbitrate and help resolve the conflict which has seen Argentine environmental activists blockade the border with Uruguay. The roadblocks are having a serious economic impact on Uruguay. A truce agreed in March between the two presidents which was due to last 90 days was broken after Finnish company Botnia, one of the plants’ investors refused to cease construction work for more than 10 days. The $1.7 billion commitment from investors Botnia and Spain’s Ence represents the largest single investment in Uruguay’s history.

Argentina’s President Nestor Kirchner warned private companies not to raise prices and blame workers’ wage demands, saying the whole country needed to work together to move Argentina forward. Argentine inflation has been accelerating, to 11.5% in February, and pay demands are on the rise, raising fears it could spiral out of control. The Kirchner administration has responded by imposing price controls and banning exports of meat to keep prices down even as his administration expands spending. Argentine officials say they reject traditional policy prescriptions for sustained growth, and point to three years of growth as proof unorthodox policies are working.

Macro-Bansud and Hipotecaria submitted the only two bids in the re-privatization of Nuevo Banco Bisel, which specializes in Argentina’s agriculture market. Macro bid US$268 against Hipotecaria’s bid of US$196 million. The bank was taken over by the government in the wake of the 2001 economic crisis in Argentina and France’s Credit Agricole pulled out. The rules allow the low bidder to match the higher offer and the sale would then depend on which bid offers the best business plan and managerial capability.

Banco Galicia y Buenos Aires will repay $170.6 million worth of debt to the Argentine central bank this week, part of the money it borrowed to survive the financial crisis in 2001. The bank has now paid off half its original debt. Argentine banks still owe the monetary authorities about US$2 billion.

Venezuela has sold a further $300 million of the Argentine paper that it holds. It has now sold $1.4 billion of the $2.5 billion purchased since last year for a total profit of $80 million. Venezuela’s finance minister, Nelson Merentes, has indicated that Venezuela is ready to buy more Argentine bonds, depending on market conditions. Its most recent purchase of the dollar-denominated Boden instruments was at the beginning of March, when it bought $250 million of the bonds. Chávez’s government currently represents the largest foreign investor in the country’s external debt.