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Cablegate: Argentina: U.S. Mining Company Coeur Inaugurates New Silver

VZCZCXYZ0016
RR RUEHWEB

DE RUEHBU #0442/01 1001347
ZNR UUUUU ZZH
R 091347Z APR 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 0671
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/USDOC WASHINGTON DC
RUEHRC/USDA FAS WASHDC
RUEHC/DEPT OF LABOR WASHINGTON DC
RUEHC/DEPT OF INTERIOR WASHINGTON DC
RHMFIUU/HQ USSOUTHCOM MIAMI FL
RUCNMER/MERCOSUR COLLECTIVE

UNCLAS BUENOS AIRES 000442

SIPDIS

SIPDIS
SENSITIVE

INTERIOR FOR USGS STEVEN ANDERSON

E.O. 12958: N/A
TAGS: EMIN EIND ETRD EINV ECON PGOV BL AR
SUBJECT: Argentina: U.S. Mining Company Coeur Inaugurates New Silver
Mill in President's Home Province

Reftel: Buenos Aires 190

1. (SBU) SUMMARY. On March 19, President Cristina Fernandez de
Kirchner inaugurated Idaho-based Coeur d'Alene Mines Corporation's
new US$15 million silver processing mill in Santa Cruz province
(where former President Nestor Kirchner was Governor before becoming
President in 2003). The new mill adds domestic value to Coeur's
mining operations and provides new local employment. The next day,
the Ambassador hosted top Coeur officials at his residence. Post
also highlighted this inauguration and U.S.-based company success on
its website. These events provided Coeur, the GoA, and our Embassy
an opportunity to highlight Coeur's successful efforts to bring
economic development, technology transfer and good corporate social
responsibility practices to an isolated Patagonian community. A
beneficiary of the current global minerals boom, Coeur is bringing
value-added development to an otherwise remote area of Argentina.
END SUMMARY.

------------
Inauguration
------------

2. (U) Also in attendance at the mill inauguration was Coeur CEO and
President Dennis E. Wheeler, GOA Minister of Planning Julio De Vido,
Secretary of Mining Jorge Mayoral, Secretary of Agriculture Javier

SIPDIS
de Urquiza, Secretary of Energy Daniel Cameron, Santa Cruz Province
Governor Daniel Peralta, and EconOff.

3. (U) The next day, Ambassador hosted CEO Wheeler and three top
Coeur Argentina executives at his residence to congratulate them on
the inauguration of their new plant. Post also highlighted this
inauguration and U.S.-based company success on its website, and
issued a press release which was picked up locally.

----------------------------------------
Coeur: Global silver player in Argentina
----------------------------------------

4. (SBU) Coeur d'Alene Mines Corporation is one of the world's
leading silver and gold producers, and is presently constructing two
of the world's largest silver mines - San Bartolome in Bolivia and
Palmarejo in Mexico. Coeur also has mining interests in Chile,
Nevada, Australia, Alaska and Tanzania.

5. (SBU) Coeur purchased what it described as a small "mom and pop"
silver mine for US$2.5 million in Argentina's Patagonia Santa Cruz
province in 2002, an operation they described as "a mess." At the
time, Coeur thought the mine only had about eight months of reserves
left. But Coeur kept discovering more and higher grade ores, all
during an unprecedented global silver price boom. Coeur reports
that since 2002, it has invested about US$25 million in this mine,
and another US$15 million in the new mill, and employs about 210
workers.

6. (U) Since 2002, the underground mine has produced over 11.5
million ounces of silver. In the first half of 2007, the mine
produced about 1.4 million ounces, and as of June 30, 2007, proven
and probable silver reserves totaled 7.6 million ounces - a 25%
increase compared to year-end 2006 levels. Coeur expects to see
further reserve increases. Coeur reports that this mine's grade of
silver is "the best in the world," and is Coeur's most successful
mine, with strong annual increases in revenues, output, and
employment.

--------------------------------------------- ----------
Provincial Government Pressure to Build Processing Mill
--------------------------------------------- ----------

7. (SBU) As reported reftel, beginning in 2004, Santa Cruz
provincial authorities began "pressuring" Coeur to build an on-site
mill. Coeur's silver ore was being shipped 420 miles across the
border to its Cerro Bayo mine in Chile for refining. Santa Cruz
officials pressed to have this value-added refining operation
handled locally. Coeur said that although initial company analyses
found building the mill hard to justify, and received initial
support from GOA and provincial officials, the province "was not
interested in our arguments." By late 2006, the province threatened
to shut down the mine if Coeur did not act. Coeur executives said
that they faced "a very tough situation." At the time, Emboffs
discussed this issue with GOA Ministry of Planning Mining Secretary
Mayoral to forestall any drastic action, and to give Coeur
additional time. Coeur thanked post for the help at a "critical

juncture" to get through a "serious crisis." In early 2007, Coeur
made the decision to go ahead with the new plant.

8. (U) Coeur's new $15 million, 240-ton-per-day flotation mill was
completed and began operations in late 2007, and can annually
process up to about three million ounces of silver, which sent its
first shipment of concentrate in January 2008. The locally-refined
product is now trucked to the Argentine Atlantic port of Puerto
Deseado, a two-hour drive.

----------
No Cyanide
----------

9. (U) Coeur states that it does not use cyanide to recover silver,
while several nearby mines use this method. Instead, Coeur recovers
silver the "old fashioned way," by crushing, milling, and via a
flotation detergent process, achieving a recuperation level of about
97%, vs. about 98-99% recovery rate using cyanide.

----------------------------------------
Corporate Social Responsibility Programs
----------------------------------------

10. (U) Coeur is the biggest employer in the 5,000-person town of
Gobernador Gregores, about 40 miles from the mine itself. Coeur
officials note that they source virtually all their supplies from
the surrounding community or Argentina itself. Coeur works closely
with the town's schools and government, hosting information fairs
and bringing in engineers, geologists, and other professionals to
schools. In 2008, Coeur will host a fair on doing business in small
towns. Coeur has also begun a housing program for its employees,
many of whom are migrant workers from the northern provinces. At
its U.S. headquarters, Coeur has also hired a new international CSR
director to help with all of its Latin American operations.

-------
Comment
-------

11. (SBU) One of almost 500 U.S.-based companies operating in
Argentina, Coeur is contributing to the social, economic and
cultural development of its Santa Cruz province mining community.
Although clearly a beneficiary of the current global minerals boom,
Coeur is also sharing this added value and social development to an
otherwise isolated area of Argentina. President Cristina Fernandez
de Kirchner built her political career in Santa Cruz province as a
provincial legislator and later as a federal senator, and her
inauguration of this remote refining plant speaks to her interest in
promoting -- and taking credit for -- her administration's
contribution to the province's economic development as well.

WAYNE

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