Regional Pulse: 20 June 2023
Southern Pulse’s weekly review of need-to-know events curated for people who work in Latin America.
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KEY DEVELOPMENTS
ARGENTINA
BRAZIL
CHILE
COLOMBIA
ECUADOR
MEXICO
PERU
KEY DEVELOPMENTS IN FULL
ARGENTINA
Lithium exports reach record highs
On 17 June 2023, the Argentine government released export figures for May 2023 showing that lithium made up 19% of all Argentine mining exports. Lithium exports totaled USD369 million in the first five months of 2023, marking 84% year-over-year growth. Argentina exported a record high of USD60 million worth of lithium last month, which marks a 17% increase over May 2022. Mining Secretary Fernanda ávila said the increased productivity will encourage development and create jobs. More than 1,400 new jobs were created between February 2022 - 2023, increasing available jobs in the lithium sector by 59% during that period.
Oil companies plan gas price hike
On 16 June 2023, Argentine oil and gas trade association CECHA announced price hikes of up to 6% - 7% from 17 June. In November 2022, oil and gas companies and the Argentine government agreed on a 4% inflation cap for oil and gas products. But according to CECHA, the 4% cap is no longer feasible because the government has denied oil companies access to the official US dollar rate to pay for their imports.
CAMMESA commissions Pampa Energía wind farm
On 17 June 2023, wholesale electricity market administrator CAMMESA commissioned Pampa Energía’s fifth wind farm in Buenos Aires province. The farm has an installed capacity of 81MW, which is equivalent to the consumption of 100,000 homes. Pampa Energía’s 18-turbine Wind Farm IV required investments of USD128 million. Pampa Energía is one of Argentina’s largest energy generators, having invested USD1 billion in renewables since 2018. Pampa Energía Wind Farm IV will supply energy to the industrial sector.
BRAZIL
Brazilian Navy to discuss illegal fishing during China’s diplomatic visit
On 15 June 2023, Chinese Navy representatives arrived in Brazil for a diplomatic visit. Brazilian Naval authorities used the opportunity to discuss illegal fishing in the South Atlantic. Local press reported that China encourages illegal fishing off the Brazilian coast, although Brazilian government officials’ language on that matter was vague and careful to not distress the bilateral relationship with China. Brazil’s Navy also took the opportunity to discuss regional cooperation between South American countries and China in the South Atlantic.
Lula inaugurates final sections of emblematic North-South railway
On 16 June 2023, President Lula inaugurated the long-awaited central and southern sections of the North-South railway project in the city of Rio Verde, Goiás state. The newly inaugurated sections make up 1,537 of the line’s 2,257 kilometers. They will be used to move freight, primarily agricultural produce, to major ports between north and south. The railway was first proposed in the 1980s, but the project has long been plagued by corruption and pricing issues. Construction of the terminals and infrastructure created over 5,000 jobs. The line will be operated by two Brazilian companies; logistics' VLI (northern section) and the mining giant Vale (southern section).
Maceió community group protest against acid storage plans
On 18 June 2023, Brazilian outlet UOL reported on a community group organizing against fertilizer producer Timac. The group, based in the Alagoas state capital Maceió, is protesting against the company's plan to store 8,000 liters of sulphuric acid in a warehouse the size of a six story building in the city’s port. The port is home to many of the city’s 1 million inhabitants, and nearby coral reefs draw in tourists to provide vital income for the city. The group fears a new environmental disaster after a 2018 mining accident caused by Brazilian petrochemical company Braskem displaced 60,000 people. Timac, owned by the French Roullier Group, says it carried out a government-approved technical, economic and environmental feasibility study prepared by specialized and independent companies.
CHILE
Government publishes detailed plans for National Lithium Strategy
On 16 June 2023, the Chilean government published a 33-page document detailing its plans for implementing its National Lithium Strategy. The document outlines key milestones for the strategy in the coming year. According to the document, the government will award special contracts for lithium operations (CEOLs) to branches of the state companies Codelco and Enami. This includes contracts for existing salt flat projects. Private companies will be able to make bids for CEOLs starting Q1 2024. The tenders will be “public, competitive and transparent” according to the government, and private companies will be required to allow state monitoring of their projects’ productivity, development, and environmental impacts.
领英推荐
Government discusses changes to anti-terrorism laws
On 15 June 2023, President Gabriel Boric gathered representatives of Congress, the judiciary and law enforcement to discuss changes to Chile’s anti-terrorism laws following three incidents last week in Valparaíso, ?uble, and La Araucanía. Explosives were attached to transmission towers in Valparaíso and La Araucanía, while an explosive device in ?uble was found on a railroad. There is no official information on the perpetrator of the attacks. However, a movement called Movimento 18 de Octubre, which opposes the right-wing’s role in the new Constitution-drafting process, has claimed responsibility. In response, the Interior Ministry invoked laws against weapons and explosive devices. However, Boric wants a reform so these types of crimes can be investigated under the powers of anti-terrorism laws. The president gave the representatives 30 days to reach a consensus on modifications that will bring serious cases under anti-terrorism laws.
Chile secures USD245 million in EU funding for hydrogen projects
On 15 June 2023, Gabriel Boric met with European Commission President Ursula von der Leyen to sign cooperation agreements and secure funding to develop Chile’s renewable hydrogen industry. The USD245 million funding includes two USD4.4 million grants from the EU and the German Ministry for Economic Affairs, USD18 million from the EU’s Investment Facility for Latin America and the Caribbean and USD218 million from the European Investment Bank and the German Development Bank. Boric and von der Leyen also signed two important cooperation agreements between the EU and Chile to promote the renewable hydrogen industry, generate jobs and promote renewable hydrogen exports.
COLOMBIA
Ecopetrol grows in Asia
On 16 June 2023, state oil company Ecopetrol announced that its Asia subsidiary has sold 72 million oil barrels since its establishment in 2021 — 15% more than expected. The Singapore-based subsidiary caters mainly to the Chinese and Indian markets. As of September 2022, Ecopetrol sells 66% of its oil to Asian clients. The company is planning to further expand internationally by opening another Houston, Texas subsidiary in the coming months.
Key witness in illegal phone tapping case found dead
On 15 June 2023, newspaper Portafolio reported that the Attorney General’s Office plans to publish a report this week examining the death of a key witness in a highly-publicized illegal phone tapping case. The incident allegedly involved the president’s chief of staff. Police Colonel óscar Dávila, a key figure in the case, was found dead in his official car on 9 June 2023. While the government has ruled his death a suicide, media outlets have raised a number of questions as they await the official autopsy results. Just hours before his death, Dávila reportedly told a journalist from the magazine Cambio that he would be killed if he testified. Dávila paid a large cash advance to his lawyer on the day he died, online outlet La Silla Vacía pointed out. The case began with President Gustavo Petro’s Chief of Staff Laura Sarabia allegedly tapping a domestic employee’s phone. Since then, it has spiraled into a scandal focused on alleged illegal campaign financing.
Benedetti to testify before Attorney General’s Office in campaign financing case
On 13 June 2023, the Attorney General’s Office called Pacto Histórico (PH) Campaign Manager? Armando Benedetti to testify following allegations that the party supporting President Gustavo Petro illegally financed its campaign during the 2022 presidential elections. Benedetti, Colombia’s former ambassador to Venezuela, is scheduled to testify on 23 June 2023. Election authorities have been investigating PH’s finances since February 2023, following allegations that the party had exceeded campaign budgets. However, the case escalated in early June when leaked audio files of Benedetti alluded to illegal sources of financing. The Attorney General’s Office has since opened an inquiry into the allegations. Benedetti and other high-ranking coalition members could face prison time if found guilty.
ECUADOR
Constitutional Court approves tax reform, rejects free trade zone proposal
On 16 May 2023, the Constitutional Court passed the government’s proposed tax reform that reduces rates on a number of taxes. The reform increases exemptions and deductions for income taxes, which the government argues will save families USD195 million in taxes. To compensate for that drop in tax revenue, the reform includes a new 15% tax on sports betting and a 12% value-added tax (VAT) rate for public events and entertainment. The Constitutional Court, on the other hand, rejected the government’s decree to reform and boost free trade zones, which would allow private companies to create said areas.
US-based private company to manage Galapagos fund?
On 14 June 2023, digital outlet Primicias reported that the company tasked with managing an environmental fund for the Galapagos Islands is a private company based in the US state of Delaware. The Galapagos Life Fund (GLF) was founded in early May 2023 by two US-based NGOs, following the Ecuadorian government’s move to approve a USD656 million debt swap. That debt swap will provide discounts on the government’s debt as long as some of the savings go toward Galapagos environmental protection efforts. The government, criticized for allegedly ceding sovereignty over the islands, has highlighted that GLF’s 11-member board includes eight Ecuadorians. But Primicias points out that only five board seats have been awarded to Ecuadorian ministries and government agencies, while the remaining six are split between US- and Ecuador-based private organizations.
Revolución Ciudadana announces presidential candidate
On 13 June 2023, main opposition party Revolución Ciudadana (RC) registered Luisa González as its presidential candidate for the August 2023 elections. She will run alongside vice presidential candidate Andrés Araúz, who was the party’s presidential candidate in 2021. Araúz became the candidate after Jorge Glas, vice president between 2013 and 2018, declined the nomination. Glas was sentenced for corruption during the Odebrecht scandal in 2017, and faced further litigation over his right to stand as candidate. González is a former government official under the administration of former president Rafael Correa (2007-2017), as well as an RC congresswoman who has vocally opposed abortion in recent years.
MEXICO
Foreign secretary resignation prompts government shuffle
On 13 June 2023, President Andrés Manuel López Obrador appointed diplomat Alicia Bárcenas as the country’s new foreign secretary, making this the first in a series of new appointments after several officials resigned to pursue a candidacy for public office. Bárcenas served as executive secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), a position she used to push for more-inclusive economic growth. Labor Secretary Luisa María Alcalde will serve as the new Interior Secretary after Adán Augusto López left the position to seek the presidential bid. Alcalde, whose family of left-wing militants is close to President López Obrador, would be the youngest person to occupy the position. Under her administration, Mexico banned outsourcing and increased the minimum wage. Similarly, Mexico City’s Interior Secretary Martí Batres will substitute Claudia Sheinbaum as head of the capital city’s government. Batres previously attempted to govern the city at least twice, but he failed to obtain the position. At least a dozen public officials have made similar announcements. Political analysts expect that the “government shuffle” will continue until elections start in December.
Mexico pledges to accelerate ratification of EU-Mexico free trade agreement
On 16 June 2023, President Andrés Manuel López Obrador met with European Commission President Ursula Von der Leyen in Mexico City. Both leaders pledged to speed up negotiations to finish updating the parties’ bilateral trade agreement before the end of 2024. Both presidents expressed their desire to deepen the bilateral partnership, while also recognizing important global challenges such as migration, food security and energy. Sonora’s Governor Alfonso Durazo attended the meeting to present the northern state’s sustainable energy plan, which attempts to foster a transition to clean energy production by increasing photovoltaic energy generation.?
Business chamber study reveals high extortion statistics?
On 13 June 2023, a study by business chamber Employers of the Mexican Republic (COPARMEX) revealed that more than 3,400 people were victims of extortion between January and April 2023. This amounts to more than one victim per hour, even as extortion decreased 2.4% year-over-year so far in 2023 based on data from the Executive Secretariat of the National Public Secretary System (SESNSP). The states with the most frequent extortion incidents are Michoacán, Baja California Sur and Mexico City. Extortion and computer crime are tied as the third most frequent crimes aimed at enterprises. Among the business victims of extortion, 72% experienced extortion by telephone and 28% were extorted for a ransom — a common tactic organized criminals use.
PERU
El Ni?o droughts worsen electric sector’s structural problems??
On 18 June 2023, newspaper El Comercio reported that the drought caused by the El Ni?o weather phenomenon is reducing the effectiveness of hydroelectric plants and increasing the use of diesel fuel to generate electricity. Using diesel has increased megawatt hour spot prices by as much as 500% to 600%. According to an association of local electric sector companies, new projects planned in the next four years will only produce an expected 706 megawatts (MW). That number is well below that association’s recommended 800-1000MW, thereby deepening the country’s reliance on expensive diesel. El Ni?o has already affected the agricultural sector, with a 14.21% fall in production reported in April 2023. That amounts to a fall of 0.43% this year in the overall national production of all goods and services.
Peruvian army reduces reliance on Russia
On 18 June 2023, the Defense Ministry announced that the government chose Peruvian companies to service the army’s helicopter fleet instead of hiring Russian firms. Peru owns a fleet of Russian-manufactured helicopters that, until the Russian invasion of Ukraine in February 2022, Russian companies maintained. But after that invasion, the government suspended those contracts and awarded them to Peruvian companies Helisur and Helicentro Perú. This is the latest move by the Peruvian government to pivot toward the US, following its recently announced plan to join the US-aligned Organization for Economic Co-operation and Development (OECD). On the other hand, it is balancing this shift with a close relationship with China, who last year alone invested USD3 billion into a large port in Chancay, near Lima.
Health minister resigns over dengue epidemic
On 15 June 2023, Health Minister Rosa Gutiérrez tendered her resignation in a speech before Congress after it called her to testify about her management of the country’s dengue epidemic. Gutiérrez has held the position since December 2022. As of 16 June, health authorities have reported 130,826 dengue cases and 201 deaths. The country has one of the smallest health budgets in the region relative to its size, and registered the highest number of deaths per capita during the Covid pandemic.
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