Details of a memorandum signed between the Argentine province of Tierra del Fuego and China’s state-owned Shaanxi Chemical Industry Group Co. Ltd. were revealed this week. The region’s governor, Gustavo Melella, signed the memorandum and presented it to the president of the Tierra del Fuego Legislature for consideration by lawmakers. The document, written in Spanish and Chinese, highlights that the Chinese company selected this location because it is at the southern tip of South America, is rich in natural gas resources, and is one of Argentina’s new industrial powers. The memorandum has an initial validity of three years, is automatically renewable for equal periods, and establishes an estimated total investment of US$1.25 billion.
Under the terms of the contract, Shaanxi Chemical Group will invest in the construction of a project that will include an annual capacity of 600,000 tons of synthetic ammonia, 900,000 tons of urea, and 100,000 tons of glyphosate. In addition, a multifunctional port terminal will be built that will allow the mooring of vessels of up to 20,000 tons and will have a 100 megawatt power plant. The document also opens the possibility of new investments from China and highlights that the smooth construction of the project will set a precedent for Chinese companies to invest in the south of Argentina.
Although the National Government had recently stated that Melella’s initiative was unfeasible, the recent trip of an important Argentine delegation to Shanghai and Beijing could indicate a reconsideration of some strategic decisions by the Government.
In addition to general commitments, both the province and the Chinese company have made specific commitments. On the part of the province of Tierra del Fuego, they are committed to completing project approvals quickly, coordinating the parties involved, providing guidance and facilities, and providing preferential tax benefits. For its part, Shaanxi Chemical commits to promote Chinese investment in Tierra del Fuego, implement environmental protection and safety measures, generate local employment, train local talents, and promote mutual cooperation.
In summary, this memorandum signed between Tierra del Fuego and Shaanxi Chemical establishes an investment agreement for the construction of a multipurpose port and other facilities in the region, with an estimated investment of US$1.25 billion. Both parties have made commitments to facilitate the project and promote cooperation in various areas.