Weekly Update

“Innova Space” was created, an Argentine Startup that works on the development of communication satellites. At the end of 2021, this company will launch a 500 grams satellite alongside Elon Musk’s private company, SpaceX. This company focuses on the development of satellite communications with an estimated turnover of US $ 15 million by 2023. Its initial market is the large agricultural Argentinian producers, since it offers them communication through picosatellites for a wide implementation of the Internet of Things (IoT). It aims to make its business model more efficient with early alerts for weather, irrigation, security issues, among others. The startups and fintech ecosystem in Argentina keeps growing. Investment in technology companies grew by 145%. This year, not only software companies and digital wallets took center stage, but also agricultural technology startups, known as AgTech, were protagonists. According to Microsoft data, this sector concentrated the 11.8% of all transactions. One of the best-known examples in Argentina is Agrofy, the largest agribusiness platform in Latin America; it is one of the possible new Argentine unicorns in a sector that grows unhurriedly. In this context, the Rosario Stock Exchange promoted a new initiative called “Startup Network”, whose objective is to promote startups dedicated to agribusiness. For further information, please contact us at cealfaro@alfarolaw.com or brief-news@alfarolaw.com

The prestigious Finnish consulting firm AFRY-Pöyry, considered the world’s most important company in the field of forestry-industry, will present to the Inter-American Development Bank (BID), a comprehensive report about investment opportunities and development niches in Argentina, with special focus on the provinces of Corrientes and Entre Ríos. This is a detailed analysis of investment possibilities in two forest basins to be identified due to their greater potential for growth and investment. It is remarkable the importance given by the BID to the generation of this information, who agreed to finance it as an instrument to attract investments.

Argentina seeks to encourage the development of mining projects by implementing new investment tools which will allow companies to obtain financing in the local market. The Ministry of Mining reached an agreement with the Argentine Central Bank, by which the latter will offer mining companies a special monetary instrument specified for the mining sector called Lemin. With it, mining companies will settle foreign currency from their exports in pesos in a 180-day period at a 0% rate for the same amount that will be paid at the official exchange rate (linked to the dollar) upon maturity. This is a useful measure for companies which are already operating in the country, that will allow them to transfer their profits abroad.

The President of China, Xi Jinping, informed to the Argentine President that his Administration is willing to work in order to promote high-quality bilateral cooperation between both countries. This communication occurs within the framework of the negotiations for the purchase by the Argentine government of the vaccine against the coronavirus produced by the company Sinopharm, recently approved “with conditions” for its commercialization by the Beijing government. The Argentine President received the visit of the Foreign Affairs Minister of Japan, who expressed his country’s desire to strengthen economic ties with Argentina. Likewise, the President of Argentina was grateful with Japanese government for the recent donation of medical equipment, which will be helpful to strengthen the national health system and also valued the growth of investments into the country by companies such as Nissan, which last August announced an investment for 130 million dollars; Toyota, which will start producing new versions of two of its models after investing 50 million dollars, and Toyota Tsusho, which is carrying out a process to expand its lithium extraction project called Sales de Jujuy. The Government of China quickly approved the diplomatic plea for Sabino Vaca Narvaja to become the new Argentine ambassador in Beijing, replacing Luis Kreckler. One of his first tasks will be to complete the business deal that Kreckler started. He must implement the memorandum of understanding that his predecessor negotiated with the president of Sinophar, in onder to ensure the provision of Chinese vaccines during 2021, which price is still being negotiated. On the other hand, it is estimated that Sinopharm will take into account that Argentina has agreed to test Phase 3 of the vaccine with local volunteers. Argentina intends to be provided with 15 million vaccines, most of them before March of this year. The ANMAT, the argentine authority on Administration of Medicines, Food and Medical Technology, has already approved its use in Argentina. For further information, please contact us at cealfaro@alfarolaw.com or brief-news@alfarolaw.com

The Volkswagen Group achieved leadership in sales in Argentina for 17 consecutive years. In a challenging year with an increasingly competitive market, the company reached a total of 59,468 patented units in 2020, with the Amarok pick up being the model with the highest production volume with more than 580,000 units. The Córdoba Industrial Center has produced 14.5 million transmissions since its opening, which are exported to different plants of the Volkswagen Group. In 2020, production of the new MQ281 transmission began, with export destination to markets such as the Czech Republic, India, Mexico, Portugal and Poland. The company has closed a year in Argentina with a great performance in each of its brands and products offered. The automotive industry showed the first positive numbers after several months of sharp falls due to the Pandemic. In November, production registered a year-on-year increase of 20.2% and best prospects coincided with a series of investment announcements for more than US $ 3 billions for the next two years, with the focus not only on the domestic market but also on an incipient but marked recovery in demand from Brazil, which continues to be the main buyer of cars manufactured in Argentina

In the midst of the economic crisis due to the coronavirus pandemic, sectors such as technology and agriculture were chosen as angel investments in Argentina. A report was carried out by different organizations in which they indicate that these activities have been setting a trend in their investments and have been crucial for the development of the country in the last three years. However, when it comes to crossing borders, they face a greater barrier due to the lack of funding of capital that ends up damaging the projects. Through the survey it is indicated that sectors such as the satellite industry, aerospace and biotechnology are also beginning to distinguish themselves at the national level. The largest number of investments in startups during the last 3 years was concentrated in the software and services sectors, with 42%. Agriculture, meanwhile, did so by 36%, followed by retailers, ecommerce, marketplaces, consumer technology, which accounted for 29% of investments. Industrial activity grew 2.2% on a year-on-year basis and returned to the positive trend. Regarding the pre-pandemic levels, the industry is still below them, -2.3%. In the case of Automotive (+20.2%) it showed a good performance, mainly due to the increase in sales of national cars to concessionaires. For its part, the Non-metallic Minerals block (+19%) registered the third consecutive year-on-year increase, due to the higher shipments of Portland cement, as well as the increase in supplies for construction due to the reactivation of works. Paper and cardboard (+3.8%) was driven by the increase in packaging paper, corrugated paper, and tissue paper. In the case of the Metalworking industry 2.6%, the third year-on-year rise was consolidated, largely driven by the automotive, basic metal and agricultural machinery industries. Finally, the 1.2% Food and beverages sector reversed the decrease of the previous month, driven by dairy products, chocolates, wines and meats.


Weekly Update

The “Plan for the Promotion of Argentine Natural Gas Production” (GasAr Plan) was launched; it was
already announced by President Alberto Fernández back in October at Vaca Muerta. This plan seeks to
guarantee the gas supply of gas for the winter 2021 and a saving of more than USD 9 billion, increasing
the gas production by about 30 billion cubic meters in 4 years. The Argentine state-owned petroleum
company (YPF for its acronym in Spanish), the country’s largest oil and gas producer, drilled a well with 63
fracturing stages in an area of Vaca Muerta. With that milestone, YPF took the design of the completion of
wells in the unconventional formation of the Neuquina basin to a new level.

The Argentine government launched its thirtyyear mining development program at the beginning of
November. Despite of the largescale investments required and the resistance from environmental groups,
a dozen projects are currently on the horizon such as lithium, gold, silver, and copper, which are the main
products that foreign companies will seek to extract from Argentine soil.

The Argentine state-owned petroleum company (YPF for its acronym in Spanish), and the Canadian
company Nutrien will soon begin the works of the project to construct a new urea plant in the city of Bahía
Blanca. The aim of the project is to double the installed urea production capacity. The projected
investments will be of approximately US $1.2 billion, which could increase the plant’s production to 2.7
million tons per year.

The Argentine Province of Córdoba approved a law to promote the production and consumption of
biofuels. The parliamentary initiative of the provincial government aims to industrialize the processes and
value chains of biomaterials, generating sustainable employment, solving environmental liabilities and
betting on technological innovation and research associated with the bioeconomy of knowledge.

Via Decree 894/2020, which was published November 18, 2020 in the Official Gazette, the Government
promulgated Law 27571 that approves the entry of Argentina, as a non-regional member, to the Asian
Infrastructure Investment Bank (BAII). In this way, the Executive Branch endorsed the approval of the
Foundation Agreement of the BAII signed on June 29, 2015 by its founding members in Beijing, People’s
Republic of China. The Central Bank is authorized to make, in the name and on behalf of the Argentine
Republic, the payments that are necessary to meet the commitments arising from the Agreement.
Likewise, it will be the depositary of the BAII.

President Alberto Fernández announced investments for US $ 187 million in the meat sector, allowing the
increase of sales of said product abroad. The company Frigorífico Rioplatense will destinate US $ 30
million for infrastructure, in different stages until 2022, to achieve a five-fold increase in the production
capacity of frozen meat per day and almost double the amount of exports. China, Australia’s largest
trading partner partner, recently suspended a significant volume of Australian import products, including
beef, timber and barley; regarding the latter, Argentina will sell 250,000 tons to China during 2020, given
the imposed tariffs of 80.5% on Australian barley. Furthermore, Argentina is expected to export to China
the record figure of 380,000 tons during 2021. According to the information from the Argentine Institute of
Statistics and Censuses (INDEC for its acronym in Spanish), the barley represented 1.6% of the country’s
total exports during last year. In real values, it reached US $ 1,029 million.