Regional Pulse: 8 November 2022
Southern Pulse’s weekly review of need-to-know events curated for people who do business in Latin America.
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KEY DEVELOPMENTS
ARGENTINA
- Chinese company picks lithium rich Salta for USD2.2 billion investment
- New FX rate for foreign card holders rivals black market rate
- French Development Agency finances USD75 million rail modernization plan
BRAZIL
- Post-election demonstrations subside
- Bolsonaro breaks silence on election results
- Lula transition team pushes for extra spending before inauguration
CHILE
- Boric to end private sector pension monopoly
- China denies existence of secret police station
COLOMBIA
- COP hits new low against USD
- Petro and Maduro meet for the first time
- Interest rates at 21-year high after latest hike
ECUADOR
- Mining still a priority for embattled Lasso administration
- Former Correa appointee at Petroecuador accused of corruption
- State of emergency declared after string of bombings
MEXICO
- PEMEX gets record-busting 140% budget increase
- Pollster tips MORENA’s Sheinbaum as next president
PERU
- Nationwide protests for Castillo’s resignation
- Oil spill protestors release hostages
- Roadblocks suspend critical mining production
KEY DEVELOPMENTS IN FULL
ARGENTINA
Chinese company picks lithium rich Salta for USD2.2 billion investment
On 4 November 2022, China-based Tibet Summit Resources announced plans to invest USD2.2 billion in lithium exploration projects in the province of Salta. Company president Jian Rong Huang said Tibet Summit Resources would invest in the Salar de Diablillos project, which is set to produce 50,000 tons of lithium carbonate annually, starting next year. Plans are also in the works to build a plant near the Salar de Arizaro by 2024, with a lithium carbonate production capacity of 50,000–100,000 tons per year.
New FX rate for foreign card holders rivals black market rate
On 4 November 2022, a new government-backed exchange rate became available for international visitors who use credit or debit cards associated with a foreign bank. The associated regulation gives cardholders a much more favorable exchange rate (USD1 = ARS290) when compared to the official rate (USD1 = ARS157), or even the black market rate (USD1 = ARS288). The government hopes the measure will rake in USD1 billion by the year’s end through taxes previously lost to cash transactions.
French Development Agency finances USD75 million rail modernization plan
On 4 November 2022, the Ministry of Transport signed a USD75 million loan agreement with the French Development Agency to modernize existing passenger rail infrastructure in Buenos Aires. Economy Minister, Sergio Massa, credited the restructuring plan that was last week with the Paris Club for the deal’s success.
BRAZIL
Post-election demonstrations subside
On 7 November 2022, roadblocks staged by supporters of President Jair Bolsonaro were almost completely cleared a week on from the second round of elections. Protests began to subside after the president made an address on 3 November 2022 calling them to end. Pro-Bolsonaro demonstrators had started blocking major highways right after the results of the 30 October elections were declared. According to the Federal Highway Police (PRF), over 1000 roadblocks were detected between 30 October and 6 November, causing massive traffic jams in 26 states and stopping perishable goods and fuel from reaching major cities. Protestor demands ranged from not accepting the election results to calling for a military coup.
Bolsonaro breaks silence on election results
On 1 November 2022, President Jair Bolsonaro broke his silence nearly 48 hours after his slim electoral defeat to Luiz Inácio Lula da Silva, ending speculation that he would not accept the election result. While President Jair Bolsonaro did not congratulate Lula on his victory, he did implicitly recognize the outcome by thanking his 58 million voters. According to Supreme Federal Court (STF) minister Edison Fachin, President Bolsonaro also formally recognized his electoral loss that same day in a private meeting with the STF.
Lula transition team pushes for extra spending before inauguration
On 3 November 2022, president-elect Luiz Inácio Lula da Silva’s transition team, headed by vice-president elect Geraldo Alckmin, announced they would work with congressional leadership to push for a constitutional amendment allowing for an extra BRL160 billion (USD31 million) in funds over the debt ceiling. According to the transition team, the outgoing Bolsonaro government has not allotted any funds in the 2023 budget for income transfer programs, such as Auxilio Brasil, which provides low income families with a monthly BRL600 (USD110) welfare stipend.
CHILE
Boric to end private sector pension monopoly
On 2 November 2022, President Gabriel Boric unveiled new pension proposals that would eliminate the contractual obligation for employees to get private pension plans and create a mixed system where workers can choose between a public or private administrator. The bill, which will now go to Congress, also increases the state’s guaranteed universal pension (PGU) payments progressively by 29%, starting with low-income workers.
China denies existence of secret police station
On 31 October 2022, the Chinese government denied claims a compound in Viña del Mar is a secret international police station, claiming instead it was a government service center for Chinese citizens. The Spanish NGO Safeguard Defenders claimed last week that the compound was used to investigate, imprison, and illegally extradite Chinese critics of the Beijing government. Safeguard Defenders claims there are over 50 similar compounds around the world.
COLOMBIA
COP hits new low against USD
On 3 November 2022, the price of the Colombian Peso dropped to its lowest value, trading at COP5,100 to USD1. The COP’s value has fallen by 27% in 2022. The US Federal Reserve’s decision to raise interest rates is likely to keep the USD strong for the rest of 2022.
Petro and Maduro meet for the first time
On 1 November 2022, President Gustavo Petro and Venzuelan President Nicolás Maduro met for the first time in an effort to reestablish diplomatic, economic, and security cooperation between both countries. The presidents discussed Venezuela’s reintegration into the Andean Nations Community, an economic integration organization that also includes Peru, Ecuador, Bolivia and Chile. Also on the agenda was the return of Venezuela to the Interamerican Human Rights system and the protection of the Amazon.
Interest rates at 21-year high after latest hike
On 28 October 2022, the Central Bank raised interest rates from 10% to 11%, the highest rate since 2001, and adjusted 2023 economic growth expectations from 0.7% to 0.5%. The measure is meant to lower rising inflation, currently at 12%.
ECUADOR
Mining still a priority for embattled Lasso administration
On 5 November 2022, the new Energy and Mines Minister Fernando Santos Alvite, announced the country was still seeking to increase mining production and called on international investors to open credit lines to develop the local industry. His remarks come shortly after his predecessor was forced to resign over corruption allegations, and Quito residents pushed for a mining moratorium. According to Santos, Ecuador is only exploring 10% of its mineral resources.
Former Correa appointee at Petroecuador accused of corruption
On 3 November 2022, the National Prosecutor’s office announced it would launch a corruption probe into Nielsen Arias, Director of Trade of Petroecuador during former president Rafael Correa’s administration. Arias allegedly used former subordinates at Petroecuador to launder money, which originated from bribes from the state-owned company’s subcontractors. The criminal enterprise allegedly would sell privileged information about Petroecuador’s future bidding contracts in return.
State of emergency declared after string of attacks
On 2 November 2022, President Guillermo Lasso declared a state of emergency lasting 45 days in the provinces of Esmeraldas and Guayas following a string of attacks by narco-gangs. The violence left five police officers dead, saw prison guards taken hostage in Guayas, and 13 bombing, including in the port of Esmeraldas, where most of the country’s oil is exported from. The recent transfer of inmates from Guayas Prison 1 was the immediate cause for the violence. The wider reason for the attacks is President Lasso’s recent crackdown on narco-related crime which has been on the rise in the country.
MEXICO
PEMEX gets record-busting 140% budget increase
On 3 November 2022, national oil company PEMEX received over MXN108 billion (USD5.5 billion) in government capital contributions, exceeding its 2022 budget by 140% and making it their largest in its 84 year history. Funding will go to oil exploration and production, debt repayment, the construction of the Dos Bocas refinery in Tabasco, and the rehabilitation of six other refineries.
Pollster tips MORENA’s Sheinbaum as next president
On 1 November 2022, Javier Murillo, founder of the pollster Metrics, said Mexico City governor, Claudia Sheinbaum, would win the MORENA primary and the 2024 presidential elections if both elections were held today, according to recent polling data. He added that the opposition would need to find a unifying candidate to have a chance at beating Sheinbaum.
PERU
Nationwide protests for Castillo’s resignation
On 5 November 2022, thousands of protesters marched in several cities to call for the resignation of President Pedro Castillo. President Castillo has been accused of corruption and nearly impeached twice in the last year. Several of his cabinet members have either been arrested or are under investigation for corruption. The demonstrations were met by a heavy police presence; however, no injuries were reported.
Oil spill protestors release hostages
On 4 November 2022, a group of 248 tourists, including UK and US citizens, were released some 24 hours after being taken hostage by members of the Cuninico indigenous community in Amazon in protest over a recent oil spill. The hostage takers accuse the government of failing to tackle a 16 September oil spill, which released 2,500 tons of crude oil into the Cuninico River.
Roadblocks suspend critical mining production
On 31 October 2022, protests by indigenous communities stopped production at Las Bambas and Imaculada mines in the Andean region. Las Bambas is the country’s largest copper producer, while Imaculada is the largest silver and gold producer. Roadblocks by indigenous communities targeting mining production have become more frequent in recent years. Mining industry group SNMPE has accused leftist President Pedro Castillo of weakening the State’s response to these demonstrations.
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