Investing in san juan1

GOVERNMENT OF THE PROVINCE OF SAN JUAN

MINISTRY OF PRODUCTION AND ECONOMIC DEVELOPMENT

BICENTENARIOSForjando Ciudadanía y

Federalismo San Juan – Argentina

Edificio Centro Cívico - 4º Piso- Núcleo 7 - San Juan 5400 - ArgentinaTel. 54 264 4306430

http://produccion.sanjuan.gov.ar/SAN JUAN

ARGENTINA

PROVINCIAL AUTHORITIES

GOVERNOR:

Mr. José Luis Gioja

VICE GOVERNOR:

Mr. José Rubén Uñac

MINISTER OF PRODUCTION

AND ECONOMIC DEVELOPMENT

Mr. Raúl Osvaldo Benítez

Edificio Centro Cívico - 4º Piso- Núcleo 7 - San Juan 5400 - ArgentinaTel. 54 264 4306430

http://produccion.sanjuan.gov.ar/

BICENTENARIOSForjando Ciudadanía y


SAN JUAN ARGENTINA

A Prospectus BICENTENARIOSForjando Ciudadanía y


SAN JUAN ARGENTINA

Investing in San Juan

San Juan Province, Argentina

On the Pacific coast in the Andean region of northwestern Argentina, San Juan is primarily known for its fertile vineyards and rich mineral

deposits.

However, much of San Juan’s potential has yet to be discovered by investors.

BICENTENARIOSForjando Ciudadanía y Federalismo

San Juan – Argentina

SAN JUAN ARGENTINA

• A strong commitment to social welfare and quality of life

• Political stability, integrity, and respect for the rule of law

• Evidence of sustained economic growth

• Growing infrastructure

• An abundance of untapped investment opportunities

• Excellent and plentiful natural resources

....all contribute to making San Juan an ideal setting for new commercial ventures

Why invest in San Juan?



SAN JUAN ARGENTINA

Human Capital



SAN JUAN ARGENTINA

• Overall population: 700,000

• Human Development Index is .776 (a medium-

high score; HDI for Argentina is .8)

• 43.7% economic activity rate

• Unemployment has recently decreased from 13.3% to 6.6%



SAN JUAN ARGENTINA

Education• Almost total literacy

• Extensive opportunities for

post-secondary and university

education, covering practically

all of the scientific disciplines

• 2 universities, numerous

post-secondary learning

institutions



SAN JUAN ARGENTINA

Educational and social development

• Under the umbrella of social

development, public

investments have been made

in schools, health centers,

and hospitals



SAN JUAN ARGENTINA

State 86 Labor-Training Institutions

9,027

2 Centers for Professional Formation

380 9,149 95%

5 Technical Schools 122

Man

agem

ent

Post-primary professional training

Private 5 Labor-TrainingInstitutions

496 5%

9,645 100%

Number of People in

2009 Matriculation

% of Matriculati

on

TotalBICENTENARIOS

Forjando Ciudadanía y Federalismo San Juan – Argentina

SAN JUAN ARGENTINA

Education financing

National predicted National executed

Provincial predicted

Provincial executed

Bilateral Funding Agreement



SAN JUAN ARGENTINA

Matriculation in the Provincial Education System

• In terms of environment:

• In terms of management:

• Recent construction in San Juan includes:

• 14 primary schools

• 6 special-education schools

• 11 secondary schools



SAN JUAN ARGENTINA

San Juan province is marked by a

political atmosphere of security

and respect for the rule of law,

government transparency, and

social peace.

Political Stability



SAN JUAN ARGENTINA

• Covers 92, 789 km2 largely mountainous terrain (80%), the rest of which is desert (18%) or arable (2%)

• Arable land found in the river-fed oases of the mountain valleys, where population is also concentrated

Borders:• North and East: La Rioja • South : Mendoza• Southeast: San Luis • West: Chile

The Province



SAN JUAN ARGENTINA

Economy



SAN JUAN ARGENTINA

Business Promotion

• San Juan Investment Development Agency

• Government policies and actions are aimed at

- Improving worker participation in the

employment market

- Stimulating wage recovery

- Reducing informal employment



SAN JUAN ARGENTINA

Promotion initiatives

• Industrial activity in the area is gross income tax exempt

•Implementation of the “Calidad San Juan” program

• Government support of business and economic growth



SAN JUAN ARGENTINA

Promotion initiatives (cont.)• Credit Program for the Development

of Production and Employment in the Province of San Juan, financed by the

IADB. This program includes actions linked to long-term financing to

– Increase investment

– Promote competitiveness

– Strengthen key institutions



SAN JUAN ARGENTINA

• 1% of Argentine GDP

• The evolution of Gross Geographic Product (GGP) reflects Argentine macroeconomic effort and international impact

Economic growth



SAN JUAN ARGENTINA

Growth of San Juan exports in relation to growth in national

exports (2003-2009)

100143,9

193,7

460,4510,2

669,8

783,8

100 115,5 134,9 155,5 187,0233,9

186,2

2003 2004 2005 2006 2007 2008 2009

San Juan exportsNational exports

Year 2003 = 100



SAN JUAN ARGENTINA

Growth of San Juan exports excluding gold in relation to growth in national

exports (2003-2009)

100 115,5 134,9155,5

187,0

233,9

186,2

100

143,93

193,72233,97

274,90

351,30

275,58

2003 2004 2005 2006 2007 2008 2009

National exportsSan Juan exports excluding gold

Year 2003 = 100



SAN JUAN ARGENTINA

Aid-based indicators

In 2008, the

World Bank

gave the

province a PBG of US $3.095m.

This demonstrates

confidence in the country.



SAN JUAN ARGENTINA

Social Inclusion Project with the World Bank

• On March 16th, 2010 the World Bank approved US $50 million to support San Juan’s efforts to

• improve the equity, quality, and efficiency of education and health services, including the Rawson and Quiroga hospitals;

• make public sector management more efficient

• A clear demonstration of international recognition and approval of San Juan’s “important achievements in the last few years” and growth of 11% annually since 2003 (World Bank VP for LAC, Pamela Cox)



SAN JUAN ARGENTINA

World Bank Index: Doing Business in Argentina 2010

Doing Business

118

Starting a Business

138

Dealing with Construction

Permits168

Employing Workers

101

Registering Property

115

Getting Credit

61

Protecting Investors

109

Paying Taxes142

Trading AcrossBorders

110

Enforcing Contracts

46

Closing a Business

86

(Economies are ranked from 1-183, 1having the best score)



SAN JUAN ARGENTINA

Fiscal solvency2005 2006 2007

Financial result/ current

revenue18% 10% 7%

Economic result/current revenue

29% 27% 24%

Net debt stock/current revenue

91% 69% 50%



SAN JUAN ARGENTINA

GGP Structure: Economic sectors, 2007Sectors %

Primary sector 15.40

Agricultural sectorMining and quarry sector

14.091.31

Secondary sector 35.34Manufacturing IndustriesElectricity, gas, and water

Construction

24.282.238.83

Tertiary sector 49.26%Retail, restaurants, and hotels

Transport, storage, and communicationsFinancing, real estate, and services

provided to businesses

Social, community, and personal services

8.385.80

13.95

21.12Source: San Juan Institute of Economic and Statistical Research



SAN JUAN ARGENTINA

Exports / Production growth

.15 .16.18

.34.31

.33.38

2003 2004 2005 2006 2007 2008 2009



SAN JUAN ARGENTINA

Exports 2003 - 2009 783%

146,6 211284

675748

982

1149

68,8 91,3147

658

814

1004

656

2003 2004 2005 2006 2007 2008 2009

San Juan ExportsAll Customs Exports

17%

(in millions of USD)BICENTENARIOS


SAN JUAN ARGENTINA

Sectorial breakdown of San Juan exports



SAN JUAN ARGENTINA

Notable Sectors & Areas of Economic Growth



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Manufacturing

Source: San Juan Institute of Economic and Statistic Investigations, 2007



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Agriculture

The fertile mountain valleys of San

Juan, fed by Andean rivers and irrigated by hydroelectric dams, Make agriculture a flourishing enterprise in this somewhat improbable spot. Agriculture forms over 20% of San Juan’s GDP.



SAN JUAN ARGENTINA

Viniculture

Grapes & grape products

The climate conditions in San Juan - dry, with low relative humidity

levels, and sandy loam soil and the added benefit of new production

technologies -make the province a national and international standard for grapes

and grape-based products.



SAN JUAN ARGENTINA

• San Juan is the second-largest producer of Argentine wine after Mendoza; Argentina itself is the second largest wine exporter in Latin America after Chile

• Ideal agro-ecological conditions: dry climate with low relative humidity levels and rainfall around 100 mm annually, lots of sunshine, warm summers, cold winters and sandy loam soil all result in high production yield and sugar content

• Argentina is unique for the absence of the phylloxera louse that threatens vineyards across the world



SAN JUAN ARGENTINA

Conditions for investment

• The current milling and storage capacity of wineries absorbs only 30% of the existing production

• Only 20% of the total produced volume is glass-bottled (around 25 million liters)

There are ideal conditions for investment in wineries with top-notch technological equipment to absorb the

existing producti<on surplus



SAN JUAN ARGENTINA

Musts

• San Juan has optimum logistic conditions to expand the already-prosperous olive oil processing business: only 10% of the possible predicted volume of olive oil is currently being glass-bottled

• Ideal agro-ecological conditions to develop olive varietals with high marketing potential

OlivesOlives



SAN JUAN ARGENTINA

• Significant concentration on Arbequina and Manzanilla olives

• Argentine olive oil production increased 40% between 1993 and 2003 (which saw a yield of 14,000 tons)

• San Juan olive oil exports reached US $9.2m in 2007; preserved olive exports reached $6.6m



SAN JUAN ARGENTINA

Glass industry expansion opportunities

• Estimated current demand for the current volume of wine produced is

33 million 750cm3 bottles/ year.• Estimated current demand for the current volume of olive oil produced is

3 million 500 cm3 bottles/year.



SAN JUAN ARGENTINA

• 26% of the total area used for vegetable crops is used for onion cultivation

• Onions and garlic represent the two main Argentine fresh vegetable exports

• Exports during 2007 amounted to US $9.4m

Fresh onions



SAN JUAN ARGENTINA

• Construction of new processing plants, expansion of existing processing capacity and introduction of new technologies

• Investment of working capital to finance the crop’s productive cycle

• Strengthening of the commercial link between cultivators and processors and exporters



SAN JUAN ARGENTINA

Onion cultivation investment

opportunities

Fresh garlic

• San Juan produces around 23,500 tons of fresh garlic per year

• The second largest garlic producer in the country, and the primary producer of high-quality white garlic

• Main vegetable exported by San Juan

• Fresh garlic exports amounted to US $25.6m in 2007BICENTENARIOS


SAN JUAN ARGENTINA

Garlic production investment opportunities

• Need for expanded processing capacity

• Investment of working capital to finance the crop’s productive cycle

• Creation of productive groups aimed at commercial development



SAN JUAN ARGENTINA

Infrastructure & Alternative Energy



SAN JUAN ARGENTINA

Public investment with both federal and local resources has largely increased the productive infrastructure.

- Route 40 connects the country from north to south, crossing San Juan and joining it with Mendoza and La Rioja

- Route 20 links San Juan with the city of Buenos Aires and Cordoba

- The new route 150 connects the province to Chile

Infrastructure development

- Daily flight services to Buenos

Aires from the Domingo Faustino Sarmiento Airport (~90 minutes)



SAN JUAN ARGENTINA

• Route 150

• Renovation and extension of the canal network

• Planning for construction of Latin America’s largest solar park

• Caracoles and Cuesta del Viento hydro-electric systems

• Door to the Pacific: the Agua Negra Tunnel

Notable Infrastructure Development



SAN JUAN ARGENTINA

San Juan’s new Route150

The Norte and 25 de Mayo canals

Eco-conscious development

San Juan has backed

the construction of

the largest solar

energy park in

Latin AmericaThe highest wind turbine in the world,

which provides electricity to the Veladero gold mine at 4300 meters



SAN JUAN ARGENTINA

Caracoles Dam hydroelectric system

Cuesta del Viento

Door to the Pacific

The construction of the Agua Negra tunnel will join San Juan with Chile’s Region IV. The completion of this project will create a permanent door from the province to the Pacific ocean and to the Central Bi-oceanic Corridor between Porto Alegre, Brazil and Coquimbo, Chile, going through Entre Rios, Santa Fe, Cordoba and La Rioja.



SAN JUAN ARGENTINA

Agua Negra Tunnel plansBICENTENARIOS


SAN JUAN ARGENTINA

Mining

Minerals• Due to its location in the Andes Mountains, San Juan has vast mineral deposits

• Mining currently accounts for more

than 45% of industrial production

• The primary value of the mining chain in 2007 amounted to USD $ 617 million• From 2004 to 2007, around 27 million oz of gold and 637

million oz of silver were found in six different deposits

• Mining and mine prospecting has skyrocketedBICENTENARIOS


SAN JUAN ARGENTINA

The Future of Mining in San Juan

• From 2009-2013, growth in Argentina’s mining sector is estimated at 2.76%, which is higher than the projected national economic growth rate of 0.82%

• Principal minerals to extract: gold, silver, and copper

• President Cristina Fernandez de Kirchner has showed herself to be a supporter of mining



SAN JUAN ARGENTINA

• According to the U.S. Commercial Service in Argentina, several new mines will be built in Argentina in the next 5-10 years, representing an opportunity for U.S. companies to supply mining equipment and machinery

• Minera Andes, Inc. announced in Aug. 2009 that it would begin exploring additional copper production in San Juan. The company already operates four copper sites, one of which (Los Azules) has discovered 11 billion lbs. of copper



SAN JUAN ARGENTINA

Relevant Mining Legislation:

Business Incentives

Mines and mine prospects

Projects with technical feasibility

Projects under exploration

Mine under operation

Mine under construction



SAN JUAN ARGENTINA

Veladero Gold Mine: total reserves estimated in 12.8 million oz of gold with a

17-year useful life

Pascua Lama

Project

Gold, silver, and copper

deposit

Reserves estimated to amount to

18 million oz



SAN JUAN ARGENTINA

Gualcamayo Project:Gold deposit with

reserves estimated at 3.5 million oz gold

Casposo Project: Gold and silver deposit

Indicated resources 313,278 oz gold,

8.155 billion oz silver

Investment amounts to US$ 45 million



SAN JUAN ARGENTINA

Pachon Project: bi-national development of a copper and

molybdenum deposit

Estimated annual production of 300,000 tons

Tourism



SAN JUAN ARGENTINA

Adventure & natural beauty• Ichigualisto National Park -

amazing natural rock formations, including the Valle de Luna

• Pampa del Leoncito

• Adventure tourism: Mount Mercedario

• Agro-tourism: wine routes

• The city of San Juan

• Fiesta Nacional del SolBICENTENARIOS


SAN JUAN ARGENTINA

Cultural Heritage

San Juan is the birthplace of Domingo Faustino Sarmiento, the second constitutionally-elected President of Argentina and the force behind the country’s comprehensive education system, the design of which he based on education systems of Boston, Massachusetts.



SAN JUAN ARGENTINA

The end.

Investor Relations

Investing in san juan1