Shandong Gold Veladero Expansion: Argentina RIGI Incentive Economic Impact

1. Key Incentives of RIGI
   : Argentina’s RIGI provides a 30-year policy stability period for major investments exceeding USD 200 million, reducing the income tax rate from the standard 35% to 25%, exempting VAT during the construction period, reducing import tariffs, exempting export revenue repatriation, and introducing international arbitration mechanisms (e.g., ICSID) to protect investors’ rights. This can significantly reduce marginal tax burdens and foreign exchange fluctuation risks, helping to improve investment predictability [1].
2. Alignment Between Veladero Expansion and RIGI
   : The USD 400 million expansion investment by Shandong Gold + Barrick has far exceeded the incentive threshold; if the project is approved, it can lock in tax rate and tariff preferences under RIGI conditions, while avoiding re-approval risks caused by Argentina’s policy shifts; if not approved, the project will still proceed under commercial feasibility but will bear the original 35% income tax and partial import tariffs [2][3].

• Annual gold production increase of 1.6 million ounces;
• Current gold price is USD 4213.3 per ounce (near-month spot level) [0];
• Operating profit margin assumption: 30%;
• Discount rate:8%, analysis period:10 years;
• Income tax rate during RIGI period:25%, regular scenario:35%;
• Investment scale: USD400 million (one-time upfront capital expenditure).

• Gain Analysis
  : RIGI increases annual net profit by15.4% and NPV by approximately USD1.357 billion over 10 years, significantly improving capital efficiency; the payback period is already extremely short, and tax preferences further reduce marginal costs, providing greater room for subsequent reinvestment by the joint venture partners [0].
• Sensitivity
  : Even if the gold price drops to USD3000 per ounce, the NPV under RIGI remains significantly above zero; while an increase in gold price further amplifies the NPV gap (the bottom right corner of Figure1 shows the trend of gold price impact on NPV) [0].

• Content
  : The top left shows net profit comparison under different tax rates; the bottom left shows 10-year NPV comparison; the top right shows investment payback period comparison; the bottom right shows the gold price sensitivity curve (x-axis: gold price, y-axis: NPV).
• Insights
  : RIGI increases NPV by approximately USD1.36 billion through tax rate reduction and policy certainty; even though the baseline scenario already has ultra-high recoverability, the incentive policy still provides a net profit improvement of over15%; the sensitivity curve in the figure shows that the RIGI scheme always maintains a net present value advantage under different gold prices.
• Data Source
  : Based on Jinling API market data and model calculations [0].

1. Approval Uncertainty
   : RIGI application is still under review; given the volatility in political and macro environments (including governance stability and continuity of foreign investment policies), if approval is delayed or rejected, the project will need to proceed with a 35% tax rate and partial tariff/foreign exchange restrictions, leading to an NPV reduction of approximately USD1.36 billion. It is recommended to strengthen communication with the government, provide local employment and tax contribution estimates, and ensure compliance transparency to increase approval probability [1][2].
2. Policy Stability and Country Risk
   : Although RIGI promises 30 years of stability, if future macro currency depreciation, increased capital controls, or local social protests occur, it is still necessary to rely on sound risk hedging mechanisms (e.g., export hedging, foreign exchange hedging, phased investment) to protect returns.
3. Cost and Construction Risks
   : Project duration, access road construction, environmental permits, and high-altitude construction lead to construction cost fluctuations; cost control mechanisms and engineering insurance should be established simultaneously to avoid the advantages brought by RIGI tax preferences being eroded by cost overruns.
4. Gold Price Volatility
   : Even if the NPV under RIGI is high, if the gold price declines long-term (below USD3000 per ounce), cash flow will still be under pressure; hedging or domestic and foreign gold price advantages (e.g., local pricing mechanisms) should be used to lock in partial returns.

1. Clear Value Enhancement
   : RIGI can increase the after-tax cash flow of the expansion project by15.4% and the 10-year NPV by USD1.36 billion, with obvious marginal benefits, which substantially helps optimize the return on capital and the internal funding costs of the joint venture partners [0].
2. Continue Approval Process and Local Collaboration
   : It is recommended to submit supplementary documents as soon as possible, strengthen environmental and community supporting explanations, and demonstrate foreign exchange income, employment, and technology transfer contributions to increase the probability of RIGI approval. If approval is delayed, an “incentive-free” alternative plan can be established to adjust costs and strengthen tax planning.
3. Risk Mitigation
   : Establish exchange rate hedging operations, cost control, and engineering insurance; clearly state the rapid adaptation mechanism for changes in RIGI-related clauses in the project charter; if necessary, launch an in-depth research model to systematically simulate external macro and policy risks (including currency, inflation, local politics) to support larger-scale capital deployment.

In summary: If RIGI is approved, the expansion project will gain significant tax and foreign exchange advantages, with a notable increase in NPV, and Shandong Gold can obtain more stable and higher cash flow returns in the joint venture; if not approved, the project can still proceed but needs to offset the tax difference through cost control and risk hedging. It is recommended to simultaneously advance policy advocacy and risk response to ensure the project smoothly transitions to the production capacity release phase.

[0] Jinling API Data (2025-12-17) - Shandong Gold Real-Time Quotes, Company Profile, and Project Financial Model
[1] AméricaEconomía - “Argentina: Canadian McEwen Copper requests the adhesion of its Los Azules copper project to the incentive regime” (https://www.americaeconomia.com/en/node/290519)
[2] Discovery Alert - “Argentina Mining Investment on Pause Until Political Uncertainty Clears” (https://discoveryalert.com.au/news/argentina-mining-sector-2025-political-uncertainty/)
[3] Yahoo Finance - “Barrick, Shandong Gold aim for $400 million investment in Argentina’s Veladero gold mine” (https://finance.yahoo.com/news/barrick-shandong-gold-aim-400-181032519.html)