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UNCLAS BUENOS AIRES 000190 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
PASS NSC FOR MICHAEL SMART 
PASS FED BOARD OF GOVERNORS FOR PATRICE ROBITAILLE 
PASS USTR FOR KATHERINE DUCKWORTH 
TREASURY FOR LTRAN AND MMALLOY 
USDOC FOR 4322/ITA/MAC/OLAC/PEACHER 
US SOUTHCOM FOR POLAD 
INTERIOR FOR USGS STEVEN ANDERSON 
 
E.O. 12958: N/A 
TAGS: ETRD EINV ECON PGOV ENRG BL AR
SUBJECT: Argentina: U.S. Silver Mining Company Coeur Earns Solid 
Returns, Community's Goodwill 
 
Reftel: 07 Buenos Aires 2313 
 
¶1. (SBU) SUMMARY. Idaho-based Coeur d'Alene Mines Corporation has 
completed construction of a $15 million silver processing mill at 
their Santa Cruz province mine site that is adding domestic value 
and generating employment.  President Cristina Kirchner is expected 
to attend the plant's March 19 inauguration and Coeur has invited 
Ambassador to attend as well.  This event that will provide the GoA 
an opportunity to highlight Coeur's successful efforts to bring 
economic development, technology transfer and good corporate social 
responsibility practices to an isolated Patagonian community.  END 
SUMMARY. 
 
---------------------------------------- 
Coeur: Global silver player in Argentina 
---------------------------------------- 
 
¶2. (U) Coeur South American Operations President Jim Duff, Country 
Manager Leon Hardy, and Public Relations Manager Karina Maldonado 
updated Ambassador February 6 on Coeur's activities in Argentina. 
Coeur d'Alene Mines Corporation is one of the world's leading silver 
and gold producers, and is presently constructing two of the world's 
largest silver mines - San Bartolome in Bolivia and Palmarejo in 
Mexico.  Coeur also has mining interests in Chile, Nevada, 
Australia, Alaska and Tanzania. 
 
--------------------------------------------- ---- 
Coeur entered Argentina in 2002, and growing ever since 
--------------------------------------------- ---- 
 
¶3. (SBU) Coeur purchased what it described as a small "mom and pop" 
silver mine in the southern Argentine province of Santa Cruz in 
2002, for $2.5 million, an operation they described as "a mess."  At 
the time, Coeur thought this Mina Martha mine only had about eight 
months of operation left.  But Coeur kept discovering more and 
higher grade ores, all during an unprecedented global silver price 
boom.  Coeur reports that since 2002, it has invested about $25 
million in this mine, and another $15 million in the new plant, and 
employs about 210 workers.  Coeur is not affected by the GOA's new 
mining export tax (reftel), since its 2002 entrance meant that it 
never benefited from the export tax exemption that has now been 
terminated. 
 
¶4. (U) Coeur reports that since 2002, the underground mine has 
produced over 11.5 million silver ounces, and increased the mine's 
proven and probable silver reserves.  In the first half of 2007, 
Mina Martha produced about 1.4 million ounces of silver, and as of 
June 30, 2007, proven and probable silver mineral reserves totaled 
7.6 million ounces - a 25% increase compared to year-end 2006 
levels.  Coeur reports that further reserve increases are expected. 
Thus, although small, Coeur's Argentina investment has been a real 
success story.  Coeur reports that this mine's grade of silver is 
among the best in the world, and is Coeur's most successful mine, 
with strong annual increases in revenues, output, and personnel. 
 
--------------------------------- 
Provincial Government Pressured Coeur to Build Silver Mill 
--------------------------------- 
 
¶5. (SBU) Coeur representatives told the Ambassador that beginning in 
2004, Santa Cruz provincial authorities began "pressuring" them to 
build an on-site processing facility.  Coeur's silver ore was being 
shipped 420 miles across the border to its Cerro Bayo mine in Chile 
for refining.  Santa Cruz officials pressed to have this value-added 
refining operation handled locally.  Coeur said that although 
initial company analyses found building the mill hard to justify, 
and received initial support from GOA Mining Secretary Mayoral and 
 
the "pro-mining" mayor of nearby city Gobernador Gregores, the 
province "was not interested in our arguments."  By late 2006, the 
province threatened to shut down the mine if Coeur did not act. 
Coeur executives said that they faced "a very tough situation."  At 
the time, Emboffs discussed this issue with GOA Mining Secretary to 
forestall any drastic action, and to give Coeur additional time. 
Coeur thanked the Embassy for the help we provided at a "critical 
juncture" to help them get through a "serious crisis," and greatly 
appreciate the help. 
 
------------------------------ 
New plant does not use cyanide 
------------------------------ 
 
¶6. (U) In early 2007, Coeur made the decision to go ahead with the 
new plant.  Its new $15 million, 240-ton-per-day flotation mill was 
completed and began operations in late 2007, can annually process up 
to about three million ounces of silver, which sent its first 
shipment of concentrate in January 2008.  The locally-refined 
product is now trucked to the Atlantic port of Puerto Deseado, a 
two-hour drive.  Coeur executives told the Ambassador that while 
cyanide can safely be used to recover silver - and that several 
other big mining projects nearby do so - Coeur does not.  Instead, 
Coeur recovers silver the "old fashioned way," by crushing, milling, 
and via a flotation detergent process, achieving a recuperation 
level of about 97%, vs. about 98-99% using cyanide. 
 
------------------------------- 
Corporate Social Responsibility 
------------------------------- 
 
¶7. (U) Coeur representatives described their extensive community 
involvement and corporate social responsibility efforts in this 
isolated area in southern Argentina.  Coeur is the biggest employer 
in the 5,000-person town of Gobernador Gregores, about 40 miles from 
the mine.  Coeur has worked closely with the town's schools and 
government, hosting information fairs, and bringing in engineers, 
geologists and other professionals to schools.  In 2008, Coeur will 
host a fair on doing business in small towns.  Coeur has also begun 
a housing program for its employees, many of whom are migrant 
workers from the northern province of Jujuy.  At its U.S. 
headquarters, Coeur has hired a new international CSR director. 
 
----------------------------------- 
President Kirchner plans to attend March 19 inauguration 
----------------------------------- 
 
¶8. (SBU) Coeur plans a formal inauguration at its new mill on March 
¶19.  Mining Secretary Jorge Mayoral indicated that President 
Kirchner will also attend, along with the Santa Cruz Governor and 
other VIPs.  Coeur extended an invitation to Ambassador to attend. 
This event will provide Coeur and the GOA an opportunity to 
highlight a successful example of bringing jobs, economic 
development and technology to this isolated community. 
 
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Comment 
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¶9. (SBU) One of 450-odd U.S.-based companies operating in Argentina, 
Coeur is substantially contributing to the social, economic and 
cultural development of its Santa Cruz province mining community. 
Although clearly a beneficiary of the current global minerals boom, 
Coeur is also sharing this added value and social development to an 
otherwise isolated area of Argentina.  President Cristina Fernandez 
de Kirchner built her political career in Santa Cruz province, and 
her planned inauguration of Couer's remote refining plant speaks to 
 
her interest in promoting - and taking credit for -- her 
administration's contribution to the province's economic 
development.  Post will also use this opportunity to highlight the 
beneficial presence of this successful U.S.-based company. 
 
KELLY