Dispute ignites over Tierra del Fuego’s Chinese-funded port – project details and Governor’s remarks

Recent days have witnessed the reignition of a dispute surrounding a business contract between the province of Tierra del Fuego and a Chinese capital firm to construct a port and a petrochemical hub.

The dispute was spearheaded by legislators of ‘Juntos por el Cambio’ (Together for Change), political adversaries of Governor Gustavo Melella of Tierra del Fuego.

The controversy was rekindled after the governor forwarded to the local legislative body the memorandum of understanding inked with Shaanxi Chemical Industry Group Co. Ltd., outlining the agreement’s specifics last Monday.

This project elicited reactions from the national government, to which the governor responded in a conversation with Bloomberg Line.

What is outlined in the Memorandum of Understanding?

The Memorandum of Understanding between Tierra del Fuego and Shaanxi Chemical Industry Group, which Governor Melella put forth to the legislature for endorsement, envisages the construction of a petrochemical hub boasting an annual capacity of 600,000 tons of synthetic ammonia, 900,000 tons of urea, and 100,000 tons of glyphosate.

Additionally, the construction of a multipurpose port terminal allowing 20,000-ton vessels and a 100MW power plant are included in the project.

The entire setup will be situated in Río Grande, Tierra del Fuego, the southernmost province of Argentina.

The project is forecasted to require an estimated total investment of US$1.250 billion.

The agreement specifies, “Its production will primarily serve the domestic market, replacing imports and conserving foreign currency; concurrently, increasing the added value to the extracted natural gas.”

It further mentions that the port and the power plant will fulfill local demands in addition to the project’s requirements.

The Fénix Project for offshore gas production is crucial in realizing this investment.

Excess gas from these wells will meet the needs of the Shaanxi Chemical Industry Group.

Opposition’s Criticism

One of the early critics of this agreement was PRO deputy Federico Frigerio. According to the national legislator, this initiative “encourages a Chinese state-owned company to take control of our strategic infrastructure.”

Given its strategic nature, he further commented that the port “can only be operated by national capital companies, public, private or mixed, but national.”

National senator of the Radical Civic Union (UCR), Pablo Blanco, highlighted the “sovereignty issues that are not within the province’s power” during his conversation with Bloomberg Line.

He insisted that the province “does not possess the authority to proceed with a port terminal,” urging the National Congress to review this project.

The opposition expresses concern over awarding a port in regions close to Antarctica to a Chinese company amid a complicated geopolitical contention between China and the United States.

Melella’s Rejoinder

When questioned by Bloomberg Line, Governor Melella denied the necessity of any special approval for the agreements made so far.

“No special approval is required. What was signed is merely a letter of understanding – a wishful-thinking letter. If we progress, we must move to a specific agreement and approvals. But as it stands today, it doesn’t require anything.”

Melella added, in Tierra del Fuego, “there is a development plan as a province and we are seeking investments and will continue to seek investments globally.”

‘Truth be told, there’s a considerable bias if they’re Chinese. If an American company had signed this, there would be applause.”

What does the national government say?

In response to an inquiry about this investment during the Chief of Cabinet (Agustín Rossi)’s report to the deputies in March, the official reply was that the Ministry of Foreign Affairs, International Trade and Worship had not received any signed document requiring its intervention from both parties.

The Senate was reassured in May, upon querying this issue, “The Ministry of Transportation reports that, currently, no construction of a multipurpose port in Río Grande, province of Tierra del Fuego is anticipated, therefore, no feasibility studies for infrastructure works in Río Grande have been conducted, nor any financial arrangements have been established.”

The Undersecretary of Ports, Waterways, and Merchant Marine, noted that no procedure is currently in place.

This procedure is vital as this Undersecretariat is responsible for coordinating the authorization of ports and declarations for the execution of works in the port area, access channels to ports, and navigable waterways under national jurisdiction.

The Minister of Transportation, Diego Giuliano, requested information from Governor Melella on the specifics of this initiative.

An anonymous source from that portfolio suggested that the minister (affiliated with Sergio Massa’s political party, Frente Renovador) considers the feasibility of this project unlikely.

The Mirgor Project

Unrelated to this memorandum of understanding, a project is underway for constructing a multipurpose port in Río Grande by Mirgor, one of the main manufacturers of electronic products in Tierra del Fuego, along with Newsan.

The Mirgor project represents an investment of US$380 million, it is for public use, it is in the detailed engineering phase, the environmental impact studies have been approved, and it is estimated that it will be operational in three years.

The province anticipates that this port will play a crucial role, among other things, in developing the green hydrogen industry in the province.

With information from Bloomberg

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