RIO DE JANEIRO: A proposal floated by the leaders of Brazil and Argentina to launch a common currency is being met with deep skepticism by analysts, who say neither country is positioned to tackle such a complicated undertaking or instill confidence in the idea with global markets.
Brazil’s President Luiz Inácio Lula da Silva told reporters Monday, though, that a common currency would reduce a harmful dependence on the US dollar.
“I think this will happen with time, and it is necessary because there are countries that sometimes have difficulty acquiring dollars,” Lula said in Buenos Aires after meeting his Argentine counterpart, Alberto Fernández. “We must not in the 21st century continue doing the same as what was done in the 20th century.”
The currency would initially be shared between Argentina and Brazil for trade and transactions between the two countries and later be adopted by fellow members of the Mercosur trade bloc, Lula explained. Details remained fuzzy a day after Lula and Fernández announced the outlines in a joint statement published Sunday in Argentine newspaper Perfil.
Speaking in Buenos Aires on Monday afternoon, Brazil’s Finance Minister Fernando Haddad clarified that the proposal would not entail the adoption of a sole currency to replace the Brazilian real and the Argentine peso.
Economists had immediately questioned the logic of the plan between the South American neighbors. Economic conditions are deteriorating in Argentina, where nearly four in 10 people live in poverty. The nation has one of the world’s highest inflation rates — 95 percent in 2022 — and its peso has been steadily depreciating for over a decade. Its multiple foreign exchange rates include an illegal one employed in backrooms by money-changers — a practice so entrenched that this so-called “blue dollar” rate is published daily in newspapers.
Brazil, Latin America’s largest nation, sits in an objectively better place economically, but it is hardly a beacon of success. Its inflation in 2022 exceeded the ceiling of the central bank’s target range for a second straight year. And the real has shed half its value against the dollar since 2014, just before the nation plunged into its deepest recession in a century. The nation’s growth prospects remain subdued, and it hasn’t recorded a primary budget surplus since 2013.
“Neither country has the initial conditions to make this succeed and attract others,” Mohamed A. El-Erian, former CEO of Pimco, one world’s premier fixed-income investment managers, tweeted on Sunday. “The best this initiative can hope for is that talk creates some political cover for much-needed economic reforms.”
Fernández said neither he nor his Brazilian counterpart knows how a currency could function between their two countries or in the region. But he said they agree that depending on foreign currencies for trade is harmful. The greenback’s recent strength has complicated the repayment of dollar-denominated debt for developing nations around the world, including Argentina. Its central bank uses its precious dollar reserves to pay down its foreign debt and to intervene in the currency market to stem depreciation, and so it is loath to sell greenbacks to importers for trade.
Both countries’ economic teams will present proposals for trade and bilateral transactions, with a currency created after “much debate and meetings,” Lula said.
The proposal isn’t original, nor has it come only from the left.
Lula’s predecessor, Jair Bolsonaro, said during a 2019 visit to Argentina that he and then-President Mauricio Macri were taking a first step toward creating the “peso real.” There have been no signs of advance since then. Three decades earlier, the two countries had approved a proposal to create a common currency for trade known as the “gaucho,” but it was never implemented.
The proposal is “a bad idea” that has merely made for an interesting headline, said Brendan McKenna, an emerging-markets economist and foreign-exchange strategist at Wells Fargo. McKenna suggested that the disparity between the two nations’ economic conditions leaves it no chance of materializing.
“Say that Argentina was in similar place as Brazil — I still don’t think it would work,” McKenna said. “You would need to get a lot of credibility behind this new currency. It took the euro decades to get that credibility.”
Frictions regarding the euro remain to this day, and some investors still don’t want exposure to it despite the euro’s status as a reserve currency in a highly developed region.
“I’m struggling to wrap my head around how this would work for Brazil and Argentina when the Italys and Germanys of the world are still struggling,” McKenna added.
The initiative might be more about politics than economics: Fernández will seek reelection this year, and amid the persistent economic gloom, the idea of a common currency may appeal to potential voters, said Thiago de Aragão, director of strategy at Brasilia-based political risk consultancy Arko Advice.
“Even if they went full-throttle on this, it could take 20 or 30 years. By saying this, (Lula) is supporting Fernández in Argentina, strengthening Fernández in Argentina,” de Aragão said.
As such, this currency may meet a fate similar to the peso real and the gaucho.
“It didn’t seem any less outlandish when I read the details,” said McKenna of Wells Fargo. “It still seemed crazy.”
Proposed Brazil-Argentina common currency is met with doubts
https://arab.news/6nucb
Proposed Brazil-Argentina common currency is met with doubts
- The currency would initially be shared between Argentina and Brazil for trade and transactions between the two countries and later be adopted by fellow members of the Mercosur trade bloc, Lula explained
How mining can transform Saudi Arabia’s economy
- Kingdom’s mineral wealth valued at $2.5tn, positioning mining as a third pillar of the national economy
RIYADH: Saudi Arabia is accelerating its push into mining as part of its economic transformation under Vision 2030, amid the growing importance of critical minerals and rare earths.
The Kingdom’s mineral wealth is valued at $2.5 trillion, positioning mining as a third pillar of the national economy alongside hydrocarbons.
The mining industry could give Saudi Arabia an edge in transition minerals and supply chains by expanding extraction, processing and the logistics needed to move materials to market, according to economists and industry specialists.
Saudi Arabia is home to more than 45 identified minerals, including gold, copper and uranium, according to the Vision 2030 strategy.
Momentum has been supported by measures aimed at making mining easier to invest in and faster to scale, including updated regulations, digital licensing platforms, specialized mining services, and new transport and rail links to mining areas.
Vision 2030 aims to raise mining’s contribution to gross domestic product to SR240 billion ($63 billion) by 2030, create 200,000 direct and indirect jobs, and attract $27 billion in new investment, according to published government targets.
Signs of progress are starting to show in the mining sector in terms of exploration activity, licensing and new discoveries.
“The mining strategy shows it’s working very well, evidenced by the rapid rise in exploration and industrial licenses, and major new mineral discoveries,” Talat Hafiz, an economist and financial analyst, told Arab News.
Saudi Arabia is undertaking the world’s largest geological survey, covering about 700,000 sq. km of the Arabian Shield for $1.5 billion, he said.
The number of mining licenses issued exceeds 2,000, according to official data, and the Kingdom’s mineral wealth is valued at 90 percent higher than it was in 2016 when Vision 2030 was rolled out.
A key milestone highlighted in Vision 2030’s mining strategy was the introduction of a new mining investment law, which reduced the tax rate to 20 percent from 45 percent to spur investment and align the sector with global standards.
The Kingdom’s mining resources position it well to be a critical supplier of raw materials that are integral to energy transition as clean-energy technologies require large volumes of mined materials.
Copper is central to electrification and power networks, while battery supply chains rely on minerals such as nickel and lithium. Phosphate is a key industrial input with wider economic value.
Reliable supplies of metals and minerals used in power grids, batteries and electric vehicles can attract investment and support downstream industry in the Kingdom.
Saudi Arabia’s Jabal Sayid site, northeast of Jeddah, ranks among the world’s top four resources for rare earth elements, Khalid Al-Mudaifer, vice minister of industry and mineral resources for mining affairs, recently told Al Eqtisadiah.
It will help meet Saudi Arabia’s needs for minerals used in magnet manufacturing, EVs and wind energy, while also supporting global supply, including the US market, he said.
Mining can also catalyze investment in the Kingdom, widen supply-chain employment, and boost non-oil exports and private-sector growth, according to economists and policymakers.
Mines, processing plants and the infrastructure around them require large upfront capital spending, creating a pipeline of work across construction, equipment, utilities and logistics.
“When a mining sector scales, the economic footprint extends well beyond extraction,” said Turki Al-Nahari, vice president of global mining at Ecolab, told Arab News. “Growth typically occurs across engineering services, industrial water management, logistics, laboratory testing, equipment reliability, environmental services and digital performance systems.
“That shift creates demand for skilled engineers, technicians, data analysts and operational specialists,” he added.
In 2025, Saudi Arabia’s mining exploration budget increased 600 percent to $146 million from $21 million in 2022.
“This growth is driven by ongoing geological surveys, technological advancements and higher exploitation budgets, all of which signal stability and opportunity, attracting foreign investment,” Manraj Lamba, a mining economics analyst at S&P Global, said in a recent report.
Mining projects are easier to finance when the size and quality of the deposit are clear, costs are competitive, and rules and taxes are stable, Abdullah Al-Harbi, an economist familiar with the industry, told Arab News.
Investors want solid feasibility work, credible timelines and evidence a project can stay profitable through swings in commodity prices, Al-Harbi said.
Saudi Arabia’s pipeline includes 24 exploration-stage projects and 17 more advanced developments, according to S&P Global.
“Its proactive approach to geological surveys and resource assessment has uncovered significant potential across gold, copper, phosphate and bauxite,” Lamba said.
Large projects also tend to generate employment across a wider industrial supply chain, including contractors, maintenance, laboratories, transport and a range of operational services.
To boost employment and support hiring and training, Saudi Arabia has moved to standardize job roles and skills for the mining industry.
HIGHLIGHT
Vision 2030 aims to raise mining’s contribution to gross domestic product to SR240 billion ($63 billion) by 2030, create 200,000 direct and indirect jobs, and attract $27 billion in new investment.
The Kingdom rolled out a framework related to employment and skills in the mining industry in January at the Global Labor Market Conference.
The framework is “a tool which ensures clear definitions of occupations and their required skills,” the Kingdom’s Minister of Industry and Mineral Resources Bandar Al-Khorayef said. It will cover more than 500 job roles, detail the necessary skills, responsibilities and titles, he added.
Exports from the sector are already rising in tandem with investments to develop the industry and create jobs.
Saudi Arabia exported 5.7 million tonnes of phosphate fertilizer in 2024, up about 6 percent from 2023, according to a GASTAT report.
As the energy transition accelerates, Saudi Arabia’s advantage may be strongest beyond extraction alone.
“Saudi Arabia’s most realistic advantage in the accelerating energy transition lies in combining selective mining with strong processing and refining capabilities, supported by its emerging role as a logistics and supply-chain hub,” Hafiz said.
The Kingdom’s position between Africa, Europe, and Asia favors downstream processing and value-added industries, he added.
“Saudi Arabia is prioritizing minerals that are both financeable and strategically aligned with emerging industries such as electric vehicles and clean energy technologies, where markets are clear, and demand is scalable,” Hafiz said.
Aluminum, phosphate, and similar commodities remain a key focus to support local manufacturing, infrastructure development and downstream industries while strengthening export capacity, he said.
“Once construction concludes, the priority shifts to operational stability and performance optimization,” Al-Nahari said.
“Small efficiency gains, applied consistently across large-scale operations, compound materially over time,” influencing cost as well as uptime and competitiveness over the life of a mine, he added.
As the global race toward electrification and decarbonization accelerates, the Kingdom is effectively positioning itself beyond its oil legacy with its strategic commitment to the minerals sector, which will play a critical role in powering the future.
Its investment in exploration, infrastructure, and downstream processing anchor it as a pivotal supplier in the critical minerals and rare earths value chain in the era of energy transition.
