In the Andes of Argentina, a growing bet on copper awaits a boost from Milei

In the Andes of Argentina, a growing bet on copper awaits a boost from Milei

High in the Andes mountain range, Argentina has world-class copper projects that could supply much of global demand, but the country's macroeconomic instability has delayed progress that awaits the impetus of the ultraliberal Government of Javier Milei.

Both the national government and those of the provinces, which in Argentina are owners of the resources, They seek to ensure that the solid portfolio of copper projects comes to fruition to boost exports and generate employment in a country that is suffering a deep economic crisis.

But investors demand economic, political and legal stability, in addition of lower tax burden and the elimination of capital controls after years of financial fluctuations.

“We believe that the country is immersed in a crisis of confidence,” said Franco Mignacco, vice president of the Argentine Chamber of Mining Entrepreneurs (CAEM).

Six projects from firms such as Lundin Mining LUN.TO and Glencore GLEN.L are slowly heading into a construction phase until 2027, with the idea of ​​reaching an average level of 1 million tons per year, equivalent to 10% of the global copper deficit in 2035, as global demand for the metal increases due to the push for electromobility.

Mignacco considered that a project promoted by the Government, under debate in Congress that provides tax benefits, Free availability of foreign currency and other advantages for investments exceeding US$200 million could be a good first step.

“Clearly the Large Investment Incentive Regime (RIGI) would contribute to being able to rebuild that trust that we have lost in the world,” he stated.

For CAEM, carrying out copper projects involves disbursements of at least 20 billion dollars, six times more than what is required for lithium, a rapidly growing mineral in the country.

“We have the resources, we have carried out the exploration and planning work, but we need to provide these macroeconomic certainties for these projects to materialize,” he added at the inauguration of the tenth edition of the San Juan Minera Expo, which runs until Thursday.

Argentina has not produced copper since the Alumbrera mine closed in 2018, but it has a portfolio of projects that could position it among the top 10 global producers.

“If conditions for the sector were improved, attacking the problems it faces, “At least six of the most advanced copper projects in Argentina are in a position to begin investments for their construction in the medium term,” Alfredo Vitaller, VP of Corporate Affairs of the Josemaría project, the most advanced in the country, told Reuters.

Josemaría, the Lundin Mining project located in the province of San Juan, which is in the pre-construction stage, has an annual production potential of 590,000 tons of copper concentrate, 131,000 tons of metallic copper, 224,000 ounces of gold and 1,048 ounces of silver, with an investment of about US$5,000 million to develop the mine.

“Although the existing legislation is quite complete, it has not always been complied with. On the other hand, it is important to mention that many new measures included in the draft Base Law (which includes the RIGI) are very necessary,” he added.

Rigi: real boost or patch?

For the analyst Ernesto Cussianovich, The slow arrival of investments has to do with the economic instability of recent years, Therefore, the approval of the RIGI would not provide long-term predictability either.

“It is still a useful tool, it is not the solution,” the associate director of Poliarquía Consultores in charge of the Energy, Environment and Natural Resources Division told Reuters.

“We also need to think about other types of long-lasting elements. We have the short duration that is the RIGI, the medium duration that the investments that may occur in those two years of validity of the RIGI will be. and then in three, four, five years, what do we do?” he added.

For Cussianovich, Chile – which produces 28% of the world's copper, Peru – 12%, and Argentina – which could produce 10%, are going to produce 50% of the world's copper. in about five years, if existing projects in the country begin to operate.

With that goal, San Juan, Salta, Catamarca and Mendoza, the provinces that concentrate the main copper projects in the country, They launched the Copper Table at the mining exhibition on Wednesday.

“The objective is, through joint work between the provinces with copper potential, “generate actions and proposals for the development of projects, in order to put them into production”said Juan Pablo Perea, Minister of Mining of San Juan, the province with the most projects in the pipeline.

In addition to Josemaría, the province also known for its wine production is home to the Los Azules projects, by McEwen Mining MUX.TO; El Pachón, from Glencore; Aldebaran Resources Inc ALDE.V's Altar and Filo Corp's Filo del Sol FIL.TO.

“As a projection and considering a 40-year production scenario with the projects Josemaría, Los Azules, El Pachón and El Altar – the most advanced and in different stages – San Juan could be billing (exporting) more than US$3,000 million annually by 2030.”Perea told Reuters.

Romina Sassarini, the Secretary of Mining and Energy of Salta, where the Taca Taca project is located, by First Quantum FM.TO, agrees on the need to coordinate actions between the provinces and the central government through the Copper Roundtable to attract investments that promote large projects.

“Today Taca Taca, for example, demands an investment of 3.6 billion dollars,” said Sassarini.

For the sector, Investments will come when there are clear signs of improvement in the macroeconomic situation.

“If conditions change all the time, there is no certainty that one can develop the business over time,” said Nadav Rajzman, head of Economics at CAEM. “Although we have very good projects, that copper (that the market demands) can come from Argentina or other parts of the world,” he concluded.