A new incentive regime for mining in Argentina is drawing major players back to the country, positioning it as the world’s next frontier for copper. BHP, one of the global mining giants, has made its first investment in Argentina in two decades, partnering with Canada’s Lundin Mining in a $3.25 billion buyout of Filo Corp to develop two copper mines along the Andes.
BHP’s return has sparked optimism among other copper producers, who hope to secure better valuations for their projects, enabling them to finance and advance stalled initiatives. Argentina’s copper industry has long struggled due to the country’s volatile economy.
President Javier Milei’s administration is attempting to ignite the sector with a new law passed in late June that offers extended tax breaks for investments made in the next two years. This law, known as the Incentive Regime for Large Investments (RIGI), also guarantees investors access to international dispute courts, bypassing the often slow local judicial system.
The need for such incentives has been underscored by recent global events, such as Panama’s government forcing First Quantum Minerals to shut down its massive copper mine after protests, which disrupted 1% of the world’s copper supply.
“Mining in Argentina is poised for significant growth under the new RIGI investment protection regime,” said Tristan Pascall, CEO of First Quantum. He noted that their Taca Taca project in Salta could potentially deliver 250,000 metric tons of copper annually.
Despite these positive developments, Milei faces significant challenges, including high inflation, contracting GDP, and worsening poverty. The mining sector, however, remains hopeful, with eight major copper projects in various stages of development in Argentina’s mountainous north.
BHP’s vote of confidence is expected to help projects like the Altar project in San Juan province secure financing. Similarly, McEwen Mining’s Los Azules project, backed by Stellantis and Rio Tinto, is likely to benefit from the renewed interest in Argentina’s copper industry.
As larger copper miners look to acquire smaller rivals to meet the growing demand for the metal, BHP and Lundin’s joint venture, Josemaria, could potentially become Argentina’s most advanced copper project by 2030, with the potential to produce 793,000 metric tons of copper annually.
However, the success of these projects will depend on how quickly developers can take advantage of RIGI’s perks, as they must spend 40% of their declared investment within two years of project approval. While the initiative offers a sense of urgency, analysts caution against relying solely on these incentives given Argentina’s economic and political uncertainties.
Glencore’s Mara project in Catamarca province, which encompasses one of Argentina’s only operational copper mines, Bajo de la Alumbrera, serves as a reminder of the potential challenges, as the mine was forced to close in 2018 due to an environmental dispute.
