Accessing the copper at Taca Taca, a deposit of the metal in Argentina’s inhospitable north-west, is a gargantuan task. The site’s low-grade 0.5 per cent copper ore lies several hundred metres beneath a Mars-like desert of rolling red dunes, volcanoes and salt lakes. It sits 3,600m above sea level and a bumpy seven-hour drive from Salta, the nearest city.
To reach a goal of producing 1mn tonnes of copper concentrate a year, Canada-listed First Quantum Minerals, Taca Taca’s owner, must first clear 250mn tonnes of waste rock, source a large city’s worth of energy, and rebuild a dilapidated train line to Chile’s Pacific coast. Construction will cost an estimated $3.6bn.
Copper miners had been unwilling to make such a large bet in Argentina, a country that has suffered decades of macroeconomic instability and dramatic political swings. As a result, Argentina has produced almost no copper, despite sharing the Andean geography that has made neighbouring Chile the world’s largest producer, with 5mn tonnes a year.
But that is changing. Copper is a key component for electric grids, wind turbines, and other energy transition technology. At the same time, a shortage of new mines has put the world on track for a shortfall of 7.7bn tonnes a year in 2034, according to business intelligence company CRU Group.
That scarcity is finally drawing the copper spotlight to Argentina, at a time when President Javier Milei is introducing free market reforms and investment incentives designed to woo foreign investors.
“Argentina is the next frontier for copper growth,” says Tristan Pascall, chief executive of First Quantum Minerals, adding that the government’s reforms put Argentina’s industry on track “for exciting and sustained expansion over many decades”.
Taca Taca, which is awaiting approval of its environmental impact assessment by Salta’s provincial government before seeking a financial partner, is one of six copper projects in an advanced stage of development in north-west Argentina.
There are hurdles to clear before those projects become a reality, though. Argentina’s crisis-ridden economy would need to attract some $20bn in investment and update neglected transport and power infrastructure. Should all six succeed, however, copper output would surpass 1mn tonnes by the early 2030s, with exports topping $6bn annually, according to CAEM, the Argentine chamber of mining businesses. That would catapult the country into the world’s top 10 producers.
“It’s an optimistic but feasible scenario,” says Nicolás Muñoz, copper supply analyst at CRU. “The world wants greenfield copper projects and Argentina has a striking number of them.”
Analysts say copper could be a greater long-term boon to the country’s economy than more financially volatile lithium. Four new lithium mines will have come online by the end of 2024, but a global price crash has halted several projects.
Investors have shown signs that they are willing to take the plunge on Argentina’s copper. In July, BHP, the world’s largest miner, said it would invest $2.1bn to produce copper in San Juan province in partnership with Canada’s Lundin. The deal came nine weeks after BHP lost its bid to expand its copper access by buying Anglo American.
“The decision by such a large company is a very clear sign of the country’s credibility and the quality of our resources,” said Luis Lucero, Argentina’s mining secretary. “We know we need to accompany miners with good management [but] their vote of confidence will encourage other investors to follow the same path.”
When Argentina adopted its modern mining code in 1995, and opened La Alumbrera copper mine two years later, the copper industry looked like it might soon take off. But that momentum fizzled out and, while Chile and Peru boomed, no further copper projects opened in Argentina. La Alumbrera closed in 2018.
Miners blame erratic policy changes. They say authorities sometimes bent the code’s fiscal rules, resulting in lengthy litigation and higher than expected taxes. Argentina imposed strict currency and capital controls in 2011, while some leaders in the Peronist movement, which has ruled for much of the past two decades, opposed mining on environmental grounds.
In recent years, however, the tables have turned. Peru and Chile have lost some of their lustre, say analysts, as their offer of greenfield projects has dwindled and political pushback against mining has grown.
Meanwhile, Argentina’s congress in June approved an incentive scheme for investments over $200mn, offering companies tax stability, exemption from capital controls for a portion of profits, and access to international arbitration.
“It’s very robust; it’s very clear on how systems work, what is explicitly allowed,” says Michael Mending, vice-president at McEwen Copper, which is developing the Los Azules copper project in Mendoza Province. “It also limits what future rulers can do to negatively influence [a project].”
Pascall of First Quantum Minerals, whose flagship $10bn copper mine in Panama was abruptly closed down last year amid a wave of anti-mining protests, says that with the scheme, “Argentina seems to be opening up for the right partners”, which should make it easier to find financing for Taca Taca.
Miners also point to a growing political consensus in support of mining. The three main presidential candidates in Argentina’s general election campaign last year touted mining as a way to boost the country’s chronically low supply of hard currency and stabilise its economy.
Still, it would be difficult to get the six advanced projects moving at once, says Roberto Cacciola, CAEM president. Most will require hundreds of kilometres of new roads, several thousand highly trained workers and new power generation and transmission infrastructure.
“There will be a growth crisis,” Cacciola says. “And we must be careful that growth crisis doesn’t turn into something that really undermines [our competitive benefit].”
Muñoz at CRU says mining companies will need currency and capital controls to be lifted before starting construction. “Pre-construction investment is one thing, in the hundreds of millions, but the real test will come when a miner is ready to start building,” he says. “Will the economy be in the right place for them to put down billions?”
Carlos Saravia Frías, a mining lawyer based in Buenos Aires, agrees that clients will not make final investment decisions before the controls are removed. “We will not grow with controls, at least not in mining,” he says. “But I think the world will hold out for Argentina to overcome its challenges, because it needs these minerals — especially copper.”
