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Argentina’s copper potential: Challenges and opportunities in the global energy transition

The southern and central ranges of the Andes, spanning southern Peru, northern Chile and north-western and centre-west Argentina, constitute one of the world’s richest regions in mineral resources, including vast deposits of copper—a mineral increasingly pivotal amid the global energy transition.

Chile and Peru have established themselves as leading global copper producers, but Argentina lags behind with no operational mines currently. Its most recent mine, Bajo de la Alumbrera in Catamarca province, ceased operations in 2018.

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Developing copper mines typically requires substantial investments, yet Argentina’s sector has not seen the billions necessary for significant growth. Moreover, the industry faces persistent challenges from social and environmental groups due to concerns over pollution, water usage disputes, and other conflicts in mining areas.

Argentina’s new president, Javier Milei, aims to spur sector development by proposing relaxed environmental regulations to attract investment and stimulate extraction. This included efforts to amend laws protecting glaciers, crucial water sources potentially affected by future copper mining operations. However, subsequent retreat from these changes followed a contentious legislative package through the Senate.

Projected growth and challenges

By 2031, pending projects could position Argentina as the world’s sixth-largest copper producer, with estimated annual exports averaging USD 8.44 billion, according to the Argentine Chamber of Mining Entrepreneurs (CAEM).

Currently, eight projects are in advanced exploration stages. If at least three are developed, mining could become Argentina’s third-largest export sector, diversifying a historically agrarian-centered economy and fostering alternative economic growth.

Copper’s role in the energy transition

Copper, alongside critical minerals like lithium, cobalt, and nickel, plays a crucial role in the global shift toward renewable energy. It is essential in electric vehicles (EVs), batteries, solar panels, wind turbines, and electricity grids supporting renewable energy integration. The International Energy Agency (IEA) forecasts a 40% increase in copper demand over the next two decades to meet Paris Agreement targets.

The surge in demand has driven copper prices to record highs, surpassing USD 11,000 per tonne in May, with projections reaching USD 12,000 per tonne by 2025, according to Citibank. Currently, Chile leads global copper production at 24%, followed by Peru and the Democratic Republic of Congo at 10% each. CAEM estimates Argentina could contribute 5% of global production by 2031.

Challenges ahead

Despite demand, actualizing supply may face delays due to regulatory hurdles. “Implementing projects is challenging, with political, social, and environmental obstacles higher than ever,” noted Eleni Joannides of Wood Mackenzie. Chile and Peru, major producers, struggle with obtaining social and environmental licenses for new mines.

Timeframes are also critical, with an average 16-year timeline from discovery to commissioning for new projects.

Projects in progress

Argentina’s first upcoming mine, Josemaría in San Juan province, aims for production between 2026 and 2027, with estimated costs of USD 4-5 billion. Another notable project is Los Azules, also in San Juan, expected to require lower investment yet promising significant copper production.

Other projects include El Pachón, Filo del Sol, and Altar in San Juan, Taca-Taca in Salta, Mara in Catamarca, and San Jorge in Mendoza, all at various stages of development.

Challenges for Argentina

Economic instability and regulatory uncertainties pose ongoing challenges for Argentina’s mining sector, as highlighted by Juan Pablo Perea, mining minister of San Juan province. “Macroeconomic factors and regulatory policies must provide predictability and competitiveness to attract necessary investments,” he emphasized.

Navigating these challenges while capitalizing on its copper potential could redefine Argentina’s economic landscape, aligning with global energy transition imperatives while addressing local economic needs and environmental concerns.

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