ANALYSIS-How can Miley unlock Argentina’s copper wealth? Fix the economy

Lucilla Seagull

BUENOS AIRES (Reuters) – Argentina has big ambitions for untapped copper riches in its Andean north. It aspires to be a top 10 global producer and has attracted investors such as Glencore, Lundin Mining and First Quantum Minerals.

But unlocking its potential is not easy. The country, and new libertarian President Javier Milei, must fix the economy first, with most large copper projects stalled by tight capital controls, 300% inflation and high tax rates.

Although copper prices hit record highs, it took some glimmers of hope a year ago, when local officials told Reuters of the sector’s „enormous potential” as it taps into global demand for the metal needed for construction and the energy transition. Global projects.

„We believe the country is engulfed in a crisis of confidence,” Franco Mignacco, vice-president of Argentina’s Association of Mining Entrepreneurs (CAEM), said at a mining event in San Juan on Tuesday, citing economic turmoil as the withdrawal of projects.

„We have the resources, we’ve done the research and planning, but we need to provide the macro-economic commitment to make these plans work.”

Lundin’s Josemaria project in northern San Juan is more advanced; then Glencore’s $4.5 billion El Bachon; MARA is owned by Yamana Gold, Glencore and Newmont; First Quantum’s Taka Taka and McEwen Mining’s Los Azuls.

Alfredo Vitaler, VP of corporate affairs at Josemaria, told Reuters the mine aims to produce more than 130,000 tonnes of copper per year, requiring economic and legal certainty to define a specific start date to move forward with the project.

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„If the conditions of the sector improve and the problems it faces are resolved, at least six advanced copper projects in Argentina are poised to begin investment in their construction in the medium term,” he said.

„We don’t have a specific start date for construction.”

MILEI Reform Bill: No Magic Solution

Milei, a wild-haired economist and former TV personality, is trying to boost investment in the country after it endured one of its worst economic crises when he took office in December.

He has promised to undo capital controls „very soon”, but first must restore economic stability and rebuild depleted central bank reserves. Monthly inflation is declining but remains one of the highest in the world.

Miley is pitching a major reform package to Congress, including increasing investment for major projects, tax breaks and easier access to foreign currency for investments of more than $200 million.

Ernesto Kuscianovich, co-director of local consulting firm Poliargia, said the slowdown in progress with copper is down to economic instability in recent years, and the reform bill — if passed — could provide some short-term relief.

„It’s a useful tool, it doesn’t solve the problem,” he said. „It is very difficult for an investor to think about plans to invest in a country with these capital restrictions, and there is an effective ban on exporting foreign currency.”

Local governments in the copper-rich northern provinces of San Juan, Salta, Catamarca and Mendoza are launching a „copper committee” on Wednesday, aiming to spur projects.

„The objective is to develop projects and bring them to production,” said Juan Pablo Perea, the mining minister in San Juan, the province with the most projects in the current pipeline.

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He said his province’s copper projects could help local government generate more than $3 billion in revenue by 2030.

Romina Sassarini, secretary of mines and energy in Salta, home of FirstQuantum’s Dhaka Dhaka project, hoped further cooperation would help attract the large investments needed to jump-start the stalled mining development.

„For example, Dhaka Dhaka today requires an investment of $3.6 billion,” Sassarini said, adding that he hopes it will soon progress to the pre-construction stage. „We believe that will develop as macroeconomic conditions improve.”

(Reporting by Lucilla Sigall; Editing by Nicholas Misgulin and Daniel Wallis)

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