Reuters US Business
By Lucila Sigal
SAN JUAN (Reuters) -Argentina holds rich copper deposits in the mountainous north along the Chilean border, but, unlike its mining powerhouse neighbor, has not built power lines and roads needed for new projects backed by miners such as BHP and Rio Tinto.
President Javier Milei's austerity campaign to clamp down on inflation and debt means the South American country is up against bigger challenges than most countries to build the infrastructure needed by mines worldwide.
Unconventional ideas, such as sharing infrastructure between miners or paying for it with royalties, will likely be part of the solution.
"The government said it won't provide any funding, but that doesn't mean it isn't responsible for getting things done," said Roberto Cacciola, president of Argentina's mining chamber, who is urging authorities to step up efforts to ensure infrastructure gets built.
Argentina exports gold, silver, and lithium but has not produced copper since 2018.
Milei's administration, as well as governors who control local development, are banking on copper to help stabilize the country's volatile economy, just as mining companies worldwide seek to boost output to cover a looming supply gap for the metal widely used in construction and electric vehicles.
A federal official said the government is assessing infrastructure needs nationwide and identifying ways the private sector could play a role.
Eight copper projects in Argentina could bring total mining export value to $15.4 billion by 2030, according to a government forecast.
That would more than triple last year's figure and make the sector one of the country's largest net foreign exchange earners. Copper projects alone could reel in $5.2 billion by 2030, if they reach the government's projection of producing 521,000 metric tons a year.
The copper projects are concentrated in the northern province of San Juan, which some call the "Vaca Muerta of copper," an allusion to Argentina's shale oil and gas field the size of Belgium.
San Juan enacted a compensation program in 2022 that could help get infrastructure built. It allows mining companies that develop road or energy infrastructure to be repaid with mining royalties if provincial legislators deem the project a "public utility." Miners normally pay royalties to governments.
The Vicuna project, from global miner BHP and Canada's Lundin, hopes to use the provision, said Vicuna's Argentina director Jose Morea.
"That speeds up investments that the private sector is currently in a position to make ... which the provincial government would probably have to defer otherwise," he said in an interview.
Vicuna consists of two mines, Filo del Sol and the more advanced Josemaria, which could become one of the region's first projects to start production. The $5-billion mine will need a 220-kilometer (137-mile) road - a distance of about two or three hours by car - to reach operations at an altitude of 4,200 meters (13,780 feet) in the Andes Mountains.
It will also require a high-voltage power transmission line at a scale that could support a large city.
SHARING INFRASTRUCTURE
Some miners are exploring other ways to reduce costs. McEwen Mining's Los Azules is looking at sharing infrastructure with nearby projects and has consulted the Inter-American Development Bank about infrastructure loans.
Some business leaders want the government to turn over more projects, such as railways and road maintenance, to the private sector through public tenders or public-private partnerships, said Nicolas Munoz, a copper supply analyst at consultancy CRU.
"It's feasible to think that private companies will assume these costs and see a business opportunity," Munoz said.
There are already signs of interest from the mining sector, such as global miner Rio Tinto, which recently took over U.S.-based Arcadium's lithium mines in Argentina and is developing another of its own in the country.
According to a public register of lobbyist meetings, Rio held a meeting with Argentina's mining secretary in June after expressing interest in bidding for the state's Belgrano Cargas railway, which the government said in February it would privatize.
Rio Tinto did not have an immediate comment.
Rio Tinto is also backing McEwen's Los Azules and Aldebaran's Altar copper projects through shares owned by its leaching technology arm, Nuton.
Some governors are still looking to the federal government to take part of the burden. Governor Gustavo Saenz of Salta, where Canada's First Quantum Minerals wants to develop the Taca Taca copper mine, said aqueducts, roads, and gas pipelines will pay off.
"We need them to give us ... everything necessary so that those who want to come and invest can do so," he said this week at the Argentina Copper 2025 conference in San Juan.
(Reporting by Lucila Sigal, Writing by Daina Beth Solomon, Editing by Rod Nickel)
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