Ores

Copper could become Argentina’s “new soybean”

Apr, 26, 2024 Posted by Gabriel Malheiros

Week 202417

While lithium has often been hailed as Argentina’s premier mineral, copper could well emerge as the sector’s “soybean.” Since the cessation of operations at Bajo de la Alumbrera in 2018, the country has lacked operational mines. A slew of megaprojects, five of which are in San Juan, while the remainder are spread across Salta, Catamarca, Mendoza, and Neuquén (the latter two being less significant), are in various stages of development. However, concrete data on copper reserves is scarce due to the low level of exploration.

Chile leads the global copper market with a volume of 987 million tons in available resources and reserves, accounting for 32% of the total. The United States and Peru follow with 9% and 8%, respectively, according to data from the Ministry of Mining. Argentina ranks 13th, with 66 million tons, representing a 2% share of the global total. One notable aspect highlighted by experts is the low allocation to exploration, which stood at 8% of Chile’s level from 2010 to 2021. The potential for copper lies in the so-called “Neogene metallogenetic belt” in San Juan, Catamarca, and Salta.

Juan Pablo Perea, the Minister of Mining of San Juan, underscores the “enormous and varied” copper potential in the province, situated in the central Andes akin to Chile and Peru. The region boasts an estimated reserve volume of 1.033 million metric tons, representing 40% of global reserves.

San Juan’s projects include Josemaría, Los Azules, El Pachón, Altar, and Filo del Sol. While Josemaria and El Pachón will export copper concentrate, Los Azules will produce copper cathodes, a key raw material for electric vehicle batteries. In 2023, the Stellantis group announced a $155 million investment in McEwen Copper (a subsidiary of the Canadian McEwen Mining, owner of Los Azules) to ensure copper supply from 2027, making it the company’s second-largest shareholder alongside Rio Tinto.

Pachón, Los Azules, and Taca Taca (Salta) collectively represent 66% of Argentina’s total copper resources and reserves. Their implementation is estimated to cost about $10 billion, nearly half of what the country’s eight largest projects will require. Mining estimates that they could provide a productive capacity of 693,000 tons, generating an annual foreign exchange income of $11.1 billion by 2031.

Nadav Rajzman, head of Economics at the Argentine Chamber of Mining Entrepreneurs (Caem), confirms the existence of several more advanced projects, ready to commence in the short or medium term. He warns that they are “world-class” and their development will coincide with the period of “highest demand” for copper globally. With the energy transition, it is estimated that by 2035, there will be a shortage of 10 million tons, equivalent to around 50 projects.

Rajzman estimates export potential between $8 billion and $9 billion per year, with a net income of $6 billion, “equivalent to the trade surplus.” He also highlights the creation of between 11,000 and 12,000 direct jobs (25% more than the current workforce), making it the “second best-paid sector in the country, behind hydrocarbons,” and an additional 17,000 jobs for construction, lasting between three and five years.

Beyond Lithium

Experts unanimously affirm Argentina’s capacity for exponential growth in copper production, citing not only the country’s abundant geological resources but also its active projects. Moreover, given the increasing technological applications of copper, joining the market is deemed “imperative” for Argentina.

The global copper industry commands a staggering $150 billion annually, equivalent to one-third of Argentina’s GDP. According to the International Copper Association (ICA), a single ton of copper powers 60,000 mobile phones, facilitates operations on 400 computers, and provides electricity to 30 homes. By 2030, it’s projected that electric vehicles will comprise around 20% of the automotive market, with over 50% being some form of electric variant, necessitating a demand of 1.4 million tons of copper solely for car manufacturing.

Source: La Nación

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