Mining, Mining Technology, Projects Tagged

Argentina Copper Project Pipeline Update

Argentina’s mining industry is still under developed even though the country holds significant mineral resources. This is set to change over the next few years with a renewed focus by industry players and foreign investors who see the potential for world class deposits both in copper and lithium.

To date, gold and silver production have historically been the most significant contributors to the Argentinean mining industry. The country is currently the fourth-largest gold producer in South America and the tenth-largest silver producer in the world. The lithium industry has been a particular bright spot over the last few years. Argentina is set to overtake Chile in the coming years with a slew of new lithium projects that are advancing to production.

Another area of strength that can not beignored is that Argentina could possibly become a major global copper producer. Currently, Argentina is ranked as the 35th largest copper producer in the world. Most of the exisiting production comes as a by-product of its gold and silver mines. There are no stand-alone copper mines but there is a pipeline of projects along the Chilean border, that if built, could catapult Argentina onto the list of top 10 global producers by 2030.

There are currently 6 projects that are advancing which should be watched by service providers.

Josemaría

Overview

The US$4.1bn Josemaría project is owned by Lundin Group. The silver-gold-copper project is expected to start operations in 2026. Lundin Mining acquired Josemaria Resources for an equity value of approximately C$625m ($485m) in December 2021. 

  • The Josemaría mine will have a life expectancy of 19-years and will produce 131,000t/y copper, 224,000oz/y gold, and one million ounces of silver.
  • Josemaría would generate 4,000 new jobs during construction and 1,000 while in production.
  • Lundin spent US$400mn in 2023 to advance the project. Capex primarily include continuation of detail engineering, procurement of long-lead equipment, and preconstruction activities such as road upgrades and geotechnical work..
  • The Josemaria copper-gold project is located approximately 10km from the Chilean border and 140km from Copiapo, Chile.
  • Conventional open-pit mining method, involving drilling and blasting followed by loading and hauling by autonomous trucks, will be employed at the Josemaria copper-gold project.

Latest Updates – 

  • Lundin Mining’s exploration programs is moving forward. More than 5,200 meters of exploratory drilling are expected in 2024.
  • The company is focused on minimizing risks and maximizing the potential of the Josemaría project through optimization studies.
  • Lundin will spend US$225mn in 2024 on hydrology and geotechnical work, installing mills, making road improvements, community relations and on obtaining permits before making a construction decision.
  • Lundin is looking for a strategic partner such as Japanese trading houses or other large miners to help finance the project.
Mara

Overview

The US$3bn Mara project (formally Agua Rica) project was orginaly controlled by  Pan American Silver  (56.2%), Glencore (25%) and US miner Newmont (18.75%).  MARA is the combined project comprised of the Agua Rica site, Alumbrera site, as well as the Alumbrera plant and ancillary buildings and facilities, and will rely on processing ore from the Agua Rica mine at the Alumbrera plant.

  • With proven and probable mineral reserves of 11.7 billion pounds of copper and 7.4 million ounces of gold contained in 1.105 billion tonnes of ore with an initial mine life of 28 years.
  • The project is to produce some 241,000t/y of copper for 28 years, will use Alumbrera’s infrastructure which includes a processing plant, tailings facilities, pipelines and auxiliary buildings, among others. 
  • MARA will be among the top 25 copper producers in the world when in production, and one of the lowest capital intensities of comparable projects globally.
  • The project will be mined via a conventional high-tonnage truck and shovel open pit operation.

Latest Updates – 

  • Glencore purchased Pan American Silver stake of 56.25% stake in the MARA project for $475 million in cash last year. It had previously purchased Newmonts shares increasing its stake to 43.75%. It is now the sole owner of the project.
  • Glencore says it has extensive institutional knowledge of the asset and the jurisdiction, based on its successful history of running the Alumbrera operations prior to the integration with Agua Rica in 2020.
  • Since taking ownership, Glencore has focused on meeting with local governments detailing its plans. It recently hired a Country Manager in December 2023.
  • There have not been many developments over the last few months but the expectation is that there will be more newsthis year now that Glencore has firm control over the project.
Los Azules

Overview

The US$2.4bn advanced exploration project is located 6 km east of Argentina’s border with Chile, at 3,500 m elevation in the Andes Mountains. Los Azules is one of the world’s largest undeveloped high grade open pit copper projects that contains significant further growth potential. It is anticipated to be the world’s 25th largest copper producer and a lowest cost quartile producer.

  • Initial capex requirement of $2.4 billion with payback occurring after 3.6 years.
  • Production would reach 186,000t/y of copper in the first 13 years of a 36-year mine life at a cash cost of $1.14 per lb.
  • The concentrator plant will have a throughput rate of 80,000t/d in the first phase, which will increase to 120,000t/d in a second phase to begin after the fifth year of production.
  • The company finished last year constructing a new, low-altitude northern access road to provide year-round access to the site. The current exploration road is only passable about five months a year.

Latest Updates – 

  • McEwen Copper, the owner of the project, completed 39,900m of drilling in early 2023 to evaluate geotechnical, hydrological, resource and exploration-related parameters and opportunities. The Los Azules drill hole database now totals some 126,000m.
  • A new drilling program was started in October 2023 that has 18 drills operating with a goal of finishing the campaign with 62,000 meters drilled.
  • The feasibility study is expected to be completed by early 2025. Currently, McEwen Copper is looking for financing and believes the project could be operational by 2029.
Taca Taca 

Overview

The US$4bn Taca Taca project is an open-pit copper, molybdenum and gold mining project owned by First Quantum. The project is located in Argentina, approximately 230km west of the provincial capital city of Salta and approximately 55km east of the Chilean border. First Quantum is expected to make an investment decison in 2024..

  • Taca Taca is set to produce 275,000t/y copper, 106,880oz/y gold and 2,914t/y molybdenum over 32 years. 
  • The mine construction could generate around 9000 new jobsat its peak.
  • The company is in the process of obtaining operating permits, including for the use of power lines, water rights and road construction.
  • The project will utilise the conventional open-pit method involving drill, blast, shovels and trucks operations. The near-surface material is expected to be mined through free-digging method, while the drill and blast methods will be employed as the mining depth increases.
  • There are plans to use, where applicable, trolley assisted trucks for ore and waste haulage. Haulage cycle times can be significantly reduced for trucks receiving direct electric power to their wheel motors.

Latest Updates – 

  • First Quantum is waiting on environmental approval. These were originally expected in 2023 but no news has been released to date. 
  • First Quantum, as of last month, restated to media that they will start construction of the project once they have all the permits.
Filo del Sol

Overview

The US$1.27bn Filo Del Sol project is owned by Filo Mining. The project also sits on the border of Argentina’s San Juan province and Chile’s Atacama region. A pre-feasibility study of the project was completed in January 2019, but the company has continued exploration drilling increasing resources since the study was completed. 

  • Average copper production is estimated at 67,000t/y over 14 years, for an investment of US$1.27bn.
  • Open-pit mining methods involving drilling and blasting followed by hydraulic shovels and front-end loaders. 

Latest Updates – 

  • In 2023, the company drilled over 38,000 meters.
  • The 2024 campaign will be the largest ever at the project. Drilling will continue with nine diamond drill rigs on site throughout the year, and 40,000m planned.
  • The company is focused in 2024 on growing the projects footprint as it steps out drilling.
  • BHP invested USD$79 million for a 5% stake in 2022 and last year it invested another USD$30 million in a private placement.
El Pachón

Overview

The US$5.6bn El Pachon project belongs to Glencore. The greenfield copper project is located in Argentina’s San Juan province, just 5km from the border with Chile.

  • The US$5.6bn for average production of 350,000t/y for 25 years.
  • The company continues to carry out the environmental impact report and the feasibility study, which it expects to complete in 2023.
  • Glencore has stated publicly that it is open to the possibility of bringing on a partner.

Latest Updates – 

  • Glencore continues with the development of the project’s feasibility and environmental impact study. No timeline on these tasks have been released to the public.
  • In 2023, the company started building a 2,700 square meter warehouse to store, analyze and study the project’s geological samples.
  • The 2022/2023 summer campaign consisted of drilling 36,000 meters, maintenance of the access road to the site, engineering studies and other additional infrastructure works.

 

 

Conclusion

The Argentinean mining industry has never been able to take off like its neighbours. In fact, many of the projects mentioned above have been around for many years but have never been to advance given the country’s complex issues. This has been changing the last few years with interest in lithium projects and now investment into what could be world class copper deposits.

There seems to be a new optimism with the arrival of the far-right economic libertarian, Javier Milei, who has promised to get rid of foreign exchange controls. The government understands that mining can be a pillar for the Argentinean economy – bringing in much needed dollars and creating well-paying jobs.

The most important tasks that the new government will need to undertake is removing foreign exchange controls. Currently, foreign exchange controls make it difficult for mining companies to repatriate profits. Just as important, it makes it difficult to acquire the machines, technology, and supplies that are needed to operate a modern mine. According to President Milei, if he can shore up Argentinean finances and reduce inflation, there could be a possibility to remove these controls before the end of 2024.

For suppliers, this will mean that goods can be brought into the country and payments can be made to foreign companies in dollars. A major pain point for anyone who is currently operating in Argentina but unable to pay in dollars for importations or services that come from outside the country. It will also attract companies to have legal entities inside the country and start providing services since they will be able to repatriate profits as they would in any other country they operate in.

Argentina could be a great market for mining suppliers as we head into the second half of the decade. Most of the projects listed above are in advanced exploration working towards feasibility studies, environmental permits, and construction.  If the government can open the foreign exchange markets, project owners will have an easier time making investment decisions to build out their mines. In addition, the operating environmental in Argentina will greatly improve encouraging suppliers to enter the country ensuring that the mines can be supported with modern equipment, technology, and services. 

Ax Legal is an advisory firm that works with foreign companies in Latin America. Our team of legal and commercial advisors have a distinguished track record of helping foreign technology and services companies to grow and operate in Latin America. Over the years, we have worked with starts up, mid-size businesses, and publicly listed companies. The one common factor that connects our clients is that they are leaders in their field, providing innovative technologies and services to the industrial sectors.

To better understand how we can support you in the Region, please contact Cody Mcfarlane at cmm@ax.legal