Argentina’s new incentive regime for mining is drawing major industry players, including BHP, as the country positions itself as a key player in the global copper market. BHP’s recent investment, marking its return to Argentine mining after two decades, involves a $3.25 billion partnership with Canada’s Lundin Mining to acquire Filo Mining and develop two significant copper projects along the Andes.
The renewed interest from BHP and other copper producers is driven by President Javier Milei’s recently enacted Incentive Regime for Large Investments (RIGI). This legislation offers long-term tax breaks, expedited access to international dispute resolution, and a favorable investment climate aimed at overcoming Argentina’s volatile economic backdrop. The RIGI promises 30 years of tax credits, reduced customs duties, and a gradual easing of capital controls, making it an attractive proposition for investors.
However, the country’s economic situation remains precarious, with high inflation, a contracting GDP, and rising poverty presenting ongoing challenges. Despite this, the RIGI has generated optimism in the mining sector, with several major projects in development across Argentina’s northern provinces.
Notably, the RIGI’s introduction has accelerated investment plans, with companies like First Quantum Minerals expressing enthusiasm for new projects. Tristan Pascall, CEO of First Quantum, views the regime as a catalyst for growth, particularly for the Taca Taca project in Salta province, which has the potential to produce 250,000 metric tons of copper annually.
In addition to BHP and Lundin Mining’s Filo acquisition, other firms, such as McEwen Mining and Aldebaran Resources, are exploring opportunities to benefit from the new incentives. McEwen Mining, backed by Stellantis and Rio Tinto, anticipates a rise in valuation for its Los Azules copper project, while Aldebaran Resources seeks financing for its early-stage Altar project, influenced by the positive shift in investment conditions.
Despite these developments, challenges persist, including political instability, potential changes in the RIGI incentives, and environmental concerns. Analysts caution against over-reliance on the incentives, highlighting the need for a stable long-term investment environment.
The RIGI is expected to bolster Argentina’s copper production, potentially reaching 793,000 metric tons annually by 2030, with copper exports projected to generate between $5 billion and $10 billion. However, investors will need to act swiftly to capitalize on the incentives, which require significant investment commitments within tight deadlines.
Overall, while Argentina’s new mining incentives are generating significant interest and investment, the country must navigate its economic and political challenges to fully realize its potential as a major copper producer.
