Argentina's mining sector is poised for significant growth, with Mining Secretary Luis Lucero telling Reuters that the country's commodities exports are set to more than double to approximately US$10 billion by 2027.
Recent changes under newly elected President Javier Milei have fueled anticipation among miners and investors alike, fostering optimism about Argentina's future as a contributor to the critical metals industry.
Argentina, which is already the fourth largest producer of lithium globally, is positioning itself as a key player in the global supply chain for electric vehicle (EV) batteries and renewable energy infrastructure.
Milei's pro-business stance has helped bolster the reputation of Argentina's mining sector, although its mineral potential is no secret. The nation's resource industry is largely governed by the Mining Investment Law of 1993, which offers a 30 year period of fiscal stability and caps royalties at 3 percent, lower than Chile's 40 percent progressive royalties.
This allows mining companies to retain a larger share of their profits. Additionally, Argentina permits private ownership and exploration of lithium resources, unlike its neighbors Chile and Bolivia, where state control is more pronounced.
The Milei administration has implemented measures to support this foundation. Called "RIGI" after a Spanish acronym, the measures offer tax breaks and improved access to foreign currency for large projects.
Argentina's focus on lithium, a key component in EV batteries, has also been a strategic move. According to Lucero, the country is aiming to increase its annual lithium carbonate equivalent capacity from just under 140,000 metric tons currently to 200,000 metric tons by 2026, with potential to reach 250,000 metric tons in subsequent years.
This would bring Argentina closer to overtaking Chile as the second largest lithium producer in the world.
In addition to lithium, Argentina is making a concerted effort to boost its production of copper, another key metal for the energy transition. The country is targeting major international players such as BHP (ASX:BHP,LSE:BHP,NYSE:BHP), Glencore (LSE:GLEN,OTC Pink:GLCNF) and First Quantum Minerals (TSX:FM,OTC Pink:FQVLF).
Rob McEwen, CEO of McEwen Mining (TSX:MUX,NYSE:MUX), described Argentina as a “sleeping beauty” in a June interview with the Investing News Network, saying it is a "beautiful country" that is rich in natural resources, but has been hampered by restrictive policies. He added that Milei is the "prince" that has come along to wake the country up.
“We did a rough calculation just on our copper projects, and if they do what they're talking about, you could conceivably see an improvement in the net present value of the project of a billion dollars,” McEwen said.
Michael Meding, McEwen Copper's vice president and general manager, added in the same interview that the mining industry will serve as a “building block” for the Argentinian economy for the future.
“If you take the five projects that are the most advanced in terms of copper, they could be about 20 percent of what Argentina exports at the moment in the agricultural sector, which is the engine for Argentina's progress,” he added.
Despite the positive outlook, challenges remain. The country’s economic crisis, characterized by annual inflation above 200 percent and stringent capital controls, poses significant obstacles to sustained growth.
Market participants are waiting with anticipation to see how fruitful Milei's actions may be.
"Argentina has an important window of opportunity with lithium and copper to be a supplier in the international trade of these metals," Lucero emphasized to Reuters.
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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.
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