How is preparing to develop its copper and lithium resources

How is preparing to develop its copper and lithium resources
How Argentina is preparing to develop its copper and lithium resources

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The expectation for mining projects in does not know political parties. Both the Liberal government officials of Javier Mileylike the radical and Peronist governors of San Juan, Mendoza, Catamarca, Salta and Jujuyare active talking to international companies to attract investments in the country. Natural resources are, especially in copper and lithiumbut for them to be developed to their maximum potential, the country still needs to generate long-term confidence, invest in infrastructure and lower capital costs to make mining projects more competitive, according to industry actors.

These issues were discussed this week at a conference on energy transition organized by the Wilson Center in Buenos Aires, which was attended by the United States ambassador to the country, Marc Stanley. “Argentina is a leader in energy resources that the world needs,” he said.

The International Energy Agency (IEA) projected that by 2030, triple the critical minerals produced today will be needed. In the industry they point out that the situation of copper and lithium is what Vaca Muerta had, 10 years ago.

“Hay a combination of factors that allow us to be very optimistic about the present and the future of mining in Argentinawhich has generally lived with its back turned to this sector. This is changing and to a large extent it has to do with the energy transition. To achieve a cleaner world, lithium and copper are required. Mining is no longer synonymous with negative extractivism and is rather an opportunity to move towards a healthier environmentbecause it allows us to electrify,” said the Secretary of Mining, Luis Lucero.

In terms of copper, Argentina stopped producing that mineral in 2018, when its activity ceased Under the Alumbrerabut there are other projects in the pipeline close to beginning their development, such as Taca Tacain Salta, Marain Catamarca, or Josemariain San Juan.

Benjamin Gedan, director of the Latin America Program at the Wilson Center; Luis Lucero, Secretary of Mining, and Juan Pablo Schaeffer, Vice President of Corporate Affairs and Sustainability at Anglo American Chile

The situation is different in lithium, where although the price per ton collapsed from US$80,000 to US$20,000 in the last year, there are four projects in production. The main one is Cauchari-Olaroz, in Jujuy, operated by Lithium Argentina, listed in Toronto and New York, in partnership with the Chinese company Ganfeng and the provincial Jujuy Energía y Minería Sociedad del Estado. Production began in 2023, after an investment of US$1 billionand the mine has a capacity to generate 40,000 tons per year, with a useful life of more than 40 years.

Although Lithium Argentina has another project in Salta, Pastos Grandes, it is still in a state of feasibility, where investments are slowed down due to the drop in the price of lithium. “Only those projects that are currently under construction or in operation can remain attractive. The expectation based on the deadlines is that all these projects can be put under construction, but it is not going to be as simple as many of us thought when prices were much higher,” said Ignacio Celorrio, vice president of the company.

Ignacio Celorrio, executive vice president of Lithium Argentina

“What matters in this market is not so much the profit that is going to be made immediately, but if one is reliable as a producer in a market that is increasing in the long term. That is the secret for Argentina: to be able to produce quality, with consistency and to be able to occupy markets that, if not, others will occupy them. One of the reasons why there was an oversupply of lithium is also that previously production came from Australia, China, a little from the United States and nothing else. But in the last two or three years, it started producing Africa and Brazil. It is not that lithium is so difficult to find, but that you have to know how to produce it efficiently and with consistent quality. Although lithium increases in price, it will not return to excessively high prices because this correction will return again,” the executive analyzed.

Martín Pérez de Solay, former CEO of Allkem, the Australian company that merged with the American company Livent to create Arcadium Lithium, recently acquired by Rio Tinto, He referred to the strategic importance that copper has in Argentina. “There are two vectors of global growth that we cannot deny today. One is that the amount of energy per capita continues to increase as we have more artificial intelligence. As we have more devices in our hands, we will need more energy. The second part is that the most efficient way to transform energy into something else is through electricity. Copper is the best way to restore the last energy mile. The world is going to need a lot more copper and Argentina has a lot of projects to explore,” he noted.

The current ITBA professor emphasizes that a copper project demands an initial investment of between US$3,000 and US$5,000 millionand warns that the window of opportunity is relatively short. “We are going to see the copper problem in five years. There are no very large copper projects in the world starting operations. Almost all there are life extensions of existing projects that already have relatively short lifespans. So there is a very big window of opportunity and it would be a shame if they missed it.”he added.

Martín Pérez de Solay, former CEO of Allkem and current professor at ITBA

For his part, Juan Pablo Schaeffer, director of the Anglo American mining company in Chile, recounted the conditions that the neighboring country generated to become a benchmark for the mining industry today. “It requires a lot of stability, a lot of coordinated work with the authorities and a social license that allows for social viability in the project.. That has to do not only with how we compensate for environmental and social impacts, but also how we generate value,” he said.

“Chile also established a regime similar to RIGI, Decree Law (DL) 600, which also provided tax and regulatory stability for the development of the project. That is key for these very long-term investments.. In Chile we have the Los Bronces mine, which began exploitation in 1867, and today we operate it very close to Santiago. They are investments that really require an extraordinary commitment. And that has helped a lot, and there was continuity beyond who governs,” he added.

Finally, the Secretary of Mining also emphasized other minerals that Argentina has, such as gold and silver. “The other great challenge that Argentina has is to resume and increase exploration. Santa Cruz is the largest metal producing province in the country and operations are reaching the end of their useful life. Copper is so attractive that we tend to forget that in Patagonia there is enormous potential for gold, silver and uranium. Argentina, in addition to infrastructure, needs to resume investment in prospecting and exploration. We have less than 40 projects in the prospecting stage, which is the first stage of initial exploration. As there is a success ratio of approximately 1 to 100, we would have to be prospecting much more and exploring much more to ensure that in the future we have the production that we could provide,” Lucero concluded.

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