Glencore has just committed a jaw-dropping US$13.5 billion (A$21 billion) into two Argentine copper projects that don't exist yet, banking on a country that hasn't mined copper since 2018.
The mining giant applied for its El Pachón and Agua Rica projects to qualify for Argentina's new investment incentive scheme, promising to spend $9.5 billion on El Pachón and $4.0 billion on Agua Rica over the next decade.
Martín Pérez de Solay, Glencore's Argentina chief executive, said the company could be producing close to 1 million tonnes (Mt) of copper annually within 10-15 years - mightily ambitious for a country with zero operational copper mines.
The numbers
El Pachón contains a substantial 6 billion tonnes of ore at 0.43% copper, while Agua Rica holds 1.2 billion tonnes at 0.47% Cu.
Yet Argentina's copper track record is paper thin. The last time the country mined the red metal was back in 2018, when its last mine, Bajo de la Alumbrera, closed after 20 years of operation.
Pérez de Solay projects an initial output of 500,000t annually before scaling to the full million-tonne target. He didn't provide production start dates.
"Glencore could be producing close to 1 million tons of copper in Argentina in 10 to 15 years," he told a Council of the Americas event.
The company expects to create 10,000 construction jobs and 2,500 operational positions across both projects.
RIGI and reality
Argentina President Javier Milei's Incentive Regime for Large Investments (RIGI) offers tax breaks and enhanced investor protections that convinced Glencore to move forward.
"President Milei and his administration must be credited for introducing the RIGI," Glencore chief executive Gary Nagle said.
"This framework has changed the investment landscape in Argentina."
Pérez de Solay estimates seven major Argentine copper projects could collectively produce 2Mt annually within a decade, requiring US$35-45 billion in total investment. He projects this could generate $20 billion annually in exports.
Those projections assume copper demand hits 35Mt by 2035 and prices remain favourable.
However, Argentina's copper ambitions face key, practical hurdles. The country lacks the infrastructure, a skilled workforce, and the regulatory experience that established copper producers such as neighbouring Chile possess. (mind you, Chile has its own mining sector worries…)
The billion-dollar bet has the same aroma and taste of confidence that BHP (ASX : BHP) is exhibiting with its own foray into Argentina - but transforming a copper deposit into a profitable mining operation remains unproven in Argentina's context.
The miner and commodities trader will also join the likes of McEwen (TSX, NYSE : MUX) and Lundin (TSX : LUN) hunting red metal in the country; as well as Rio Tinto (ASX : RIO) and its move into the country's slice of the Lithium Triangle.
Glencore's RIGI deal will help determine whether Argentina can join Chile and Peru as a major South American copper producer - or whether it becomes another case of government promises outpacing delivery.
