Argentina’s energy metals sector: A potentially rich seam for renewables to mine

Argentina is home to some of the world’s biggest early-stage energy metals mining projects, many perched high in the Andes mountains in the country’s north.

A challenge for lithium and copper miners that are concerned about the carbon content associated with their future output is securing supply of low-emission power. The task is not straightforward, given the altitude of some projects and their distance from population centers, combined with demand for steady supply.

The local electricity sector has stepped up to the plate. Argentina’s biggest renewables player Genneia, for example, has come up with a grid-connected solution that would provide electricity 24 hours a day.

To find out more about the general state of play, BNamericas spoke to Marco Zazzini, technical manager at Chilean energy consultancy Anabática Renovables, which also serves the Argentine market. Anabática specializes in the wind, solar, green hydrogen and energy storage sectors, offering a portfolio of support and advisory services, from the initial technical studies phase, through permitting, financing and optimization.

BNamericas: In terms of supplying future mining operations, what opportunities do you see for the power sector in northern Argentina? For example, what level of demand could we see?

Zazzini: A lot of industrial development is being seen in the north of the country, linked to mining demand, above all for lithium, globally. 

Given this potential, industrial zones, for extraction, are starting to be developed and these need supplying with electricity.

BNamericas: What are some of the challenges?

Zazzini: The thing is, we’re talking about isolated zones far from centers of [power] consumption, far from population centers, areas at the end-point of power lines or, even, far away from them. 

In some cases, interconnecting [with the grid] is feasible but in other cases alternatives need exploring, namely, self-supply.

Miners want a more environmentally friendly image. Today, power supply, as a mix of solutions, is being mulled. Microgrids are taking on the characteristics of a power system – there’s a mix of fossil fuels, storage and solar PV. Wind has also been attempted. 

BNamericas: We understand that proposed supply solutions are circulating in Argentina. 

Zazzini: There’s a lot of movement. Recently, solid projects seeking financing have been seen. There’s also a lot of analysis work being carried out to decide whether to proceed or not.

Argentina is a fertile land of opportunities. It has a form of doing business where, when opportunities present themselves, decisions are taken quickly. It can be seen that preparations are being made. There is going to be, perhaps, a vortex of this type of project. The market is getting ready. The workforce is in place to carry out this type of project. 

BNamericas: What are some of the barriers? We understand that regulations are one of them?

Zazzini: Work is needed in regulations; a good operating framework is needed for investors, so there is stability to recover investment. And that they don’t face elevated [financing] rates on account of country risk. 

We’ve proven that with a good regulatory framework, where things work for both foreign and local investors used to operating in Argentina, when the window opens, they’re there. 

You see that, when it opens, big local players, like [state-controlled oil and power firm] YPF and [generators] Genneia and Central Puerto are companies that move quickly.

Foreign players wanting to enter can learn from local firms. 

BNamericas: With the new administration, which took office in December, regulatory and legislative changes are underway or in the pipeline.

Zazzini: The change in government was quite recent. One needs to observe how work advances in the area of regulations, what signals are being sent out.

What needs underscoring is that in Argentina you need to be ready for when the window opens.

BNamericas: Just moving back to power supply, the focus seems to be on lithium. But are there opportunities in other segments, metals?

Zazzini: Yes, copper, lithium and secondary extraction, such as gold and silver. Existing mining operations, for various years, have been trying to change their energy consumption mix. Some are looking for, or already have, private power-purchase agreements [PPAs] via [term market] Mater.

BNamericas: So, in the overall mining sector, for both projects and operational-phase mines, the options are clearly grid connection or off-grid?

Zazzini: Yes, you need to look at it on a case-by-case basis. Depending on their location, they will have the possibility of seeking grid connection. Or those that are connected can seek a PPA in the market – various projects have been presented in Mater recently – or, alternatively, working with island [off-grid] projects with storage components.

In terms of storage, we have developed an application in which you can configure the various participating vectors, which could be wind, solar PV, network, for example. With this you can see what the best option is in terms of battery configuration, in terms of injection duration, capacity.