Digging for solutions: Can Mendoza break ground on its mining potential?

Mendoza province in western Argentina is trying to unlock its mining potential after years of persistent anti-mining sentiment. 

The province could potentially produce 500,000t/y of copper from just four projects and could even surpass output of 1Mt/y with eight projects, according to a roadmap outlined by the state-owned enterprise Impulsa Mendoza, private entities and academic institutions.

Impulsa Mendoza's Pilares plan estimates that between 2024 and 2050, annual investments of US$100mn will be required for exploration and studies, with an additional US$13bn needed to kickstart production. If this is done, Mendoza could receive US$2.9bn annually in export revenues, in addition to creating thousands of jobs.

However, provincial law 7,722 restricts the development of mining projects and could pose a challenge to the advance of the Malargüe western mining district (MDMO) initiative, which local authorities aim to use to promote over 100 exploration projects.

Edwards Gajardo, founder of media outlet Mendoza Minera, shares insights into the MDMO and the ongoing challenges faced by the mining industry in this mineral-rich part of Argentina.

BNamericas: Why has mining been unable to thrive in Mendoza?

Gajardo: Mainly due to law 7,722, which since 2007 has prohibited the use of substances like sulfuric acid, cyanide and mercury, and the leaching process. It also requires that environmental impact assessments for projects first go through the mining authority and Mendoza's environmental protection office before gaining political approval in the legislature. Ultimately, it’s up to two chambers, 38 senators and 48 deputies to approve projects. However, their votes are often based on mood or ideology rather than technical reasons.

BNamericas: What is the MDMO project?

Gajardo: Technically, it's a workaround to bypass the restrictions under law 7,722. There's growing interest in unlocking the copper potential in the Uco valley in Malargüe department, near Chilean projects like Los Bronces, El Teniente and Andina, as well as further north, near San Juan. Moreover, Malargüe has a social license, which reduces the likelihood of opposition.

BNamericas: Why was a collective EIA submitted for the MDMO projects?

Gajardo: This EIA covers a polygonal area of nearly 20,000km² (around 1.9mn hectares), 350 properties and over 100 projects where a mining district would be created. Environmental impact reports were submitted in groups to secure joint approval and clear the political hurdles all at once.

In the first stage, 34 exploration projects were selected and approved by the local mining and environmental protection authorities, who participated in preparing the collective report. Now, the file is under review in the committees of the chamber of deputies, and if approved, it will move to the senate for political approval. 

This approach is seen as a solution to overcome the restrictions of the anti-mining law, at least for the exploration phase.

BNamericas: What role has Impulsa Mendoza played in this process?

Gajardo: They're the driving force behind MDMO, hiring technical staff to prepare the environmental impact studies, gathering landowners from the area and defending the 34 EIAs for the projects.

BNamericas: Do the property owners in the area have the means to conduct exploratory work?

Gajardo: Many landowners lack resources, so they depend on partners. That search will be easier with the EIA and political approval in place. The idea is to set a standard for a second phase of the MDMO, where another group of projects will be presented.

BNamericas: For the subsequent exploitation phase under MDMO, do you think the legislature will be more willing to approve projects?

Gajardo: If the exploration results are good and mineralization is found, the entire technical process will have to be repeated to obtain approval for exploitation. A key issue will be whether the exploitation of the San Jorge project is approved. If this government blocks it, it will send a negative signal to investors interested in exploring under the MDMO framework.

BNamericas: What difficulties has the San Jorge copper project, now owned by the Swiss´s Solway Investment, faced in Mendoza?

Gajardo: San Jorge was owned by Coro Mining when law 7,722 was enacted, and they couldn’t proceed because the project involved leaching. The plan was to produce 40,000t/y of copper concentrate, along with other minerals, over a 16-year mine life. Then, a plan B was devised to process only the sulfides and perform the flotation in Mendoza

That EIA was approved in 2011, but during that year's gubernatorial election, the Peronist candidate, Francisco Pérez, asked legislators to reject the project, fearing that supporting it could harm his campaign. San Jorge was ultimately shelved and mining in Mendoza was effectively buried, though there are now efforts to revive it.

BNamericas: Besides the political sector, who else has hindered the progress of the mining industry in Mendoza?

Gajardo: The province’s wine sector has been a strong opponent. Entrepreneurs and winemakers argue that mining could contaminate water supplies. The oil sector, Mendoza’s main industry, has also had an influence, along with various ideologically driven organizations from across Argentina that support this movement.

BNamericas: What kinds of obstacles have anti-mining groups created in Mendoza?

Gajardo: Under governor Julio Cobos in 2005, and with Carlos Monjo as director of mining, several exploration projects based on the Cordilleran plan prepared by Segemar [Argentina's geological mining service] were presented at [mining convention] PDAC in Canada. Junior companies were attracted, and even Anglo American acquired properties in Mendoza, aligning them with Los Bronces in Chile. However, anti-mining groups emerged in the Uco valley area, which includes the Tupungato and San Carlos departments, near Codelco’s El Teniente mining operation.

During that time, protected areas were expanded, including a zone around Laguna del Diamante that was part of the Cordilleran plan, where no activity could take place.

BNamericas: How has the Potasio Río Colorado [PRC] project in Malargüe managed to continue?

Gajardo: It’s a potassium deposit, and since it involves salts, it doesn’t fall under the metallic mining category. PRC has changed owners several times. It was bought by Rio Tinto in 2000 and then sold to Brazilian company Vale in 2009, which eventually abandoned it in 2013 when potassium prices dropped from US$900/t to US$400/t.

It was a disaster for the province, as it was a large project, with US$1.5bn invested, and it was planned to produce 7Mt/y. It would have been positive for employment and royalties. Then the company Potasio Río Colorado was created to take over Vale’s assets, eventually handing the project to businessman José Luis Manzano, who, to date, has only planned a pilot plant and faces several logistical problems.

BNamericas: The Cerro Amarillo and Hierro Indio metallic mining projects have seen exploration, following legislative approval of their reports in Mendoza.

Gajardo: Cerro Amarillo includes five copper porphyries, while Hierro Indio is a small iron deposit near Malargüe. Both projects had the opportunity to move forward under governor Rodolfo Suárez [2019-23] when the nation faced a crisis with inflation, unemployment and poverty, which made mining necessary again for the province.

In 2019, the legislature approved Hierro Indio's exploration, which was celebrated as if we had discovered Escondida [the world’s largest copper mine, owned by BHP in Chile]. Meanwhile, Cerro Amarillo's EIA was approved last year and passed the political filter during a debate that proposed creating a mining district in Mendoza. This idea aimed to allow the development of mining in the province without limitations, leading to the Malargüe western mining district project.

BNamericas: What other initiatives is Mendoza undertaking to develop its mining sector?

Gajardo: Mendoza has potential in other areas, but they lack social licenses. In the meantime, the government has joined the copper roundtable, which includes other provinces like San Juan. Unfortunately, Mendoza and Chubut are the two most anti-mining regions in the country. They claim that law 7,722 was created to protect water, but mining is the only economic sector being targeted, while others are not.