Battery Metals

Global mining heavyweights including Lundin Mining Corp., Glencore Plc and First Quantum Minerals Ltd. are piling into Argentina as a new government intent on luring foreign investment propels the companies closer than ever to opening up vast copper deposits in the red-hued Andes.

It’s part of a colossal wave of spending needed worldwide to prevent a supply crunch for the metal, a critical component of the electrification push to slow climate change.

Argentina stands to get a good share of that money if President Javier Milei can convince companies based in Toronto, Melbourne and London that their projects are safe from the country’s notoriously volatile politics and rules for doing business — and if those companies can convince Argentines that the economic benefits outweigh the environmental risks.

As it stands, Argentina produces next to no copper despite sharing geology with its neighbor Chile, the world’s top exporter.

But should just six of the two-dozen-or-so copper projects being contemplated in Argentina come to pass, the nation could be a major supplier by 2035, churning out more than 1 million metric tons a year. Annual exports could top $8 billion, according to local mining group Caem.

“With the change of government, I think Argentina will now become a huge rival to Chile,” said Marcelo Awad, who was the chief executive of Antofagasta Plc from 2004 to 2012 when the Chilean miner tried and failed to start operations in Argentina. “The pro-business policies clearly make it a big competitor for attracting capital flows to copper projects.”

Milei, a libertarian in his first year in office, is trying to flip the fortunes of a country that’s on course for its sixth recession in a decade by curtailing government influence and freeing business from a slew of controls to — in theory, at least — tee up private-led growth. Former President Mauricio Macri tried something similar from 2015 to 2019, but the efforts didn’t make much progress and he was swiftly voted out.

To help avoid a repeat scenario, Milei needs to generate a surge in economic activity. Mining, one of just a handful of sectors with the muscle to stimulate business up and down Argentina, provides an obvious opportunity.

That’s why Milei has made a sweeping package of tax, currency and customs benefits for big-time investors — known locally by its Spanish acronym, RIGI — a hallmark of his proposed reforms. They’re being debated by lawmakers.

“The RIGI will be a jumper cable for infrastructure projects,” said Michael Meding, the general manager of Los Azules, a copper site run by Canada’s McEwen Copper Inc. Company officials estimate it will take $2.5 billion to build the mine, with construction slated to start midway through Milei’s four-year term if it can win the needed permits.

Prices of copper, a wiring metal, have surged in recent months, driven in part by concerns that demand from clean power, military equipment and data centers will outstrip supply. Miners need to spend about $130 billion over the next decade to avoid a projected annual shortfall in 2034 of some 7.7 million tons, according to the CRU Group, a research firm focused on mining and commodities.

While there’s plenty of copper still in the ground, deposits are getting pricier and trickier to develop at a time of heightened scrutiny of social and environmental issues. In Argentina, those issues have been a bigger hurdle than elsewhere — but the record prices and Milei’s pivot to a friendlier business climate are suddenly making it more feasible to unearth the nation’s resources.

Argentina has already had success with lithium, a mineral that’s key to making batteries for electric cars. Copper projects, though, tend to be bigger, more expensive and more destructive. And Argentina is a particularly precarious destination for prospectors since it is largely focused on farming and oil, not metals like regional peers Chile and Peru.

A scene last month offered a peek into this dilemma. In the mountain village of Calingasta, in San Juan province, Meding and other officials from McEwen Copper were pitching investors about their plans to dig the Los Azules pit, measuring 2.3 miles long and more than half as wide, just up the road in a pristine stretch of the Andes.

Company founder Rob McEwen, seated in the audience, didn’t like the rosy picture he was hearing from his underlings about the impact the mine would have on wetlands, oases at 12,000 feet called vegas in Spanish. They were suggesting that water could be rerouted to recreate the marshes elsewhere.

“Those vegas are disappearing,” McEwen, 74, interjected from across the room, taking the men aback. “They’re gone forever. Don’t try to coat it, as people will see through it.”

In addition to securing environmental permits, miners operating in remote corners of the developing world like Calingasta must win “social licenses” from communities and other groups. It’s a difficult task in a place like Argentina that hasn’t fully embraced the metals industry, but McEwen says it’s vital to avoid protests and disruptions down the line.

San Juan, a relatively poor province with an economy based on agriculture and solar power, has been opening its arms to miners in a way that others — unwilling to compromise on ecological issues — haven’t.

Beyond the wetlands, glaciers are another concern. A federal inventory lists 16,000 sites to protect in the Argentine Andes, many in San Juan. Glencore has tried to get one — an ice-rich rock glacier — struck off the list so it can proceed with its El Pachon copper project.

Earthquakes are another major threat: A big quake might damage a mine and release chemicals into river systems.

Already, leaders of a small anti-mining group from Jachal, a San Juan county close to Calingasta, have been warning people not to give their blessing to Los Azules. At community meetings hosted by McEwen Copper, they’ve highlighted the negative impacts of nearby gold mine Veladero, which suffered three cyanide leaks from 2015 to 2017, leading a federal judge to recommend it be shuttered. After making improvements, today Veladero operates normally.

“We went to Calingasta with our own truth — to tell them that because of the sheer scale of mines it’s impossible for them not to pollute,” said Faustino Esquivel, one of the leaders of the non-governmental organization called Don’t Touch Jachal.

Bill Shaver, chief operating officer of McEwen Copper’s parent company, said he’s heard similar arguments before during a career spanning 50 years. His strategy is to bring in outside specialists who are comfortable with the project, say professors from the provincial university, and get them to meet with locals to address their concerns.

“You have to work with the communities,” Shaver said. “Otherwise these NGOs could come in and you get in a p—ing match that lasts years.”

San Juan — which has the power to issue environmental permits for building mines, rather than federal authorities — wants the windfall of investment, jobs and tax revenue that copper can bring. Yet officials are only too aware that they must tread carefully when it comes to social and environmental considerations.

“Mining in San Juan is state policy,” Governor Marcelo Orrego said in an interview. “But we also know that we can’t make a mistake on environmental issues.”

There are risks at the national level, too: Milei’s proposed RIGI tax benefits for miners — part of his broader deregulation push — come after a similarly sweet deal recently fueled protests and the downfall of a huge copper pit in Panama.

For now, McEwen, like most wealthy investors, is fawning over the policies.

“Argentina has been a case of ‘nice deposit but wrong country,’” he said. “Milei is Prince Charming who’s given it the wake-up kiss.”

Form Energy launched in 2017 to tackle one of the biggest problems hindering the clean energy transition: how to cheaply store renewable energy for days on end. In developing its iron-air battery, though, the company stumbled on a potential breakthrough for another notorious climate challenge: cleaning up the iron and steel industries.

Form designed a novel battery that stores clean energy by converting rust into pure iron, and discharges electricity by oxidizing or rusting the iron again. The company now is building out a commercial-scale factory in West Virginia to start mass-producing these novel batteries by the end of the year. But Form’s early-stage R&D engineers started thinking about how to decarbonize the iron that goes into those batteries, and realized the charging mechanics helped out there too: They could prepare iron using electricity rather than high heat and fossil fuels.

Last month, Form’s clean iron proposal was one of 13 projects selected to receive funding from the Department of Energy’s Advanced Research Projects Agency-Energy (ARPA-E). Now the team has $1 million to take the technology from benchtop scale to the next level. In short, one of the most ambitious energy storage innovators has entered the colorful and dynamic field of clean iron and steel technologies.

“We found a cheaper, more scalable, more efficient process for producing green iron,” co-founder and CEO Mateo Jaramillo told Canary Media. ​“We know that it has a chance to create a ton of value, so we’re going to pursue it.”

Steel production generates approximately 9 percent of global carbon emissions, and much of that comes from the preparation of iron ores as an input. That’s because the furnaces that turn iron into steel can’t take the stuff in the form that comes out of the ground.

“Iron has a high affinity for oxygen. Over the four billion years or so the iron has been in the Earth’s crust, it has turned to iron oxide or hydroxide,” said P. Chris Pistorius, a metallurgical researcher who co-directs the Center for Iron and Steelmaking Research at Carnegie Mellon University. To make this material useful for iron or steel applications, it needs to be reduced by removing the oxygen, which yields metallic iron.

Traditionally, steel companies have prepared iron by putting ores in a scorching hot blast furnace with limestone and a purified coal called coke. More recently, some steel companies have switched to another method, called direct reduced iron (DRI): flowing fossil gas over iron pellets in a towering shaft furnace at extremely high temperatures, causing reactions that pull out the oxygen and leave metallic iron, also called sponge iron. ​“It’s efficient both from the point of view of energy use and cost,” Pistorius said. But both systems depend on carbon for heat and to catalyze the necessary transformation, and the resulting greenhouse gas emissions are a big problem for the climate.

Green steel techniques remain in their infancy, but several strategies for cleaning up this essential industry are gaining traction. Steelmaking in electric arc furnaces is already a common practice — in the U.S., these furnaces are in widespread commercial use, primarily because they’re good at recycling steel scrap. Reducing the carbon emissions from these types of furnaces is not technically hard to do — it’s simply a matter of running them on clean electricity. Cleaning up the precursor iron production has proved more challenging.

One of the most promising pathways for mitigating the steel industry’s carbon emissions involves running DRI facilities with clean hydrogen instead of fossil gas; hydrogen can also pull away the oxygen atoms from ores. Then the green iron can feed electric arc furnaces powered by clean electricity, producing green steel.

So far, only the Hybrit plant in Sweden has implemented DRI with hydrogen, but the Biden administration recently awarded two $500 million grants to construct hydrogen-based iron plants in the U.S. The price tag for such facilities runs in the billions of dollars, and they ultimately depend on high-volume clean hydrogen production, which doesn’t yet exist.

Other pathways receiving funding from the ARPA-E grants take radically different approaches, like using lasers or microwave-powered kilns to heat the iron. More similar to Form’s proposal is the ​“electrowinning” technique from startup Electra, which zaps dissolved iron ores to produce plates of solid metal.

Unlike Electra, Form didn’t launch with the goal of producing green iron. Form’s core product is a grid battery that uses powdered iron for the anode and runs the reduction and oxidation reactions back and forth to charge and discharge. The saying goes that if you wield a hammer, everything looks like a nail; Form’s engineers store energy by reducing iron, so they saw green iron production as another opportunity to apply their energy storage technique.

“Energy storage is effectively all around us. Iron mines are just discharged piles of iron, if you will,” Jaramillo said. ​“We saw the challenge of the green steel industry as ​‘what they need to do is charge the oxides.’”

With that insight, the Form team engineered a system that places powdered iron ore in a low-temperature alkaline solution; adding an electrical current produces powdered metallic iron. This process can be run continuously and at high efficiency, Jaramillo said, and has a strong shot of competing on cost with conventional furnace operations. But furnaces entail a minimum investment in the billions of dollars; Form’s electrolytic technique could be easier to deploy because it can be scaled up in smaller increments.

Any electrically driven iron production will still be energy intensive, due to the fundamental chemical task at hand.

“The main electricity consumption is breaking the bonds between iron and oxygen. That’s a fixed baseline that you can’t get below,” Pistorius said. Pistorius surveyed the leading pathways for green steel and found they all clock in at between 3 and 4 megawatt-hours per metric ton of steel produced. A European low-temperature alkaline electrolysis process called Siderwin, which shares some key attributes with Form’s new approach, hits the lower end of that energy-use range.

To compete with fossil-fueled iron reduction, the cost of electricity will have to be very low — something like 3 cents per kilowatt-hour, well below the current U.S. average, Pistorius said. And to actually slash emissions, the electricity itself has to be clean.

Form is very much aware of these dynamics, and is designing its iron electrolysis to integrate directly with variable renewable generation, the company told Canary Media. It also chose a low-resistance cell architecture that the company believes will reduce energy consumption relative to the historic baseline of alkaline electrolysis techniques. Given those factors, Form aims to compete on cost with blast furnaces, even if it has to buy electricity at today’s prevailing industrial rates.

That cost-competitiveness is something Form still has to prove. But whereas traditional ironmaking has matured over centuries, the newer electrochemical iron producers have lots of room for improvement. And their costs will decline as ever-cheaper renewables flood into the power system. They’re not alone in that: The whole green hydrogen industry is banking on increasingly cheap clean electricity, since that’s the major cost input for it too. Renewables are continuing to get bigger and cheaper; it’s just a question of how cheap they’ll be by the time the green iron techniques are ready for prime time.

China’s top copper producer Zijin Mining (HKG: 2899) expects to produce 4% more copper in 2025 than previously planned to profit from the metal’s ongoing price rally, driven by anticipated supply shortages.

The state-owned miner’s new goal is to boost copper production to 1.22 million tonnes next year. It also plans to further boost output to between 1.5 and 1.6 million tonnes by 2028, which represents a 50% increase from 2023.

Zijin, which is also China’s top gold miner, justified the production forecast revisions to positive market fundamentals and the potential for capacity expansion. It noted it was already working on increasing mine capacity at some of its operations, including the Julong copper project in Tibet.

The company, one of China’s most acquisitive metals groups and its biggest listed miner, intends to expedite the expansion of its Congo and Serbia mines, while also seeking large-scale projects globally.

The company recently said it was planning acquisitions of “ultra-large mines or mining companies with global influence” to boost overall output.

Copper prices are trading near all-time highs as decades-old existing mines have shown it is unlikely they will meet a soaring demand driven by the world’s shift towards green energy.

Supplies have significantly tightened so far this year following the forced shutdown of First Quantum Minerals’ (TSX: FM) Cobre Panama mine and a guidance cut from Anglo American (LON: AAL), which owns three of the top 10 producing copper mines in South America.