McEwen Copper, a subsidiary of McEwen Mining (MUX), is making a significant move to address the looming global copper deficit. The company is seeking a substantial $2.5 billion in capital investment to propel its Los Azules copper project in Argentina forward, transforming it into a world-class copper mine. This ambitious undertaking aims to yield an impressive annual production of 175,000 metric tons of copper.
Vice President Michael Meding recently confirmed to Reuters that McEwen Copper has already invested over $400 million in the project. The remaining $2.5 billion will be crucial for capital expenditures (CAPEX) to bring the mine online. Located in Argentina’s San Juan province, the project is awaiting a pivotal environmental permit, expected by the end of 2024, with construction anticipated to commence by late 2025.
The sheer scale of Los Azules is undeniable. It ranks among the world’s top ten largest undeveloped copper deposits, boasting 10.9 billion pounds of indicated resources and a further 26.7 billion pounds of inferred resources. At current copper prices of $4.09 per pound, the indicated resources alone are valued at over $44.5 billion – a staggering figure that underscores the project’s potential.
However, the value of this project extends beyond its current valuation. With predictions of a global copper supply deficit potentially reaching 4 million metric tons by 2035, driven by the burgeoning demand for electric vehicles (EVs) and renewable energy infrastructure, copper prices are poised for significant growth. This scarcity makes Los Azules an increasingly attractive investment, safeguarding against future price volatility.
It’s important to consider the extraction costs. For industry giant Freeport McMoRan, these costs amounted to $1.61 per pound in 2023, providing a benchmark for understanding Los Azules’ potential profitability. McEwen Copper, however, is committed to operating sustainably, powering the mine entirely with renewable energy sourced from Argentina’s YPF Luz. This commitment resonates with environmentally conscious investors and aligns with the growing global push for sustainable mining practices.
McEwen Mining Chairman Rob McEwen has actively cultivated support for Los Azules, both domestically and internationally. He recently met with Argentinian President Javier Milei, who took office a year ago and is focused on revitalizing the country’s mining sector, particularly after the closure of its only operating copper mine in 2018. This meeting highlights the project’s significance for Argentina’s economic future.
The project has already attracted significant interest. A recent funding round in October saw a $35 million investment from Rio Tinto’s venture arm, Nuton, granting them a 17.2% stake in McEwen Copper. Furthermore, automaker Stellantis (STLA) is also a key investor, underscoring the importance of securing copper supplies for the burgeoning EV market. This strategic investment reflects the growing concern among major automakers and tech companies about securing the raw materials crucial for EV batteries, renewable energy technologies, and grid infrastructure.
The confluence of factors – a massive undeveloped copper deposit, a growing global copper deficit, and strategic partnerships – positions Los Azules to become a pivotal player in meeting the world’s growing demand for copper. With copper demand projected to surge by over 50% by 2035, McEwen Copper’s $2.5 billion capital raise is likely to garner considerable interest from both investors and stakeholders worldwide. The success of this project could reshape the global copper landscape and solidify Argentina’s role as a key player in the mining industry.
