Milei OKs Lithium Argentina’s $1.24B growth under RIGI

A $1.24-billion (C$1.7 billion) expansion of Lithium Argentina’s (TSX, NYSE: LAR) Cauchari-Olaroz mine is one of two mining projects approved by Buenos Aires under the country’s large investment incentives program.

Argentina Economy Minister Luis Caputo announced the move Thursday after completion of the final technical review process, while a formal resolution is expected next month, Lithium Argentina said in a press release. Minera San Jorge’s $891-million copper project in Mendoza will also join the incentives program, known as RIGI, Caputo said Thursday in a post on social media platform X.

Thursday’s decisions boost to 16 the number of approved projects under RIGI, with a combined value of almost $30 billion, Caputo said. Another 20 investments are under evaluation.

Zug, Switzerland-based Lithium Argentina runs Cauchari-Olaroz, a lithium brine operation in Argentina’s Jujuy province, in partnership with China’s Ganfeng Lithium Group.

The approvals are notable given Argentina President Javier Milei’s pro-U.S. stance and prior restrictions on Chinese state-linked companies, BMO Capital Markets mining analysts Helen Amos and George Heppel said Friday in a note. The projects stand to receive tax breaks and legal guarantees as Argentina looks to accelerate critical minerals investment.

Argentina’s decision is “an important milestone, providing greater stability for the expansion and ongoing operations, while also adding meaningfully to project economics,” TD Cowen mining analyst Craig Hutchison said in a note.

Large scale

Together, Cauchari-Olaroz and San Jorge will generate more than 8,000 direct and indirect jobs, Caputo said.

Argentina rolled out RIGI in 2024 to attract investments of at least $200 million in strategic sectors such as mining, energy and infrastructure. The regime offers long-term tax, customs and foreign-exchange stability for qualifying projects.

Approved investments can benefit from a reduced corporate income tax rate of 25% from the standard 35%, duty-free imports of capital equipment and export-duty exemptions after three years.

Lithium Argentina filed the expansion application and related environmental permits in December.

“Securing RIGI approval is an important milestone in de-risking the Stage 2 expansion at Cauchari-Olaroz,” Lithium Argentina CEO Sam Pigott said in the statement. “With Stage 1 performing well, the operation is generating strong cash flow and well positioned to support this next phase of growth.”

Lithium Argentina updated Cauchari-Olaroz’s resource earlier this year, increasing measured and indicated resources by 42% to 28.1 million tonnes of lithium carbonate equivalent (LCE), which management said supports long-term expansion plans.

Lithium Triangle

Cauchari-Olaroz is located in the “Lithium Triangle,” a high-altitude region spanning parts of Argentina, Chile and Bolivia that hosts some of the world’s largest resources of the metal. Lithium Argentina owns 44.8% of the operation, compared with stakes of 46.7% for China’s Ganfeng Lithium and 8.5% for Argentina’s state-owned Jujuy Energía y Minería Sociedad del Estado.

Commercial production at Cauchari-Olaroz started in 2023 after years of construction and commissioning work. The operation has since become one of the country’s largest lithium-producing assets and a cornerstone of the company’s portfolio following the 2023 split by Lithium Americas of its U.S. and Argentina businesses.

Lithium Argentina is also advancing its Pozuelos-Pastos Grandes (PPG) project, where it envisions a multi-phase operation targeting up to 150,000 tonnes annually of LCE production. It has already submitted a separate RIGI application tied to the first phase of that development.

PPG has already sparked “strong interest” from a “broad group” of potential partners and customers, Piggott said Thursday.

Shares of Lithium Argentina fell 2.4% to C$13.60 Friday morning in Toronto, valuing the company at about C$2.2 billion ($1.6 billion). The stock has traded between C$2.36 and C$16.46 in the past year.