The Australian firm's investment in late July marked the company's first foray into Argentine mining in two decades. The company partnered with Canada's Lundin Mining in the $3.25 billion purchase of Filo Corp, with the aim of developing two copper mines along the Andes mountain range on the border with Chile.

A new mining incentive regime in Argentina is attracting big players such as BHP, which is beginning to see the South American country as the next global frontier for copper, more than half a dozen mining industry executives told Reuters.

BHP's investment in late July marked the company's first foray into Argentine mining in two decades. The company partnered with Canada's Lundin Mining in the $3.25 billion purchase of Filo Corp, with the aim of developing two copper mines along the Andes mountain range on the border with Chile.

The re-entry of one of the world's largest miners has raised hopes among other copper producers that they will be able to obtain better valuations for their projects so they can access financing and push forward projects. Copper mining has been a floundering industry for decades in Argentina's shaky economy.

President Javier Milei is seeking to light the fuse with a law passed in late June that promises tax breaks for investments committed over the next two years, in an attempt to allay investor fears and offset capital controls that some politicians have called instruments of torture.

The Large Investment Incentive Scheme, or RIGI, also guaranteed investors access to international courts, rather than having to resort to slow local courts.

The need to mitigate risk at volatile mining locations came to the fore after Panama's government forced First Quantum Minerals to close its massive mine last year following protests. The closure wiped out 1% of the world's copper supply and sent shockwaves through the industry.

"Mining in Argentina is set for exciting growth following RIGI, the country's new investment protection regime. This is great news for our Taca Taca project in Salta," Tristan Pascall, chief executive of First Quantum, told Reuters.

Pascall added that its mine in the northern province of Salta could potentially produce 250,000 metric tons of copper a year and noted that Argentina may be opening up to the possibility of the right investors joining the push, depending on the type of financing needed.

Still, Milei faces an uphill battle to turn the economy around and analysts say investors will have to contend with the world's highest inflation, a contraction in GDP and worsening poverty.

"The Argentine economy still faces many challenges and foreign companies will continue to be subject to financial instability," said Christian Perlingiere, a Southern Cone specialist at business consultancy Control Risks.

Although Argentina does not currently produce copper, eight major projects are in various stages of development in the country's mountainous north.

That means Argentina has a potential pipeline of projects that the government says could approach the production levels of Australia and Zambia by the end of the decade, though still far behind top producer Chile.

Javier Roberto, who oversees the Altar project in San Juan province for Aldebaran Resources, hopes BHP's vote of confidence will help them secure financing, although Altar is unlikely to qualify for Milei's investment benefits because it is still in its exploration phase.

"Many of the things we were hoping for, with the large investments from abroad, are coming to fruition," he said.

Roberto said the company has begun seeking financing to advance the project to the pre-feasibility stage in 2026, starting talks with three major investors, while analyzing options such as issuing shares or incorporating an investment bank.

"We are testing out, let's say, some of the players in the market," he said.

The local unit of Canada's McEwen Mining, backed by carmaker Stellantis, and Australian miner Rio Tinto, are also set to benefit.

"We believe our valuation will be enhanced considering we are geographically in a much easier location to build our Los Azules copper mine compared to Josemaria-Filo," said Michael Meding, vice president of McEwen Copper, referring to the two mines to be developed by BHP and Lundin.

The company is discussing its next round of financing with partners ahead of its 2029 production target.

Milei's reforms, part of his campaign to fix Argentina's economy, come as mining mergers and acquisitions heat up globally.

The biggest copper miners are targeting smaller rivals eager to stock up on the red metal that is expected to be in high demand for the global transition to clean energy and artificial intelligence technologies, which will need to be powered by high-capacity data centers.

Glencore chief executive Gary Nagle, speaking at the company's latest earnings release in August, highlighted Milei's reform as a driver for more deals.

"Argentina is the next frontier for copper growth, without a doubt," he said. The company plans to invest up to $400 million over the next two years in its Argentine Mara and El Pachón projects, but has not said when production might begin.

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According to Milei's RIGI, mining companies would have 30 years of tax credits, reduced customs duties and a progressive relaxation of capital controls.

Lundin's chief operating officer, Juan Andres Morel, told Reuters the passage of the law was a catalyst for finalising the deal with BHP, which is expected to be completed early next year.

From there, the joint venture will analyze investment needs and financing options for Josemaría, Argentina's most advanced copper project, he said.

BHP did not respond to a Reuters query.

If Josemaría and several other major projects get underway, Argentina could produce 793,000 metric tons of copper a year by 2030, according to projections by the Mining Ministry in a government report last year.

The Mining Ministry has not yet updated its forecasts.

Copper exports at that point could reach $5 billion to $10 billion, depending on how many projects are successful, according to another government report this year.

Developers will have to act quickly to take advantage of the RIGI. Once a mining project is approved, it will have to spend 40% of its declared investment within two years, with the possibility of a one-year extension.

Morel acknowledged that the schedule was demanding.

"It's good and bad, of course. It gives us a certain sense of urgency to move forward with Josemaría," Morel said. The initiative includes building roads and power lines, and securing water, he added.

Some analysts cautioned against pinning too much hope on long-term incentives, given the possibility of political changes as well as the unstable macroeconomic environment.

"RIGI definitely helps to bring back the C-Suites' affection for Argentina, but I wouldn't base my investments solely on it," said Christopher Ecclestone, mining strategist at advisory firm Hallgarten & Company.

Milei's four-year term ends in 2027 and he could seek re-election. The far-right libertarian has so far maintained relative popularity, although he risks losing support with an austerity plan that includes cutting the size of government, reducing fuel and transport subsidies, closing state institutions and auditing social plans.

Mining projects in general are often subject to environmental concerns and community protests, problems that have dogged mining companies around the world, from Serbia to Panama.

Glencore's Mara project in Catamarca province includes one of the few copper mines that has been operational in Argentina: Bajo de la Alumbrera. But the mine was forced to close in 2018 due to an environmental dispute and never reopened.