FILE PHOTO: Argentina's Economy Minister Luis Caputo participates in a business event, in Buenos Aires, Argentina, May 13, 2025. REUTERS/Agustin Marcarian/File Photo

By Lucila Sigal

BUENOS AIRES (Reuters) -Argentina has approved Canadian miner McEwen Copper's $2.7 billion Los Azules copper project in the country for a tax break program known as the Large Investment Incentive Regime (RIGI), the nation's economy minister said on Friday.

The project is set to contribute $1.1 billion in exports a year, Economy Minister Luis Caputo said in a post on X. McEwen Copper is a subsidiary of McEwen Mining.

Argentina has not produced copper since its Alumbrera mine closed in 2018, but developers and analysts hope projects like Los Azules could make the South American nation a major global supplier.

Caputo said the approval marked a first for a copper mining proposal in San Juan province - Argentina's leading gold mining region and a hub for so far non-operational copper projects - and would directly and indirectly create over 3,500 jobs.

Los Azules is the eighth project to be approved for the RIGI tax break scheme, bringing a total investment of $15.7 billion under the incentive plan promoted by the government of libertarian President Javier Milei.

Company sources told Reuters McEwen estimates the total investment for Los Azules, which towers 3,500 meters above sea level in the Andes mountain range, will reach $3 billion over three to four years.

The company must now seek financing for this investment, they said.

McEwen plans to produce copper cathodes in Argentina starting from 2029, and should soon publish a feasibility study showing operational details for the next 20 years while in the meantime it works to secure permits.

The mine is set to use a leaching copper extraction method rather than the traditional method of floating and skimming the concentrate, which the company expects will allow it to use five-sixths less water and reduce the impact on local residents.

McEwen is Los Azules' main shareholder with a 46.4% stake, while automaker Stellantis holds another 18.3% and Nuton/Rio Tinto owns 17.2%.

(Reporting by Lucila Sigal; Editing by Sarah Morland)