The leadership of Grupo Mexico, the nation’s second-largest conglomerate, led by billionaire Germán Larrea, has begun to look seriously at investment opportunities in Javier Milei’s Argentina. The libertarian government sees strategic value in attracting foreign capital to revitalize its freight rail system and has specifically encouraged Grupo Mexico to participate in the upcoming tender for Belgrano Cargas—the country’s most important cargo railway, which stretches across vast productive regions and links directly to agricultural and mining corridors.
Argentina, long recognized as an agricultural powerhouse, also possesses extraordinary potential in mining. To put this into perspective: Argentina shares the Andes mountain range with Chile, yet two-thirds of the range falls within Argentine territory. Despite this, Chile generates roughly USD 55 billion annually from mining, while Argentina produces just about USD 5 billion. The gap reflects years of underinvestment, complex regulations, and macroeconomic instability that have hindered Argentina’s ability to monetize its geological wealth fully.
Why Railways Matter: Agriculture and Mining Depend on Efficient Transport
Agriculture and mining rely heavily on rail infrastructure to transport massive volumes of commodities efficiently and competitively. For this reason, Grupo Mexico sees long-term value in Belgrano Cargas. The freight network spans more than 1,000 kilometers, crosses productive zones in northern and central Argentina, and provides a direct route to major export ports.
Rail is a core business for Grupo Mexico, second only to its extensive mining operations. Over decades, the company has developed expertise in acquiring freight rail systems that suffer from chronic underinvestment—often due to limited public budgets—and transforming them into profitable, high-performing assets. This is precisely what the firm accomplished in Mexico, where it modernized rail networks and significantly increased cargo capacity. Bringing this operational model to Argentina could position the conglomerate as a strategic partner in one of South America’s largest but underutilized transport systems.
Macroeconomic Risks Temper Investment Enthusiasm
Despite the potential, Argentina’s longstanding macroeconomic volatility continues to raise concerns. The Milei administration has succeeded in reducing the fiscal deficit and slowing inflation. Yet these gains have been accompanied by two crucial international financial lifelines—those from the IMF and the U.S. Treasury—to maintain short-term liquidity. Additionally, the government has kept in place strict currency controls, known locally as the cepo cambiario, which prevent companies from repatriating profits.
While Milei has promised to dismantle currency controls soon, the timing remains uncertain. The challenge lies in a complex monetary reality: with deeply negative central bank reserves and an artificially restrained exchange rate, financial markets insist the peso must float freely. However, such a move could trigger a resurgence of inflation, which still averages above 2% per month. Until this dilemma is resolved, foreign investors remain cautious.
A senior Argentine official familiar with the Larrea group’s thinking confirmed this dynamic: “There is genuine interest in investing in Argentina, but the decision has not been made. They will wait to see how the situation evolves.”
The Passenger Rail Issue: A Complicated Condition
Another obstacle involves the structure of the upcoming railway concession. The government wants to bundle profitable freight rail operations with the money-losing interurban passenger services in the Buenos Aires metropolitan region. Managing these services would require substantial subsidies, operational complexity, and long-term financial commitments—factors Grupo Mexico is not willing to assume. The company is focused on freight railways, where its expertise and profit models align. Taking on passenger lines would undermine the business case for entering the Argentine market.
Why Take the Risk? Mexico’s Regulatory Roadblocks Offer a Clue
A key question arises: Why would Larrea’s conglomerate take the risk of entering such a volatile market? One possible answer lies in the regulatory challenges the company currently faces at home. In Mexico, Grupo Mexico has encountered significant delays in securing environmental permits for one of its largest planned investments: the El Arco copper mine in Baja California.
The company has prepared a USD 9-billion investment plan for El Arco, one of the world’s most promising copper deposits. The project is massive in scope and includes not only the mining operation itself but also the construction of transmission lines to bring electricity from combined-cycle power plants in Sonora, the development of water infrastructure for surrounding communities, and even the creation of a port to support logistics. In other words, it is a fully integrated industrial development capable of transforming the region’s economy.
However, Mexican regulatory agencies—particularly SEMARNAT and PROFEPA—have delayed issuing the necessary environmental permits since 2023. According to Rubén del Pozo, president of the national association of mining engineers, these bureaucratic slowdowns have effectively frozen the project. For a company of this scale, immobilized capital is the worst-case scenario. The situation has pushed the conglomerate to explore alternative destinations for major investments, much as it has previously done in Peru and in U.S. states such as Florida and Arizona.
The regulatory environment in Mexico has become increasingly unpredictable for large-scale industrial projects, and diversification across borders offers a hedge against domestic uncertainty. In this context, Argentina—despite its own challenges—presents an opportunity: a government eager for investment, a strategic railway system in need of modernization, and a mining sector poised for exponential growth if infrastructure and logistics improve.
A Strategic Crossroads for Grupo Mexico
As Grupo Mexico weighs whether to move forward, it finds itself at a strategic crossroads. On one hand, Argentina offers long-term potential in two industries that align directly with the company’s strengths: mining and freight logistics. On the other, macroeconomic fragility, currency restrictions, and the unresolved issue of passenger rail obligations introduce significant risk.
For now, prudence prevails. But the pressure created by stalled investments in Baja California may ultimately push the company to accelerate its international expansion. Whether Argentina becomes the next major step in that strategy depends on how quickly the Milei administration can stabilize its economy and create a predictable framework for foreign investors.