What unites Egyptian Pharaohs, Israelis, and Mexicans? Recently, I braved the blazing desert sun to get an inside look at the revival of a 6,000-year-old copper mine and find out.
In southern Israel’s Arava region, in the Negev Desert just a half-hour’s drive from the Red Sea, the same tectonic movements that separated Asia from Africa left a copper resource that cultures dating back to the Late Neolithic Period have tapped.
The Holy Land’s base metals bounty even got a mention in the Bible, as Deuteronomy 8:9 promises "a land where you will eat food without scarcity, in which you will not lack anything; a land whose stones are iron, and out of whose hills you can dig copper."
In the Timna Valley, 300 meter-high cliffs surround what is practically an open-air museum of the base metals industry. Hieroglyphs carved into the cliffs depict Hathor, the Egyptian goddess of mining. There are ruins of work camps and tubular shafts that plumb depths up to 30 meters, in addition to the smelting furnaces used to turn rock into treasure.
But neither the Egyptians who ran these mines, nor the Midianites and Amalekites that toiled there, could have foreseen the effect of the modern copper commodity market on the area.
After the establishment of the State of Israel in 1948, the young country’s engineers and builders turned to Timna to mine for the wire, plumbing copper and other finished copper products so essential to construction and infrastructure in our age.
Then when prices bottomed out in the late 1970s, the government shut down the operations. It was cheaper to import finished copper from abroad than to keep digging in Israel.
When I arrived at the site this June, I was reminded of the western gold rush relics of the American West: rusting, twisted metal lay everywhere, the pipes, machinery and melted tires of an unprofitable industry left to the harsh sun and sand drifts of the Arava.
Then I got a bit further, beyond the gates and the rubble of the Israeli-run operation. In towards the ancient mines, I noticed Mexican flags flying among the Stars of David that represent Israel.
Altos Hornos de Mexico SA (AHMSA) is the latest arrival at the Timna mines (known to some as Solomon’s Mines, though a connection to that king is dubious). Based in the northern Mexican state of Coahuila, AHMSA was originally founded by an American, later nationalized by the Mexican government, and then re-privatized in 1991.
The company has about 20,000 employees, primarily focused on the manufacture of steel from ore, which AHMSA mines with its own operations.
So what brings AHMSA all the way to Israel, where it has established its subsidiary, Arava Mines?
The arrival of AHMSA gained top mention in the United States Geological Survey’s 2005 Israel Minerals Yearbook. AHMSA agreed to a deal with the Israeli government in August of that year allowing Mexican engineers to begin pumping out ground water that had seeped into the mines, clean up the scraps and buildings all around the previous work site, and establish new facilities.
All in all, AHMSA plans to spend $160 million to get production going again, with the goal of 22,000 tons per year of pure copper output beginning in 2009. The plant is expected to provide direct and indirect employment to around as many as 2,000 people, giving a major boost to the sparsely inhabited area (where currently only 3,000 live).
Almost two years after the USGS report, I met with Arava Mines director Carla Garcia-Granados on the site. On the wall I read the Hebrew letters of the promising Deuteronomy verse, and in a room full of Mexican engineers with over three decades of experience among them we shifted from English to Spanish, occasionally interspersing our discussion with Hebrew, which Garcia-Granados speaks fluently.
The primary concern for most investors in the Middle East is understandable. Security. It’s a volatile region, but down in the Negev, right on the border with friendly Jordan, Baghdad and Beirut seem a million miles away. "This country is accustomed to maintaining its economic rhythm," the head of Arava Mines told me. "There was a war a year ago and the market actually rose! I’ve never seen anything like it. Even today, the government is about to fall but the currency is going up." Indeed, the Israeli shekel is stronger than ever these days.
Israel has proven itself hospitable to companies of all sizes, from high-tech startups to major industrial players like AHMSA. "The government keeps its economic promises. It’s not related to left or right, politically," she added.
The thing about Israel is that people tend to believe the bad news before the good, at least from afar. "It’s not easy to know how good it is here from outside of the country," Garcia-Granados observed, but added with a smile that such a misperception can be an advantage for those who know the real deal.
With conditions of economic stability like Europe, but offering incentives for investment like the ones usually seen in developing countries, Israel is a unique case.
And with a diversity of industry that is constantly growing, Israel will not be pigeonholed. Life sciences, Internet technology, and now even base metals are all providing growth engines for Israel to establish a positive economic horizon for years to come.
On Tuesday, September 4, AHMSA Israel announced a major milestone in the progress of the Arava Mines renewal. The copper production plant pilot is now up and running, simulating the industrial copper production process from start to finish.
Israeli Minister of National Infrastructure Binyamin Ben-Eliezer said of the news, "The copper mining project at Timna is due to provide a source of income to hundreds of families in the area in the near future and to thus contribute to the Israeli economy. Moreover the project in itself has a huge potential to be profitable, especially in light of the ever-increasing demand over the last few years around the world for copper and its products."
As with the tech sector, the Israeli government is giving its full encouragement to its upstart metals industry, realizing the local and global significance such projects bear. As with any international investment opportunity, you can’t completely understand the environment and excitement of Israel’s bullish economy unless you go there…Or if you have eyes and ears on the ground.
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Regards,
Sam Hopkins
