This Mexican conglomerate has experience in taking state-run trains with low investment levels and making them competitive and profitable, as they did in Mexico. Citigroup rejected Larrea's offer and is proceeding with Chico Pardo and the IPO at Banamex. However, Argentina has a bitter history of macroeconomic imbalances, and Milei's government, while successfully reducing the deficit and inflation, has recently relied on two international bailouts—from the IMF and the U.S. Treasury—to stay afloat. That's why Grupo México sees a long-term business opportunity in Argentina's Belgrano Cargas railway, which spans over 1,000 kilometers, crosses productive zones, and provides direct access to ports. They want to observe how Milei's government and its attempt to normalize Argentina's macroeconomy evolve. The Milei government promised to privatize it soon, but that decision is tied to a monetary knot: with negative reserves at the Central Bank and an artificially suppressed dollar, the market is demanding he liberalize it and let it float, but that move could worsen inflation that remains above 2% monthly. That's why Grupo México is interested in investing in Argentina, but no decision has been made, and caution prevails. 'They are going to wait to see how the situation evolves,' an Argentine official aware of Larrea's group's interest told LPO. Now, the obvious question is: why would Larrea's group risk entering such a complicated market as Argentina? One possible answer is the problems they are facing investing in Mexico, which is leading them to analyze other potential destinations for their capital, as they have already done in Peru and in states like Florida and Arizona. Grupo México is fully prepared to invest over $9 billion in the El Arco copper mine in Baja California, a world-class deposit. In fact, the dollar restriction that prevents companies from repatriating their dividends remains in effect. Grupo México is interested in investing in Argentina, but the decision is not yet made, and caution prevails. For perspective: Argentina shares the Andes with Chile, but two-thirds of that mountain range are on the Argentine side. This is a deep initiative that includes bringing energy from the company's combined-cycle power plants in Sonora, building electrical transmission lines, a water network for communities, and even a port. However, regulatory authorities have been delaying the environmental permits that Semarnat and Profepa must issue since 2023, said Rubén del Pozo, president of the Mining Engineers' Association. The libertarian government wants them to bid on the Belgrano Cargas, the country's main freight railway. Argentina is an agricultural powerhouse and has immense potential in mining. However, Chile bills $55 billion annually from mining, while Argentina barely reaches $5 billion. Agriculture and mining need trains to transport their massive loads. And as is known, the worst thing that can happen to a company is to have its capital immobilized. The leadership of Grupo México, led by Germán Larrea, the country's second-richest person, has begun to take a close look at Milei's Argentina. Railways are the second-most division of Grupo México, behind mining.
