Thursday, May 3, 2012

Mining Investments Boom In Latin America

Regionally, Latin America (led by Mexico, Peru, Chile, Brazil and Argentina) is still the leading destination for mining exploration, a position it has held for the last two decades according to the 2011 report of the Metals Economics Group (MEG).

“Canada was the most important country overall” in terms of exploration, which estimates that the total worldwide budget for exploration, carried out by 2,089 companies, reached US$10.6 billion that year, representing 95% of the worldwide nonferrous exploration budgets.

Latin American countries received 27% (some US$2.884 billion) of the investment mentioned by MEG and 83% of that figure (around US$2.394 billion) was destined for exploration in Mexico, Brazil, Argentina, Chile and Peru. Gold was the main object of exploration in Argentina and Mexico.

The figures show that mining companies increased their exploration budgets by 45% compared with 2009, which, according to the analysts consulted, is in response “to rising metal prices and more stable markets”. Gold was the leading target of the explorations, “attracting more than half the global exploration budget total, with copper a distant second”.

For the Executive Director of Cesco (Center for Copper and Mining Studies) in Chile, Juan Carlos Guajardo, “the boom in the emerging countries is establishing a greater demand for commodities, (for which reason), in the current phase of high demand for raw materials, Latin America has great opportunities compared to other parts of the world such as Africa and Asia”.

However, Guajardo warns that there is much “diversity among the countries of the region as regards their disposition and capacity to take advantage of this opportunity”, and therefore the countries must strike a balance between their geological potential, institutional stability and the conditions for mining operations.

In the principal mining countries of Latin America, the mining projects of the next two years that are currently underway will require investments of around US$37 billion, according to sources consulted by Minería Pan Americana.

Chile and Peru are by far the two top mining powers of Latin America. Investments in mining projects in Chile exceed US$17 billion and those in Peru exceed US$10 billion. The combined investment for both countries is more than half of all the projected investments for Latin America (not including Brazil).

Copper Is King

According to the experts consulted, you cannot speak of noteable mining projects without referring to Chile as well as copper.

In Chile, copper mining is shared among private and state-owned companies. CODELCO Chile (the National Copper Corporation) is an autonomous state-owned company, the largest copper mining company in the country and the biggest copper producer in the world. The main products sold by Chile are copper cathodes and concentrates.

2011 is a very important year for Chile’s mining industry. There are two large projects in the final stages of preparatory works and in the early stages of exploration in the Atacama region alone. These are Cerro Casale, belonging to Barrick Chile, with an investment of US$2,300 million, and Pan Pacific Copper’s Caserones project, with an investment of US$2 billion.