EDITOR: | May 28th, 2014

Shining a light on Latin America’s mineral potential

| May 28, 2014 | No Comments

Latin-America-Down-UnderIn Sydney at present you can meet just about a who’s who of Latin American mining. Representatives from South American financing houses and geological institutes along with senior political figures from Mexico, Peru, Colombia, Venezuela, Bolivia and Nicaragua are in town to boost interest among Australia companies at the Latin America Down Under Conference on this week.

South of the Rio Grande, the foreign presence has traditionally been dominated by U.S. and Canadian companies. That is changing: large numbers of Australian companies are working there now, and the Chinese are moving in, too.

Perhaps it is time for a reminder of just how important the region is, not only for mining generally, but for the various commodities in which were are interested: Brazil for potash and rare earths and now tin, Argentina for uranium (and its developing nuclear industry), Peru for tin, Colombia for platinum. In the case of the latter, Colombia became the West’s only large source of platinum when the 1917 revolution knocked out Russian exports. In the Second War II, also, Latin America was key. It was a vital cog in the victorious Allied wheel. Washington was able to use its money and political power to squeeze out Japanese and German interests from 1939 onward and pretty well secure a monopoly on mineral exports from South America.

Many countries there are rich in gold and silver and, as one Australian company showed this week, there are still big finds to be made. Beadell Resources — ASX:BDR — reported one intersection in Brazil of 19 metres at 62.8 grams/tonne gold, including one 7 metre section at 162.8 g/t; that’s the sort of result 150 years that would have set off a gold rush with prospectors racing to Brazil to get into on the action. Consider that against the four largest miners owned in North America along with AngloGold Ashanti having reserves now grading an average 1.1 g/t.

Latin America produces 45% of the world’s copper, 50% of the silver, 26% of the molybdenum, 21% of zinc and 20% of global gold output. In 2013, according to Sydney-based Latin American advisor, Jose Blanco, Latin America is the leading region for mineral investment, attracting 27% of global spending in 2013, with Mexico, Chile, Peru and Brazil between scoring 21% of global mining investment.

Yes, there are problem areas. Peru is demanding much greater social accountability from mining companies intending to work in its country. Bolivia has to overcome some erratic policy making in recent years (as does Ecuador). Gautamala has been a disappointment, and parts of Colombia are still ones you enter at your peril.

But things keep getting better and politicians are increasingly aware that they have to make themselves as an attractive destination. Hence the presence here in Sydney of Nicaragua and even delegates talking about Cuba.

“Discover the Mining Opportunities” was the message the Nicaraguans were putting about at the Sydney conference on Latin American mining. They were trying to publicise their abundant natural resources, a pro-business government ( big change from the Sandinista years), solid legal framework and generous tax incentives, along with qualified available labour and “high levels of personal safety”. This Central American state exported $436 million worth of gold last year. The delegation explained that less than 10% of the country is under exploration.

And did you know that Cuba has ostensibly come over all friendly to miners? Two months ago Cuba’s National Assembly halves the profits tax (to 15%), although other tax benefits are available only to joint ventures involving Cuban entities, and state-owned ones at that. However, there is considerable scepticism whether the spirit of the new policies will actually be realised, and grave suspicions it won’t.

But Cuba is important for one metal: nickel, having large resources of nickel in laterite, Something to watch. Along with the region as a whole.


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