Why is Latin America the next hotbed for mining activity?

March 3, 2017

Global demand for certain resources and materials means mining is still a lucrative export activity for many countries. Currently, nations throughout Latin America are leading the race for the spotlight, as sizable inbound investment boosts an already active industry.

According to Ernst & Young (EY), although the US and China are still the most attractive outbound investment markets for other nations looking to spend on mining, Argentina leads a host of Latin American nations looking to take the top spot. For companies that need mining equipment shipping services, it’s important to choose a provider that is active in the region and understands what makes it unique.

What’s encouraging mining activity in South America?

Compared with many other mining hotspots across the world, Latin American countries offer and almost unprecedented potential for scale. EY found that much of the environment is yet to be fully explored from a mining perspective, a fact which suggests a strong future for the region.

This exploration potential is paired with regulatory environments that are friendly to overseas investors, particularly in Chile, Colombia, Peru and Mexico. Beyond that, there’s a near-guaranteed target market for these resources in North America, further adding to the confidence investors are beginning to have in the region.

However, EY also noted that, in some ways, Latin America is yet to reach its full potential. It’s been impacted by the same challenges as the rest of the global mining industry, and as such still hasn’t reached its peak while other markets rebuild.

Which resources does the region produce?

An investigation into the region from Mining.com found that Latin America is responsible for a large proportion of a range of different resources. In 2013, half of the world’s silver supply came from these countries, as did 45 per cent of all copper, and a significant chunk of total molybdenum, zinc and gold.

According to the report, gold mining in particular is experiencing a resurgence in interest, in line with the global focus in the mineral that grew in intensity from the early 2000s. Now, three Latin American countries – Peru, Brazil and Chile – have seen major growth in their gold production. All three countries have increased production by at least 25 per cent since 2001, and Peru sits sixth on the global list of top gold producers, according to Finances Online.

How to members of the industry feel about the region?

As mentioned above, countries across the Latin America region offer a supportive framework for foreign investment, a sentiment reflected by a BNamericas report from 2013. According to the company’s findings, Chile is perceived as having the best climate for mining investment, with 44 per cent of survey respondents pledging their support for the country. Peru, Brazil and Colombia followed.

There's still plenty of room for further expansion in South America. There’s still plenty of room for further expansion in South America.

However, there is still work to do if the region is to continue its ascent to being a mining superpower. According to risk management expert Willis, as reporting by Mining.com, countries throughout the region will need invest at least 9 per cent of their GDP into their infrastructure development every year up until 2020 to achieve to this level.

Experience shipping mining equipment to Latin America makes all the difference

As the region’s expansion continues, there’s likely to be even more movement of mining machinery both in and out. EY noted in its profile of Latin America that the local infrastructure can be a challenge, adding further difficulty when it comes to shipping equipment, especially by land.

Freightplus has worked in the region before, with one particular assignment involving the extraction of 10 140 tonne Caterpillar dump trucks out of a mine in Chile. To do this, we had to find a port that could handle equipment of this size to avoid the task of dismantling them, and then ensure all the necessary checks and inspections took place.

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