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Latin American Mining: Trends, Opportunities and Strategies

This address was given by Jose Blanco, Chairman of the Australia-Latin America Business Council and Senior Partner of Blanco Partners, at the Latin America Downunder Conference that was held in Sydney on May 28-29, 2014. 

I would like to begin by taking a moment to highlight why the Latin American region ranks as one of the best mining environments in the world and why it should figure more prominently than it does on the radar of Australia’s mining and METS companies.

The principal reason is that the region is blessed with abundant mineral resources, producing 45% of the world’s copper, 50% of the silver, 26% of the molybdenum and equally high percentages of zinc, gold and iron ore.

Latin America’s geology and its relatively attractive operating environment are such that five of its countries consistently rank in the Top 10 global destinations for mining investment.

The region’s mining potential is reflected in the fact that in 2013 it captured 27% of the global exploration budget. Furthermore, even though Latin America has maintained its share of the global exploration budget at close to 25% for over a decade, it is generally acknowledged that much of the region is unexplored.

However, Latin America’s mining credentials are not limited to exploration. For more than 4 years, the region has also led the way in the development of projects.

In 2013, Latin America was credited as having 229 committed development projects, with an average investment of 780 million dollars. These figures equate to Latin America having a 29% share of global committed development capex.  

Despite such a successful track record and strong growth prospects, it has to be acknowledged that Latin America is not immune to the general slowdown that has impacted global mining activity. It too is grappling with the impact of lower commodity prices, persistently high input costs and reduced availability of funding. It too has experienced a fall in investment in exploration and development.

Beyond the global issues, the region is also having to address a range of additional factors that are more ‘domestic’ and are impacting on the development of its mining sector.

However, despite the undoubted challenges that exist in the region, I believe that Latin America has weathered the mining slowdown better than most other regions and that it continues to offer some of the best opportunities for growth  - be that for exploration or development, mining products or services.

I also believe that the current market volatility and challenging trading conditions have created an exciting opportunity for well-managed, cashed up and ambitious companies to profit by making astute investments and thus positioning themselves for the sector rebound that will invariably occur further down the track.

Taking advantage of the opportunities on offer requires accurate market intelligence, the ability to interpret it correctly and the willingness to act on it.

The starting point has to be the acknowledgment that Latin America is not a single homogeneous market and an appreciation of the specific situation in each country, as the scenarios do vary......

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