Mining Activity in Latin America Heats Up to $198 Billion

Researched by Industrial Info Resources (Sugar Land, Texas)--In Latin America, there are more than 1,500 active mining projects totaling about $198 billion under development, ranging from those in the early exploration stage to those under construction, according to Industrial Info's Metals & Minerals Business Intelligence Platform. Ranked by total investment value, the top five Latin American countries for mining projects are: Chile with $53 billion; Brazil with $52 billion; Peru with $41 billion; Mexico with $14 billion; and Argentina with $13.8 billion.

Mining firms are starting to invest again after several years of retrenchment due to the collapse of commodity price/demand fundamentals. Around the end of 2016, commodity prices hit the bottom and have been climbing steadily ever since. Latin America's vast mineral wealth is attracting mining investments, especially for metals such as copper, gold and lithium.

Growing demand for metals used in batteries for electric vehicles and energy storage are driving demand for several metals including cobalt, copper, nickel, lithium and rare earths. With the electric vehicle and batteries industries on the rise, lithium projects will be very important for Latin American countries with large reserves like Chile, Argentina and Bolivia. Chile and Argentina account for 67% of global lithium reserves, according to the U.S. Geological Survey. Currently, there is $4.7 billion worth of lithium projects under development in Latin America.

Click the image at right for a graph showing the top 10 Latin American countries for mining investment.

Chile, Peru and Brazil are the most important mining countries in Latin America, representing 67% of mining project investment. New government policies and strategies are starting to bear fruit in countries like Argentina and Chile, where growth-minded governments have been recently elected. Examples include the activation of projects like Spence in Chile and Lindero in Argentina. The Spence project is a $2.5 billion expansion of the BHP Billiton plc (NYSE:BHP) (Melbourne, Australia), copper mine in Chile. Lindero is a $239 million gold mine project by Fortuna Silver Mines Incorporated (Vancouver, British Columbia) (NYSE: FSM US).

Chile
Chile is the world's largest producer of copper, but it has lost market share to other copper-producing nations such as those in Africa. Chilean state-owned Codelco (Santiago) has active projects totaling $24 billion and plans to expand existing operations in order to maintain capacity amid dropping ore grades. Chile is also one of the world's leading producers of lithium. Due to increased demand, producers including Sociedad Química y Minera de Chile (SQM) (Santiago) and Rockwood Lithium are planning expansions.

Brazil
One of the world's largest exporters of iron ore, Brazil is the number two country in Latin America for mining project development. New project activity has slowed significantly as the economic crisis and competition from foreign sources of iron ore like Australia have taken a toll on market activity. Brazil-based Vale (Rio de Janiero), a global leader in iron ore and nickel mining, is bucking the trend of increased capital spending by mining firms in 2018 and is reducing spending. Vale has $8.9 billion worth of projects planned in Brazil.

Peru
Peru is the third-largest country for mining project development after Chile and Brazil, with about $41 billion worth of projects. Recent political turmoil in Peru has slowed investment in the country. However, the price of copper has improved and copper mine project activity is on the rise. In Peru, significant copper mine investments, such as Minas Conga and Tia Maria, are awaiting improved economic conditions and a resolution to community opposition. Recently, Southern Copper Corporation, a subsidiary of Grupo Mexico (Mexico City, Mexico), won a tender to develop the long-delayed $2 billion Michiquillay copper project.

Mexico
Mining activity is increasing in Mexico, the fourth-largest country for mining project development in Latin America. Mexico currently has $14 billion worth of active mining projects, mainly involving copper gold, silver and zinc.

Argentina
Argentina is the fastest-growing country in Latin America for mining project development and currently has $13.8 billion worth of projects. Argentina's pro-mining government is enacting mining reform and seeking to lift a ban on open-pit mining, which would further encourage development. A major supplier of lithium, Argentina is poised to take advantage of the rise in demand.

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