Mining Needs Sustained Investment as Middle America Growth Steadies

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Researched by Industrial Info Resources (Sugar Land, Texas). Any sustained downward wobble in global commodity and resource prices will affect the potential of Middle American countries to develop the potential of their mineral resources. Still lacking the overall integrated industry infrastructures to back strong export supply chains, planned projects could be stalled.

But the mixture of base and precious metals reserves in the region could provide a balanced base on which to move the mining and metals sector forward. Underinvestment in the base metals sector has been a worldwide phenomenon, which has been brought into focus by the sustained demand pressures. Central America stands to receive a relatively small, but regionally significant proportion of this investment.

GDP growth rates in the region will taper off in 2007 with the energy resources- driven growth in Trinidad and Tobago showing the most dramatic fall from 12.5% in 2006 to 6.9% in 2007. But the 2007 growth prospects are still dynamic enough to drive a number of major projects in that Caribbean country. Costa Rica, with a drop from 5.5% to 4.5%, is still perceived as the third best place in Latin America to do business and could be ready for an economic take-off, if structural trade and financial policy changes are carried through. The quality and motivation of the workforce receives top endorsement from international companies operating manufacturing plants in the country.

Guatemala, with a GDP of 4.1% for 2006 and an estimated 4% for 2007, is continuing to receive investment from Russia’s Rusal in the development of bauxite mines. Russia’s Rusal has acquired the Cambior stake in local operations and as the world’s largest aluminum producer, after merging with Sual, could be a source of further project investment in bauxite and alumina production. New gold mining potential has been opened up by a drilling and exploration by Stratagold. Other global major metals and mining companies are active in the country.

The Dominican Republic‘s GDP for 2006 was 5.5% and is anticipated to fall to 5% in 2007. The Republic is seeing activity from Barrick and Goldcorp who have 60% and 40% stakes, respectively, in the Pueblo Viejo gold and silver mine. Nickel mining continues to be a major performer for the country as it is with Cuba (GDP 2007 -5%), where the government has invested $500 million in the industry over the past decade. Sherrit is now working with Cubaniquel on a $450 million expansion project that covers increasing local production of nickel and cobalt as well as retooling a refinery in Canada to handle increased nickel ore volumes from Cuba over the next 25 years.

Countries in the region are streaked with deposits of gold, silver and other metals and nearly all of them have some exploration going on directed to uncovering a pot of uranium. Guyana continues to make progress off a low base with GDP growth moving up from 3.5% in 2006 to 4.1% in 2007. Leading growth in the region is Panama sustaining a 6.1 % growth rate in 2007 after hitting 6.5% in 2006.

IMF data shows that the economies of the six CAFTA countries (Central American Free Trade Agreement) with the U.S. will grow at a rate of 4.1%, which is just under the average rate for the whole of Latin America.

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