South America is a Resource Force with $216 Billion in Mining Project Development

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Researched by Industrial Info Resources (Sugar Land, Texas)--South America, home to vast mineral resources, will remain an attractive place for foreign investments in the Metals & Minerals Industry in coming years. With more than 350 operational mines and about 400 active mining projects representing combined investments of more than $216 billion, project activity on the continent is growing substantially, thanks to worldwide and domestic demand for mined raw materials.

All of South America's operational mines and mining projects are featured in Industrial Info's newly released South America Mining Industry Wall Map, 2nd Edition.

Overseas investments are growing significantly. China and India are investing heavily in South American coal and iron ore mining projects and shipping infrastructure to feed growing demand for resources at home.

Click on the image at right to view a chart showing the breakdown of South American mining projects by country.

Brazil, Chile and Peru account for 87.5% of the value of mining projects under development in South America, with more than $189 billion in the works in those three countries. Brazil has recently overtaken both Chile and Peru as the South American country with the leading amount of mining projects under development, with more than $73 billion. Global miner Anglo American plc (PINK:AAUKY) (London, England) has an $85 billion growth pipeline, most of which is focused on projects in South America. The company will see four major expansion projects come into production in South America and South Africa to boost the company's output of iron ore, nickel and copper.

Brazil

Brazil leads South America in mining projects, with 118 projects worth more than $73 billion that are planned or are currently under way. Brazil's mining sector is set for robust growth, as the country is expected to see economic growth of 6% in 2011. Vale SA (NYSE:VALE) (Rio de Janeiro, Brazil), the world's largest iron producer, is one of the mining companies driving overall sector growth. Vale plans to invest a record $25 billion in 2011 to expand its business across the globe.

Vale, along with industry giants Rio Tinto plc (NYSE:RIO) (London, England) and BHP Billiton (NYSE:BHP) (Melbourne, Australia), has forced major changes in the iron and steel sectors, resulting in the end of the 40-year-old annual benchmark system of pricing iron ore in favor of quarterly contracts with steelmakers. The companies also raised the price of iron ore nearly 30% to $150 per ton. Elsewhere in the sector, gold mining is seeing increased activity, because of the rise in demand from investors, making this commodity an attractive investment. Brazil will see an increase in gold investment and exploration projects in the next five years.

Chile

Chile is the world's largest copper producer. The country's mining industry is forecast to reach a value of more than $55 billion in 2014, up from $29.8 billion in 2008. With improving commodity prices aiding the recovery of Chile's mining sector, many companies are seeking investment projects in the mineral-rich and politically stable country. State-owned miner Codelco (Santiago, Chile) has investment plans exceeding $15 billion over the next five years, which will help the company maintain its spot as the world's top copper producer. In addition to copper, gold could also be a potentially attractive investment prospect for Chile. In November 2009, the Chilean National Copper Commission reported that Chile planned to triple the country's gold production over the following five years. A number of developments have already begun on gold assets in Chile, such as Barrick Gold Corporation's (NYSE:ABX) (Toronto, Ontario) Pascua Lama gold mine and Kinross Gold Corporation's (NYSE:KGC) (Toronto) Lobo Marte gold mine. Currently, there are 87 mining projects being developed in Chile, requiring investments of more than $56 billion.

Peru

Peru currently has the most mining projects under development in South America, with 122 project totaling $59.8 billion. Only 10% of the country's metals and minerals reserves are currently being exploited. More dynamism in the sector will increase this percentage as additional mineral-rich regions in the country are explored and exploited. Peru's copper production is expected to equal that of Chile in the future.

However, the recent cancellation of mining concessions by the government of Peru, along with the election of President-elect Ollanta Humala on July 28, 2011, has put mining investments in the country on alert. Projects being developed by Bear Creek Mining Corporation (TSX:BCM) (Vancouver, British Columbia) and Southern Copper Corporation (NYSE:SCCO) (Lima, Peru) representing more than $3 billion in potential investment have been cancelled or delayed in 2011 due to permitting or geo-political issues.

After the victory of Ollanta Humala in the country's election, the mining industry is on alert as the new president negotiates a new mining windfall tax that jeopardizes project activity. Peru is the second-largest world producer of silver, lead and zinc, and the sixth-largest producer of gold.

Colombia

With 11 major mining projects totaling $4.2 billion, Colombia is the fifth largest country in South America for active mining projects. Colombia is Latin America's top coal producer, and most of the country's export production is from open-pit mines operated by foreign firms such as Drummond Company (Birmingham, Alabama), BHP Billiton and Xstrata plc (LSE:XTA) (Zug, Switzerland). Colombia's coal production was about 76 million tons in 2010, compared to 69 million tons in 2009. Potential reserves are still being examined, which will increase demand for investment.

Colombia is the world's fifth-largest coal exporter, lagging behind Indonesia and Australia, and just trailing exports from Russia and South Africa. Most of Colombia's thermal coal exports are shipped from ports on the Caribbean Sea, making Europe, the United States and Latin America the most logical markets for export. The bulk of thermal coal exports go to Europe, where power generators prize Colombian coal for its high energy output and low sulfur content. More recently, Chile, Mexico, Brazil and Argentina have become a small but steadily growing market for Colombian coal for power generation and cement production.

Argentina

Argentina's mining sector also holds significant potential. There are currently 34 active Metals & Minerals Industry projects in the country, notably in the gold, copper and uranium sectors, representing investments of about $14 billion. Argentina's mining sector has proven attractive to foreign investment. Industry giants Xstrata, Barrick Gold, AngloGold Ashanti Limited (NYSE:AU) (Johannesburg, South Africa) and GoldCorp Incorporated (NYSE:GG) (Vancouver, British Columbia) have investments in the country. The industry benefits from relatively good levels of political and financial stability, coupled to a sound regulatory framework. As such, the scene should be set for strong growth until 2014. Argentina has reserves of copper, gold, lead, silver, zinc and other minerals. The country also has extensive smelting and metal-processing capabilities and is a producer and exporter of steel and aluminum products. In particular, we should expect increased output from Argentina's gold and copper sectors, as new projects begin operations.

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