years ago, while working as a translator for a mining company
in Peru, I was often surprised by the divisive views held by
the public when I told them where I was working.
(the term given then to the people of Lima, where I lived) the
mining industry had transformed the country into a parable not
unlike Tolstoys fabled beggar who spent his lifetime
sitting on a pot of gold. My colleagues meanwhile would argue
that the industry bringing jobs, education, healthcare and
opportunity to areas which had been overlooked by the
government and blighted by terrorism.
This was, as
I mentioned, ten years ago. Today I am told that, at least
since the hasty departure of Fujimori, that the hypothesis has
moved on. Peru has looked to other countries in Latin America
and taken lessons on how these countries are developing their
mining industry. Countries like Brazil, which hosts the
worlds largest graphite company (outside of China)
Nacional do Graphite, and refractories company, Magnesita. Or Mexico,
which has a fluorspar behemoth in Mexichem and Chile,
which holds lithium and potash company SQM.
But the tide
is turning and it is a wave which encompasses all of
Latin America. Just as Africa has taken to resource nationalism
and Australia is reviewing its taxes, so countries in Latin
America are reviewing their royalty payments. Regulation is
opening up, leading the way for potential in hydraulic
fracturing (fracking) and renewable energies. But for some
countries, progress remains slow.
InMexico, the country
recently introduced the steepest mineral royalties in the
world, unsettling foreign and domestic mining companies
operating in the country, and, arguably jeopardising the Latin
American nations mining-friendly image.
The fiscal reform bill, approved by both houses of congress
at the end of October and signed by President Enrique
Peña Nieto, has not gone down well with the
countrys mining industry.
The aim of the bill was to boost mineral tax revenues to
strengthen the governments fiscal position. But
Mexicos mining industry, the biggest in Latin America,
says it has been unfairly singled out and is being asked to
make a disproportionate contribution.
Mexico senate this week also signed an historic energy bill,
which has now been sent to the lower house. The ruling PRI
party, its coalition bloc PVEM and the right-wing PAN were the
proponents of the bill while the left-wing PRD and other
leftists groups voted against it, at times occupying the senate
floor and unsuccessfully motioning for suspension of
The legislation opens up legislation of all exploration,
including shale-rock formations which jut from southern Texas
into northern Mexico. It is expected that Mexico will begin to
look at unconventional gas exploration.
state involvement has been so high that for lithium producers
it has meant regulatory hurdle after regulatory hurdle in
trying to get a project off the ground.
This year the Fraser Institute, a
Canada-headquartered independent public policy research firm,
placed Bolivia below Zimbabwe at 92 of a list of 96 least
enticing places for foreign mining companies to fund projects,
despite being rich in mineral deposits.
Annual Survey of Mining Companies was sent to
approximately 4,100 exploration, development, and other
mining-related companies worldwide. The survey represents
responses from 742 of those companies.
Bolivia has missed a golden opportunity to
become a lithium superpower following a failure to come up with
a plausible technical approach to produce lithium carbonate on
its own after more than five and half years of unfruitful
experimentation, Latin America economist Juan
Zuleta told IM.
Faith is still
there, however. In August this year the Dutch Ministry
of Foreign Affairs special envoy for natural resources,
Prince Jaime de Bourbon Parme, signed a declaration of intent
on behalf of the Netherlands in Bolivia. This declaration
spelled out a partnership which will see the Netherlands share
its knowledge and expertise with Bolivia on exploiting and
using its large deposits of lithium.
How, or when,
or what this will entail, however, remains to be seen.
Chile is long
established as a copper producer and it is also the largest
lithium producer in the world.
Chile, the mining industry is by far the most important sector
of the economy, representing an average 14.7% of GDP between
2003 and 2012; in the same period, mining exports reached an
average of $36bn, mining lawyer Jerónimo
Carcelén, wrote recently in Latin Lawyer.
logistics and infrastructure can be an issue. Power outages are
common and roads can become washed away.
In terms of
its energy problem, Chile has started to look towards renewable
energy to solve this conundrum. Solar energy has been discussed
(an industry which consumes silicon carbide, high purity
quartz, silica sand and soda ash and feldspar) and since
July this year fracking is now taking place. State oil company ENAP
announced a successful frac at its Arenal block in Tierra del
Fuego. The fracked well is reportedly flowing 120,000 cubic
metres per day. ENAP has said it will spend $100m on
unconventional exploration this year.
lithium producers looking to exploit the vast Salars (de Atacama and Maricunga) the main
issue is regulation since the complete disaster that was
the Special Lithium Operation Contracts (CEOL), all
has fallen quiet on that front.
The winner of
the CEOL was expected to sign a 20-year contract with
the government to explore the Atacama Desert. SQMs
winning bid to develop a lithium concession in Chile was
declared as invalid by the Chilean
government as it still had legal issues pending with the state.
Follow-up contender Li3 Energy filed a petition with
the Chilean government, asking them to consider awarding them
the tender, but nothing has come of it.
issue, in any case, is the lack of available water on the
salar, Carlos-Zuleta told IM.
What if Atacama fails to deliver the lithium
necessary for all the different competing uses in the following
years? (...) I have reason to believe that that could in fact
be the case. This has nothing to do with reserves (....) It
pertains to availability of a key element in brine production
nowadays: water, he said.
A Brazilian government mining-reform committee this week said
it will postpone a vote on a proposed legislation overhaul
until February amid continued disagreement over the bill ahead
of an upcoming recess.
The vote was been held up due to differences within Brazil's
executive branch over some provisions in the bill, the Wall Street Journal
"The government demonstrates that it doesn't want to vote on
the bill this year," the bill's sponsor, Congressman Leonardo
Quintao, told the newspaper.
The main sticking point, Quintao added, was whether the
government would allow royalty rates to be established directly
within the legislation.
But the mining industry itself is growing in the country, but
also, it is looking to the end use market, with a view to
becoming vertically integrated.
Solvay announced it has agreed to acquire the speciality
chemical assets of ERCA Química, Ltda. in
This, it said, allowed the group to more than double its
production capacity in surfactants in Brazil, serving customers
in the agrochemicals, home and personal care, coatings, mining
and oil and gas markets.
Novecare deals in specialty surfactants which use industrial
minerals as fillers, such as kaolin, calcium carbonate and
meanwhile has gone the other way and is developing graphite and
talc deposits within Brazil for use in its refractories and
other end markets.
markets, Brazil remains an important player as it has recently
discovered significant assets in the country both in
conventional energy markets and unconventional ones. Protests,
however, have marred this landscape so far.
looks to be an interesting one in Latin America. Weve
touched on only a fraction of the exciting developments that
have been taking place.
It is not a
continent where mining is a new concept, nor it is a continent
which is coming to the end of its path. But it is one which
needs to work with the mining industry in order to develop. It
is marred by past greedy government and sometimes,
greedy mining bosses strict and sometimes, nonsensical
regulation policies and a vast amount of misinformation in the
logistical challenges and there are energy issues, but these
look to be developed which can only be a good thing for
the industrial minerals industry.