Mexico has 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
The fiscal reform bill, which was
approved mid-December by the Mexican Senate, 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.
In December, the Mexico Senate 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 leftist groups voted against it, at
times occupying the senate floor and unsuccessfully motioning
for suspension of discussion.
The Bill 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 in the
Exploration in Bolivia,
In Bolivia, the level of 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 out of a list of the 96
least enticing places for foreign mining companies to fund
projects, despite being rich in mineral deposits.
The Fraser Institute 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
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 Carlos 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, meanwhile, is long
established as a copper producer as well as being the largest
lithium producer in the world.
In 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 Jernimo Carcelen, wrote
recently in Latin Lawyer.
However, 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
uncon-ventional exploration in 2013-2014.
Mining reform in
A Brazilian government
mining-reform committee said in November that it will postpone
a vote on a proposed legislation overhaul until February amid
continued disagreement over the bill ahead of an upcoming
The vote was been held up due to
differences within Brazils executive branch over some
provisions in the bill, the Wall Street Journal
The government demonstrates
that it doesnt want to vote on the bill this year,
the bills sponsor, Congressman Leonardo Quintao, told the
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.
For example, in November, Solvay
announced it has agreed to acquire the speciality chemical
assets of ERCA Qumica Ltda. in Brazil.
This, it said, allowed the group to
more than double its production capacity in surfactants in
Brazil, serving customers in the agrichemicals, home and
personal care, coatings, mining and oil and gas markets.
Solvay Novecare deals in specialty
surfactants which use industrial minerals as fillers, such as
kaolin, calcium carbonate and talc.
Magnesita meanwhile has gone the
other way and is developing graphite and talc deposits within
Brazil for use in its refractories and other end markets.
For oilfield 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.
2014 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
bossesÑ strict and sometimes, nonsensical regulation
policies and a vast amount of misinformation in the public