The richness and diversity of Latin
Americas geology has long made it an appealing target for
miners and minerals, having been an important part of the
regions economies for centuries.
Yet Latin America is often deemed
to have failed to fully deliver on its potential as a world
class mining centre, largely because of a turbulent and
colourful political history that has seen countries up and down
the continent relentlessly rewriting regulations governing the
extraction of natural resources.
Such erratic policy making has been
blamed for deterring investment and creating uncertainty in the
mining sector, meaning that some mineral-abundant nations still
lack the technology to capitalise fully on their native
This year, several Latin American
nations have found themselves in the public eye once again, as
regulation, controversial policies and corruption in the mining
industry have taken centre stage.
Renewed interest in lithium mining
has thrust Bolivia and Chile into the spotlight, as both
countries attempt to meaningfully exploit vast brine reserves
in the Andean salars.
Meanwhile, In Peru, allegations of
mining-related corruption dog the countrys government and
Brazils failure to meet GDP expectations has held back
its mineral industry.
Lithium in Bolivia and Chile
Latin America is one of the
worlds most important lithium producing regions.
According to US Geological Survey (USGS) figures, lithium
resources in Bolivia and Chile are 9m tonnes and 7.5m tonnes,
respectively, while Argentina holds a further 6.5m tonnes.
In Bolivia, however, recent changes
to the countrys mining code look likely to frustrate the
nations opportunity to become a top lithium producer.
In May, the government approved a
controversial new mining law (see p26), which provides
that only state-run firms can mine lithium and potash in the
country and bans private firms from partnering with domestic
The policy follows a stream of
nationalisations of foreign-run mining assets in recent years,
which form part of President Evo Morales stated mission
to return wealth and power to Bolivias long-marginalised
indigenous majority population.
With general elections due to take
place in the country later this year, many feel that the law is
cynically timed and could prevent Bolivia from benefitting from
a predicted upswing in lithium demand.
Bolivias lithium deposits are
located on the Salar de Uyuni, the worlds largest salt
flat, covering nearly 5,000 square miles (12,950km2)
in Potosi and Oruro, southwest Bolivia, and are estimated to
account for 50-60% of the worlds lithium reserves.
While extracting lithium from brine
deposits is a relatively simple process, relying on solar
evaporation, certain characteristics of Bolivian lithium
present challenges that would benefit from access to
international technologies; something that looks less likely
now that the deposits have been earmarked for state
The Uyuni lithium is mixed with
magnesium, as well as being unusually high in salt content,
complicating the extraction process.
The salar is affected by seasonal
flooding every February, while the remote location also raises
the cost of bringing in energy, water and other inputs for
Despite being home to the domestic
lithium giant, Sociedad Quimica y Minera (SQM), and fostering
projects belonging to the major US producer, Rockwood Lithium,
Chile is often regarded as having failed to adequately develop
its lithium industry.
This could be about to change,
however, as the country has embarked on a state-backed
initiative to capitalise on its lithium reserves, which began
with the establishment of a National Lithium Commission in June
(see p58) and is intended to lead to the creation of a
state policy for the exploitation of the mineral.
Attempts to open up the sector in
the past have been thwarted by bureaucracy, while the
difficulty of securing water rights in what is one of the
driest areas on the planet, a problem that has also affected
Chiles iodine industry (see p14), and the
operational difficulties of working in the Andean plateaus,
have also been stumbling blocks.
The establishment of the commission
highlights the governments awareness that Chiles
lithium reserves are a precious asset.
Lithium was one of the few mining
issues that was directly addressed in the manifesto of the
current president, Michelle Bachelet, prior to her election in
March this year. Bachelet, together with the mining minister,
Aurora Williams, signed the decree to establish the commission
on 12 June.
Corporate interest in the sector is
also growing. Earlier this year, state-owned miner Codelco
announced it would once again open a tender for lithium
exploitation on tenements in Maricunga and Pedernales. At Salar
de Maricunga, four companies, including Li3 (see
pg54), are already exploring for lithium.
The allocation of mining rights to
potentially lucrative mineral reserves in developing economies
frequently goes hand-in-hand with corruption, and Latin America
is no exception.
In June, stories emerged which
alleged that Peruvian President, Ollanta Humala, who used
support for mining as a springboard to gain more votes during
his 2011 election campaign, financed his campaign with
ill-gotten mining funds.
Local press reports citing
Humalas political opponent, former President Alan Garcia,
alleged that Humala accepted over $49,000 from a union
representing informal miners.
Humala recently announced a package
of economic reforms, which included promoting investment in
Perus mining and energy sectors, along with pledges to,
streamline bureaucratic processes, encourage competition
and reduce risks of fraud and corruption.
Most of Perus export earnings
derive from its metallic mining industry, which is a large
producer of copper, gold and tin, but it also holds and exports
a modest amount of industrial minerals, including phosphate,
kaolin, talc, boron, andalusite and mineral sands.
Expansion of its industrial
minerals industry will depend partly on Peru providing
reassurance that its mining business can be run without undue
risk to international operators and investors, while increasing
pressure for environmental protection and sustainable
development have added to restrictions on miners.
However, a series of laws passed
over the last two decades, making it easier to acquire mining
rights and secure private investment, suggest that the country
is serious about its mining sector.
Brazil is the largest country in
Latin America and is the worlds second biggest producer
of natural graphite and the third largest producer of
Nearly all the Brazilian magnesite
reserves are located in Serra das Eguas, near Brumado, Bahia,
with two companies, Magnesita Refratarios and Industrias
Brasileiras de Artigos Refratarios Ltd (IBAR), exploiting
reserves in the area.
The countrys graphite
producers include Nacional de Grafite, with mines in
Itapecerica, Pedra Azul and Salto da Divisa, and Grafite do
Brasil, with a mine in Bahia state.
Magnesita is also developing a
graphite project in Minas Gerais, along with talc reserves in
In June, mineral sands producer
Iluka signed an agreement, with global mining giant Vale, for
the development of the titanium-mineral-bearing Tapira complex
in Minas Gerais (see pg21).
Despite being a hotbed for
industrial minerals mining, Brazil is not free of
disappointments. As one of the BRIC (Brazil, Russia, India and
China) nations, touted to see stratospheric economic growth at
the beginning of this decade, the country has only averaged GDP
expansion of around 2% since 2011, according to figures from
Rapid development of infrastructure
and construction projects, which were expected to boost raw
material demand in the country, failed to materialise, while a
struggling global economy has also kept a lid on exports.
On the policy front, Brazil has
been considering an overhaul of its mining code. In April 2013,
Brazils Senate created a commission to discuss proposals
for new regulations as part of a planned overhaul of the
countrys mining industry.
The regulatory sub-commission for
mining and rare earth exploration is led by two senators, one
from the governing Workers Party and one from the
opposition Social Democracy Party.
The purpose of the commission was
to discuss and propose specific regulations to flesh out a
policy initiated by President Dilma Rousseffs
administration to update the existing tax and royalty rules
under the mining sectors current legislative
However, since the announcement in
February there has been little notice of any advancement from
the sub-commission, although a new mining law was unveiled
separately by Rousseff several months after it was formed.
Rousseff said her government wanted
mining companies to have contractual stability and security and
for concession renewals to be contingent on them meeting
investment and environmental goals. What this meant in reality
was an increase in royalties.
A royal headache in
The Mexican mining industry entered
a new era in 2013. After a decade-long mining boom, which was
only briefly interrupted by the global financial crisis, news
that a 7.5% royalty tax was being imposed initially scared off
The initial panic failed to make a
mark however, as the economy ministry reported that foreign
direct investment in the countrys metallic mining sector
increased in the first quarter of 2014, when compared to the
Mexico is the leading Latin
American destination for mining investment and is fourth
worldwide behind Canada, Australia and the US, according to
Metal Economics Group, accounting for 6% of global exploration
However, prior to the tax being
imposed, mining only contributed around 4% to Mexicos
national GDP, despite seeing investment of over $28bn between
2005 and 2012.
Mexico has a
well-developed industrial minerals industry, hosting the
worlds leading fluorspar producer, Mexichem, as well as
developed wollastonite deposits and amorphous graphite mines in
The Central American country is
also seeking to develop its junior mining industry, with
explorers looking at mining borates and lithium and the
government seeking to develop the rare earths deposits
And to the
Indications are that companies
operating within Latin America are developing projects to serve
growing markets, and in some cases are aided by the governments
in said countries.
Chiles establishment of a
Lithium Commission is a positive boost for those hoping to
exploit the countrys vast reserves and comes after years
of struggle by those seeking to develop the industry. Bolivia,
meanwhile, with its own brand of resource nationalism, lies
contrary to this on some levels.
Work being carried out by companies
such as Magnesita and indeed, Curimbaba, which looks to provide
the growing oilfield minerals markets with its sintered bauxite
proppants, show how companies are working in Brazil to
vertically integrate and work past the domestic demand
Latin America does hold vast amounts of industrial minerals
and has an established mining background, but it will be the
governments within the countries that finally decide the fate
of these markets.