Latin America has emerged as a mining investment and exploration hot spot amid growing global demand for battery metals and other critical mineral resources.
Long known to be rich in minerals like gold, silver, copper, lithium and uranium, mineral extraction from Latin America is increasingly crucial for a decarbonised future.
Yet investors have long been deterred from the region due to regulatory, environmental, and operational risks. In response, many South and Latin American nations, including Brazil, Peru, Argentina, Ecuador, Chile, Colombia, and Guatemala are amending their tax policies, regulations, and permitting processes to better appeal to international investors.
Dr Remi Piet, from the Embellie Advisory consultancy, said Latin America is on track to become a crucial investment destination as it emerges from a history plagued by political instability.
Dr Piet noted that while the region has quite a positive recent track record of regulation and investment stability, that is not always reflected in the media. Though there are perceptions of erratic leadership or political events, the actual resilience of Latin America’s mining sector is commendable.
“If we look closer at the structural evolution of key jurisdictions, we see a resilience of the mining sector and its capacity to re-emerge as a leader of sustainable mining in the next decade,” said Dr Piet.
“There is no denying the incredible potential of the region, from its geological wealth (in particular, in copper, gold, silver, zinc and now battery metals) to the strength of its national mining ecosystems built on centuries of mining history. Its geographical location also makes it an overall secure mining hub with prime access to Asian, European, and North American markets.”
One example comes from Mike Henry, CEO of Australia's largest mining company, BHP (ASX:BHP) Group Ltd (LSE:BHP, ASX:BHP), who spoke of his positive engagement with the Chilean government over copper taxes. In June, at the World Mining Congress in Brisbane, Henry said BHP’s negotiations in Chile, where the company has considerable copper mining operations, were “respectful and …. focused on understanding and collaboration”.
At the small cap end of the scale, companies like Xantippe Resources Ltd (ASX:XTC, OTC:XTCPF) are hoping to tap into the potential.
The company recently doubled down on its current and potential projects in Latin America by installing highly regarded veteran Matthew Beem as an executive director within the XTC Group. Beem was formerly director of finance, Latin America for Xantippe and recently served as the country head/CEO for Uruguay at the EFG Bank Rep Offices in Montevideo and Punta del Este.
Spotlight on Peru, an Australian favourite
With the view that South and Latin America plays a key role in the energy transition by supplying the full gamut of critical minerals, Global Victoria – the Victorian government’s trade facilitation agency and gateway to global economies – is actively developing relationships between Australia and the Americas.
It considers Latin America to be a major development opportunity for Victorian mining companies.
The agency highlights Peru as one of the most promising markets in the region, a country in which over 90 Australian mining-related companies already operate.
Australian Ambassador to Peru and Bolivia, Maree Ringland said, "Over the years Australia and Peru have developed significant trade, investment, and people-to-people links. The mining sector is a key driver of our relationship."
Peru is a particularly lucrative market given its abundant reserves of copper, silver, lead, zinc, tin, gold, phosphates, and uranium. As such, the country’s mining industry has attracted over US$60 billion in investment over the last decade.
There do remain challenges, such as slow permit processes and perceptions of political risk, but leading South American mining strategist, Fiorella Rivera Madariaga, is optimistic about Peru's potential with the view that the nation is becoming one of the world's foremost mining nations.
Peru has an abundance in minerals essential for renewable energy, electric vehicles, and batteries, becomes increasingly relevant, and Madariaga highlighted there being opportunities for companies with expertise in water treatment, environmental consulting, and innovative solutions for challenging operational environments.
The upcoming 2023 International Mining and Resources Conference (IMARC) in Sydney is set to host a large delegation from Peru. Highlighting the strengthening relationship between Australia and Peru, especially in the mining and resources sector, Peru will be represented at IMARC by over 20 companies from its $10 billion mining sector.