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Latin American infrastructure woes barrier to mining

Keywords: Tags  Latin America mining, infrastructure problems, water supply, energy supply, Mercosur, alumina, copper, aluminum Carolina Guerra

SÃO PAULO — Latin America is the world’s most popular precious and nonferrous metals exploration destination, yet most countries in the region have recently suffered water and energy supply problems for their mining industries, according to a report released earlier this year by consultancy SNL Metals Economics Group.

The region attracted 25 percent of global investment in 2012, SNL said.

The exact amount of mineral resources on the continent remains unknown, but the lack of infrastructure for the mining industry—especially water and energy supplies, when combined with the lack of integration in the region—results in barriers to the progress of local mining projects.

Chile, the world’s biggest copper producer, is currently discussing ways to enhance its energy supply structure and avoid future problems fulfilling mining company power demands.

Peru is aiming to increase its copper production, and could eventually surpass Chile as the biggest producer in the world. But there are many challenges to overcome and the industry has faced protests from local communities against new projects, such as Greenwood Village, Colo.-based Newmont Mining Corp.’s Minas Conga project, and Lima, Peru-based Southern Copper Corp.’s Tía Maria project.

The Brazilian government recently reduced energy tariffs (, May 13), which had been among the highest in the world.

Paraguay has one of the highest electricity capacities per capita in the world and has for years been discussing the development of a local metals industry, which would be prompted by plans for a Rio Tinto aluminum smelter, although no agreement has yet been reached on prices for energy to be charged over the coming decades.

Some of these problems could be solved if integration among countries on the continent was stronger, but this isn’t the case.

Mercosur, the treaty relating to the free circulation of goods and services between some of Latin America’s major players, was signed in 1991 by Argentina, Brazil, Uruguay and Paraguay. Venezuela became a full member of the group in 2012, while Chile, Colombia, Ecuador, Peru and Bolivia act as associate members.

But the treaty didn’t achieve its initial aim of economic union due to differences in the policies of member states.

Paraguay has been suspended from the group since it impeached its then-president Fernando Lugo in June 2012, a move considered by other Mercosur members to effectively be a coup d’etat.

The new Paraguayan elected president, Horacio Cartes, has said he is willing to bring the country back into the Mercosur fold, according to local media. But Cartes won’t take power until Aug. 15.

A version of this article was first published by AMM sister publication Metal Bulletin.

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