Australian resources companies are under-represented in Latin America’s mining sector despite its attractive operating environment, according to a seasoned player in the region.
Founder of Blanco Partners market advisory Jose Blanco, who formerly oversaw the Australian operations of Banco Santander and now chairs the Australia-Latin American Business Council, said the region presented an opportunity with its strong natural resource endowment and a comparatively stable political situation.
Mr Blanco said this potential was highlighted by the fact that Latin America captured 27 per cent of the global exploration budget in 2013, and four of its nations (Chile, Peru, Brazil and Mexico) consistently ranked in the top 10 global destinations for mining investment.
As Business News reported in September, 95 ASX-listed companies have projects in the region, with discoveries of nearly $416 billion over the period from 2008-13. However Australian miners have traditionally focused on African projects, with 220 companies involved on that continent.
In Latin America, mining equipment technology and services companies are leading the way, with substantial operations in the region; but there is a strong, unmet demand for capital and for industry knowledge, both of which Australian businesses can provide.
“Companies in Latin America are re-evaluating the way that they operate, and the push is on to drive performance improvement through greater use of technologies, rationalisation of supply chains, more effective management and reporting systems, and other operational enhancements,” Mr Blanco said.
“Innovation is the new catchcry and mining companies are racing to identify cost-cutting measures and value adding products and services.
“This push is presenting opportunities for those METS players that have the required products and services.”
Despite mining representing more than 12 per cent of Chile’s GDP, Mr Blanco said only three mining-related companies were listed on the Santiago Stock Exchange, driving the creation of a new bourse in conjunction with the Toronto Stock Exchange.
Perth-based nickel producer Mirabela Nickel, which has Brazilian operations, recently ran aground after weakness in nickel prices, but BHP Billiton owns the world’s second largest ferronickel mine at Cerro Matoso in Colombia, which it says is one of the world’s lowest cost producers.
Troy Resources currently operates a gold mining operation in Argentina, Casposo, and is undertaking exploration in Brazil.
