Follow the Money – Latin America is the Place to Be
GUEST COMMENTARY–Rockstone Research–We are confident that Latin America will not only bring into production many new deposits in the following years, but that many new discoveries will be made as well. We follow the money as Latin America is apparently the place to be.
Latin America continues to be the most popular destination for exploration investments in the world. According to the latest “World Exploration Trends” by the Metals Economics Group, 25% of total exploration investments worldwide were headed to Latin America in 2011 (in contrast to 10% in 2003), whereas 15% of all spending worldwide went to 3 countries: 1. Mexico (6%), 2. Chile (5%) and 3. Peru (4%).
More than $425 billion in investments have already been budgeted by international resource companies for the development of deposits in Latin America for the next 5-10 years, whereas the lions share flows to Chile, Peru and Colombia. (1)
Most near-surface deposits in other regions of the world with traditional sound mining jurisdictions have already been discovered and are increasingly being depleted thanks to technological advances in exploration and mining since the 1970s. Many of the largest deposits worldwide are being brought into production in Latin America these days, yet Latin America is still considered as being relatively underexplored, because its laws were not favorable for foreign companies in the past. During the last decade, a drastic change in politics and attitude towards foreign mining companies has occurred in Latin America with the result that most exploration funds are now flowing there continuously. Peru, Chile and Mexico rank among the 3 mining-friendliest countries in Latin America (according to the Fraser Institute) and the Top-10 in the world. While the frameworks and jurisdictions for exploration and mining are worsening in many other regions (e.g. Australia or China), Latin America is increasingly improving its regulations. Peru is ranked third in the world in terms of gold, silver, copper and zinc reserves, yet from a mining standpoint, only 15% of the country has been explored leaving immense potential for future discoveries.
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