Future bright for Latin America, but water issues impede growth.
JOHANNESBURG (miningweekly.com) – While the outlook for mining in Latin America remains positive over the coming years, research firm BMI has outlined certain obstacles that will hinder its development, with water use and contamination among the most significant challenges.
BMI warned that companies and governments in Latin America would experience increasing pressure to respond to water scarcity and contamination issues, as freshwater shortages and droughts fuel tension between local communities and miners.
In April, Argentina’s government announced plans to invest $44-billion in water infrastructure, including a sewage system and treatment plant.
Meanwhile, in March, El Salvador passed a law banning all metal mining in the country to protect water sources.
“Desalination plants may become mandated in Chile, and Peru will take an inclusive approach to help small-scale gold miners comply with regulations through reducing red tape and offering incentives such as banking services.
As such, Latin America’s gold mining M&A activity increased significantly year-on-year in the first half of 2017, to $1.9-billion.
BMI highlighted that continued supply and capital discipline from miners, who are wary of price volatility, would underpin growth strategies focused on partnerships, joint ventures and expansions of existing assets to reduce risk and cost.
Sector-wise, BMI highlighted lithium as a key growth area, noting that countries like Argentina and Chile would experience solid investment and production growth, supported by a tightening global lithium market pushing prices up over the coming years.
“We expect lithium prices to continue on a solid upward trajectory, as rising global demand growth outpaces that of production,” said BMI, adding that project development in both countries’ lithium sectors remained on track.