Latin America touts its mining potential

Investors looking to participate in mining ventures in Latin America were given an overview of what that part of the world has to offer at a 4-day conference here recently.

The conference, titled “Investing in the Americas,” drew 500-600 registrants and featured presentations by delegates from the various nations that make up Latin America, from Mexico to Chile. Guest speakers included the president of one South American country and the vice-president of another. Representatives of North American companies involved in mining — junior exploration firms, producers, drillers and engineering outfits — mingled freely with the Latin American delegates throughout the conference. One of the luncheon speakers who said she had taken part recently in a number of meetings focusing on Latin America, referred to the conference as “a Latin American love-fest.”

Opening remarks were given by London metals newsletter publisher David Williamson. “The mineral potential (of Latin America) is vast,” he told The Northern Miner, comparing an “underexplored” Latin America to an “overexplored” North America. “The speed of the permitting procedure is much quicker,” Williamson said of Latin America, explaining that the standards are maintained but the bureaucracy is less.

Because Spanish is the first language of most of the Latin American nations and the presentations were delivered in Spanish or English (or both languages), the conference made simultaneous Spanish-English translation facilities available.

In addition to the presentations by the various countries, registrants heard talks on such topics as “Finance, coping with inflation, foreign-exchange exposure and capital scarcity,” “Latin American debt: where has it gone?”, “The lessons of a unified Germany for investors of the newly democratic countries of Latin America,” “Soviet perspective of Latin America” and “European perspective of Latin America.”

Brokerage house Yorkton Securities, which earlier this year opened an office in Santiago, Chile, says Latin America currently receives 80% of the investment capital going to the developing world. In 1991, the area received $15 billion in capital, a substantial portion of which was previous flight capital returning.

“Latin America is undergoing profound economic and political changes with the drive towards free trade agreements rapidly consolidating North and South America into an economic block with major growth potential,” says Yorkton, adding that 25-30% of the world’s known mineral reserves are in Latin America. Vancouver-based Jordex Resources (VSE) is one Canadian firm keen on Latin America. The company, active in Bolivia and Venezuela, has opened an office in Miami.

Jordex President Brian Hinchcliffe, in his presentation, listed three areas of concern for potential investors: political and economic stability, a reserve base and capital. One of his slides indicated that many of the Latin American countries will be staging elections in 1993 and 1994. A Bolivian delegate claimed that his country currently has the lowest inflation rate (under 15%) in Latin America. He said Bolivia has enjoyed six years of economic and political stability. The turning point, he explained, occurred in 1985, when inflation was running at above 4,000% annually. Among the mining companies active in Bolivia are Battle Mountain Gold (NYSE), Rio Tinto and Minnova (TSE). Bolivian Vice-President Luis Ossio Sanjines gave a brief address during his country’s panel presentation.

A former U.S. ambassador to Bolivia, Robert Gelbard, in his luncheon address, referred to the shifting winds of change in Latin America in the 1980s setting the stage for the 1990s. “Democracy has now been established but much remains to consolidate it,” he said.

Recent trouble spots include Haiti, where the government was overthrown, Venezuela, where a coup attempt failed, and Peru, where the president declared “emergency rule.” And, during the conference, the president of Colombia declared a temporary economic emergency in the wake of an energy crisis and nationwide strike.

The conference allowed each of the nations to make a pitch to potential investors on an equal footing. On occasion, the competitive spirit emerged, such as when one country boasted it had 16 investors for each mineral prospect and another countered by saying it had 16 prospects for each investor.

Ian Telfer, executive vice-president of TVX Gold (TSE), which has mining operations in Brazil and Chile, pointed out that mining is the largest industry in Chile (a major copper producer), which is not the case in the other Latin American countries.

Clive Johnson, chairman of Bema Gold (TSE), said that for the last few years he has “felt like an unofficial ambassador for Chile.” Bema has been developing its Refugio gold project in that country and Johnson has spent a great deal of his time trying to raise the necessary financing. The president of Guyana, H.D. Hoyte, in a luncheon speech, perhaps summed up the thoughts of all of the representatives of the Latin American countries taking part in the conference.

“I believe that through an investment in mining, Guyana will realize its true potential,” he said, adding that the opening up of the hinterland will lead to other types of industrial development in his country.