South America Overview
Map of South America showing project locations
South America has a strong, active and prosperous mining industry which is recognised internationally. Several major international resource companies are active across the continent with major mining operations and excellent mining support infrastructure.
Brazil
Brazil boasts an enviable position in the ranking of worldwide mineral reserves and is the most important mineral producer in Latin America. With large and well-developed agricultural, mining, manufacturing and service sectors, Brazil’s economy (ranked by the International Monetary Fund in 2007 as the world’s tenth largest economy with a GDP of $US1.3 billion) outweighs that of all other South American countries and is expanding its presence in world markets. Brazil’s GDP grew by around 5.4 per cent in 2007 and is forecast to grow by 4.8 per cent in 2008.
It is anticipated that over US$30 billion worth of capital will be invested by various players into the Brazilian mining industry by 2012. Australian participation in the Brazilian mining industry is increasing and major Australian investment activity includes: BHP Billiton, Troy Resources NL, Mincom & Maptek, Rio Tinto and Orica. Eleven other Australian mining juniors have operations of various sizes and stages of development.
Peru
Peru ranks among the world’s top seven mining countries with large reserves of copper, silver and zinc. Peru is Latin America’s leading producer of lead, silver, zinc, tin and gold and number two in copper. A number of Australian and International resource companies – Xstrata Copper, Rio Tinto, Strike Resources, Investor Resources, Gallipoli Mining, Alturas Minerals and Newcrest – have already established a strong position within the Peruvian mining industry.
Peru has experienced recent impressive economic growth with real GDP growth at an estimated 9 per cent in 2008. The expected weakening of external demand in 2009 may slow growth to a still robust figure of between 6 and 7 per cent of GDP in 2009.
Mundo Minerals – a golden opportunity
The tables below clearly demonstrate Brazil’s potential of to emerge as a major new gold producer. Brazil has a slightly larger land mass than Australia but with an area of Archean Shield more double that of Australia. The Archean Shield is the geological setting where many of the medium-sized gold deposits have been discovered in Australia. Importantly, where Australian exploration companies have spent US$28 per hectare exploring for gold resources, Brazil is clearly under-explored with only US$2.70 having been invested in seeking gold resources.
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–> <!–[endif]–> <!–[if !vml]–><!–[endif]–>Exploration expenditure seeking gold projects
| $US/ha | |
|---|---|
| Australia | 28.00 |
| Canada | 21.00 |
| Chile | 21.00 |
| Brazil | 2.70 |
Source: Jaguar Mining Inc Corporate Presentation Dec 2005
Although Brazil and Peru have rapidly growing mining sectors, both countries are largely under-explored countries with respect to gold. The gold mining industry in South America currently resembles that of Australia in the late 1970’s.
In the late 1970’s, the Australian gold industry was dominated either by the extremely large mining operators with a production focus on multi-million ounce deposits or the smaller prospecting low tonnage high grade private operators. Little attention was paid to the potential of medium grade, medium tonnage gold resources.
In the early 1980’s, the Australian gold industry, assisted by technical innovations such as commercialized carbon in pulp processing, expanding contract mining and a trained technical workforce that was available to the medium-sized companies, redirected its focus towards exploring and exploiting medium-sized gold deposits.
The effect of this focus was a major change in the status of Australia as a gold producer. In the late 1970’s, Australia was the world’s 13th largest gold producer. By the mid 1980’s Australian gold production had increased largely through exploitation of medium-sized mining operations to the stage where Australia was established as the world’s 2nd largest gold producer.
The mining industry in South America, and in particular Brazil, is currently in a similar position to Australia in the late 1970’s. Gold mining is predominantly undertaken by the major gold mining companies, exploiting multi-million ounce ore bodies, or small private operators focused on small high grade ore bodies.
There is a significant potential in Brazil to emulate the expansion of gold production that was experienced in Australia in the early 1980’s.
