Australian mining companies investing locally and in Latin America

Australia is world famous for its mining prowess, and strong peripheral equipment, technology and services industries (known locally as METS). Australian mining investments are showing promising signs of growth, both locally and abroad, in spite of competitive global conditions.

As Australia achieves greater connectivity with key Latin American partners, opportunities present themselves for the country’s miners to expand abroad and invest in mining projects in the naturally wealthy region. Much like Australia, Latin America’s vast biodiversity holds significant deposits in highly sought-after minerals and metals. We explore investment activity from some of Australia’s top mining actors, both in their home country and in Latin America.

Overview: Australia mining sector

Australia demonstrates world-class capability for mining productivity and innovation. It’s diverse landscapes house significant reserves in coal, copper, gold, and iron, among others. Mining represents 10% of the country’s overall GDP, making one of the highest-contributing sectors to the nation’s economic outputs.

Australia plays a key role in technology and innovation in mining, with services industries that steadily growing, and have potential to become world leaders. Leading industry body Austmine supports and promotes some 600 companies in the METS sector that offer crucial value to Australia’s humming mining operations.

While Latin America’s mining sector shows promise but lacks some technological advancement, it’s no surprise that Australian mining companies are increasingly considering investment opportunities in the region.

Rio Tinto increases iron ore spending in Australia

Anglo-Australian multinational Rio Tinto is one of the largest metal and mining companies in the world. This year, the mining giant is increasing its spending on iron ore mining projects in Australia to over US$4 billion.

In a public statement made by Rio Tinto in late November, the corporation confirmed it will invest AU$749 million into the Western Turner Syncline Phase 2 mine. This will support its iron ore production capacity in the Pilbara region in Western Australia.

This investment reflects the multinational mining company’s confidence in sustained demand from major consumers such as China: “Production of high-quality Brockman ore will support the company’s flagship Pilbara Blend, which continues to be the preferred baseload product for China’s steel mills.” Though China’s steel output still runs strong, Australian mining companies have a distinct advantage in relatively low production costs and competitive maritime trade facilities and connections.

With this investment and the addition of a new crusher and conveyor belt, Rio Tinto aims to bring the Western Turner Syncline project into its production phase in 2021. Though this investment was said to ensure the corporation maintains its current output levels, Rio Tinto nevertheless predicts that it could increase its iron ore shipments up to 5% in 2020. This expenditure is nudging the corporation towards its target of producing an annual cargo volume of 360 million tonnes by 2022.

Fortescue Metals Group and BHP investments in mining in Australia

Similarly, rival companies to Rio Tinto, the Australian Fortescue Metals Group and BHP Group are upping their investments in iron ore mining in Australia.

BHP is investing over AU$3 billion into its South Flank iron ore mine, also located in Pilbara. Like Rio, it has an expected delivery time of 2021 for its first ore and has passed the halfway mark of its development timeline.

Fortescue Metals is investing the same amount over 2 of its projects: the Iron Bridge Magnetite and Eliwana developments.

Mining in Peru: possible Rio Tinto and First Quantum partnership

Canadian mining corporation First Quantum is looking for potential strategic partners in proposed copper projects in Peru. Though nothing has been confirmed, the company’s Chief Executive, Philip Pascall has indicated that a partnership with Rio Tinto could be an option under consideration.

Additionally, First Quantum is looking for a partner to buy up the 10% of shares owned by the Korea Resources Corp. in the Panama Cobre mine. An Australian mining company looking at their options to expand with a credible partner in Latin America’s mining sector may see this as an opportunity to move into the region’s mineral-rich areas.

Austral Gold buys up Casposo mine in Argentina

Australian mining company Austral Gold is buying up the remaining 30% of shares in Argentina’s Casposo mine. Austral Gold held 70% interest in the gold and silver mine since 2016, and entered into a share purchase agreement with Troy Resources Limited in November to become the sole owner.

Austral Gold is also looking to “consolidate surrounding projects,” according to Stabro Kasaneva, Chief Executive of Austral Gold: “We are also assessing opportunities to consolidate surrounding projects and source ore from third parties. All these initiatives are part of our business strategy to consolidate mineral resources with the goal of recommencing mining operations at Casposo.”

The Casposo mine in Argentina covers approximately 100.21 square kilometres, with total resources estimated at 1.415 million tonnes.

Opportunities for Australian mining companies in Latin America

Opportunities for these powerful Australian mining corporations in Latin America are many and various. Latin America has a wealth of natural resources, and key mining countries such as Chile, Colombia, Peru, Mexico and Brazil each offer significant contributions to overall global mineral production.

Latin America has potential for growth, development and commercial success in its various mining-focussed countries. Australia’s brand and mining reputation holds high prestige in the region, and Latin American governments are open to welcoming further foreign investment from this South Pacific powerhouse.

Lacking somewhat in technology, innovation and sustainable practice, Australian miners can add value in implementing new methods and equipment to boost the sophistication of mining in the region. There are ample investment opportunities for junior explorers as well as large multinationals, especially as countries like Ecuador and Bolivia review their legislation to allow more foreign investors into the market.

As an Australian mining company considering expansion options abroad, consider leveraging Australia’s reputation and growing international relations and activity with Latin American mining countries.

Expand your Australian mining company abroad with Biz Latin Hub

When expanding your operations into Latin America, you’ll need to be aware of key differences in local legislation for corporate compliance, company formation, and applying for mining concessions and licenses. To successfully navigate local regulations in your new market, make sure to partner with a trusted, experienced local team.

Biz Latin Hub are market leaders in supporting foreign businesses expand to Latin America. Our local teams of legal, accounting, and human resource professionals offer a suite of market entry and back-office services to ensure your company succeeds in your desired market.

Contact us for personalized advice and support from our mining experts.

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