The growth in the natural resources sector within Latin America presents a wealth of business opportunities for companies and individuals looking to expand their mining operations. The region is set to be one of the fastest-growing mining locations within the next decade and companies that can bring the right skills, knowledge, expertise, equipment, services, and technology to the market will be able to experience commercial success. Currently, the Latin American mining sectors are having an unprecedented time of growth and development
The Peruvian Mining Sector
Peru is fast becoming a mining powerhouse, with the mining sector experiencing the fastest growth in modern history. It now accounts for over 50% of foreign currency, 20% of tax revenue and 11% of the gross domestic product – a huge economic contributor to say the least. The country provides an attractive market for establishing a legal entity. In fact, as a testament to the nations open market economy, Peru allows 100% foreign ownership, has minimal capital controls and provides attractive company tax rates. Notable market opportunities exist for companies that can provide products and services associated with on-site safety, community and social engagement, environmental management and improving on-site productivity. Some specific examples include the following:
- Technology systems associated with fatigue management
- Advanced OHS training and systems
- Water management products
In the same vein, lithium is arguably one of the most talked about upcoming minerals as the demand for electric vehicles in developing countries grows. The recently discovered lithium reserve last year near the region of Puno has the potential to be one of the biggest lithium mines in the world.
The Colombian Mining Sector
Colombia has the largest economy in the Andean region, with a national GDP of USD$378 billion. It’s the only country in South America with coastlines on both the Pacific Ocean and the Caribbean Sea, making it an exception trading hub. The country is an attractive market for establishing a legal entity, allowing 100% foreign ownership, limited capital controls, cheap operating costs, and a relatively attractive company tax rate.
With well-developed coal, gold and emerald mining sectors, the country provides investors with attractive opportunities for mining service companies – with countries such as the US, Canada, Australia, China and Russia seen as being able to add value and become profitable in the sector. There is a particular niche for companies that can offer services associated with improving community engagement, and the provision of technologies that reduce the impact of mining on the local environment.
The Argentine Mining Sector
Argentina has taken an active approach to encouraging foreign investment within the mining sector through reducing mining taxes, re-floating of the local currency and the implementing a number of measures to support the growth of the national economy. Despite recent economic hardships, Argentina is still considered an attractive jurisdiction for foreign investment in the mining sector.
The Argentine government has declared that the mining, energy, and agricultural sectors are key elements for re-engagement, and hope to attract significant foreign investment in the coming years. Additionally, the country recently created a new type of legal structure called a S.A.S (Simplified Share Company) that allows for a fast company incorporation process, 100% foreign ownership, a single shareholder (either a legal or natural person) and has reduced the legal corporate compliance requirements.
Of particular interest and opportunity is for those companies that can offer those services and products to help progress and develop the Argentine mining sector, which has in recent years been in many ways starved of foreign investment and expertise because of international trade and commercial policies of the past. Opportunities are particularly accessible for those companies that can offer more specialized services such as mineral processing expertise, advanced environmental management systems, laboratory services, and geological modeling services.
The Mexican Mining Sector
Mexico’s is Latin Americas second largest economy, after Brazil, and has a well-developed extractive sector. It was recently rated by the World Bank as the best country in the region to do business. A large number of foreign mining and mining service companies (principally from the US and Canada) are already active and thriving in Mexico’s mining and resource sectors. With that in mind, the best opportunities exist for those companies that are able to work with other local partners through technology transfer, complementary product offerings or through offering niche high tech products/services that are not already provided within the local market.
The Chilean Mining Sector
Chile is an attractive market for foreign investment, offering a stable economy, developed infrastructure, and a strong mining industry. As one of the most advanced economies within the Latin American region, Chile has few entry barriers for foreign companies looking to enter the region. This is due to the governmental and fiscal policies which welcome foreign participation in the local markets. However, given Chileans highly-educated population, costs tend to be higher than in other countries due to the higher local salaries.
With that in mind, the resources sector is facing a number of challenges associated with water and energy scarcity, a need for increased productivity and a need to reduce operating costs. Hence these challenges present an opportunity for services companies that can provide higher energy efficient systems, best practice water management systems and products, desalination plants and systems that improve mining productivity.
Do You Need Local Mining Support?
Countries across the Latin American region offer an appealing legislative framework for foreign mining companies looking to enter the market. Latin America is fast making a name for itself in the global mining sphere as a region of growth and opportunity. Mineral exploration potential paired with regulatory policy that is friendly to overseas investors creates a wealth of opportunities for foreign companies with mining skills, products, services, and expertise.
If you are interested in expanding your mining operations in Latin America, then it is vital to work with a local partner. Please reach out to a member of Biz Latin Hub to see how we can support your mining venture in Latin America.