Various minerals required for clean energy technologies are produced in large quantities in Latin America. In terms of essential mineral extraction and processing, Latin America has much potential and could play a significant role in guaranteeing a steady, long-term supply of the minerals necessary for the world's energy transitions. By expanding local processing capabilities and producing components for sustainable energy technologies, further investments in this area could generate new opportunities for economic growth and diversification.
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The resource-rich region of Latin America has recently drawn the attention of investors due to the rising cost of commodities, which is primarily caused by the increased demand for metals and minerals from China and India.
Countries like Brazil, Chile, and Peru have benefited significantly from this financial influx, particularly in developing their base and precious metal mining industries. This article will provide a brief overview of the current mining boom in Latin America and its drivers.
Abundance of Mining Resources in Latin America
Latin America accounts for around 40% of the copper produced globally, with Chile contributing 27%, Peru 10%, and Mexico 3%. Currently, the region provides 35% of the lithium required for batteries worldwide, with Argentina (6%), the second-largest producer globally, and Chile (26%) leading the way. Over half of the world's lithium deposits are found in this region, mostly in Chile (11%), Argentina (21%), and other countries.
In addition to copper and lithium, nickel, a vital component of batteries, and graphite, manganese, and rare earth elements, all necessary for wind turbines and electric car motors, are considerable resources in Latin America. Brazil alone holds approximately one-fifth of the world's reserves in each of these resources.
Technological Advancements in Mining
The mining industry, regarded as a conventional and conservative sector in terms of innovation, is undergoing a major shift due to complicated challenges, including diminishing ore grades. In response to these challenges, innovation is now essential.
Several mining companies in Latin America are using cutting-edge digital advancements like autonomous drones, 3D printing, and the Internet of Things (IoT). These offer solutions to the issues at hand and drastically alter mining operations, boosting productivity, profitability, and regulatory compliance.
Latin American mining companies remain under tremendous pressure to reduce expenses, enable safer operations, and increase operational efficiencies. Mining is susceptible to significant changes due to introducing several new technologies and digital breakthroughs, which could result in outstanding benefits for customers, stakeholders, and the environment. The following are some technology advancements in the mining sector spearheading the next wave of change.
Most mines are in harsh, isolated locations, and equipment failure has very expensive consequences. Mining companies bear the logistical costs of shipping spare parts during emergencies to maintain the ongoing operation of their machinery.
Using a printer to create tangible items from a digital model is known as 3D printing (3DP). While still in its infancy in the mining sector, this technology has the potential to revolutionize the mine's maintenance supply chain by providing rapid access to a wide variety of replacement components.
Surveying and mapping mining areas requires extensive time, money, and risk. Drones scan mining sites from above and transmit geophysical data and images to surveyors without disturbing regular operations.
Compared to traditional surveying methods, drones significantly reduce the time surveyors spend on-site inspections, allowing for safer operations.
Mining organizations could reduce the time and cost of physical testing by employing simulation modeling to analyze their processes virtually and forecast operational outcomes using hypothetical situations.
Such an examination can identify potential improvement areas, bottlenecks, and performance levels. Fundamentally, mining simulation helps firms plan to reach production targets at the lowest possible cost by providing a better understanding of key drivers, mining resources, or plant operations.
Investment Potential
Mining offers significant economic expansion opportunities and is frequently seen as the route to success.
Latin American nations are drawing large amounts of international investment. In the past ten years, the extractive industry's share of the Chilean GDP has quadrupled, amounting to 15% of GDP. The percentage of GDP in Colombia and Peru has quadrupled to 10%. One of the main focuses of Colombia's Santos administration's policies is mining.
As anticipated by the Copper Study Centre of Chile (CESCO), Latin America has seen a surge in investment in the mining industry. According to the Metals Economic Group, by 2020, the region is expected to receive $250.000 million, or roughly 26% of global mining output.
Mining-related foreign investment could significantly impact sustainable development by transferring technology and funds, creating jobs, connecting with regional industries, developing infrastructure, and building capacity.
However, the degree to which these advantages truly assist host nations largely depends on the investors' and host nations' policies and the structures in place to help them reach mutually agreeable solutions.
The risks are also great since mining has occasionally served as a catalyst for growth and has occasionally been linked to social unrest, corruption, and environmental disasters.
Resource-based sustainable development involves multifaceted engagement among governments, corporations, communities, and international partners to secure a long-term, mutually advantageous framework for all stakeholders.
Large global mining corporations have become more interested in Latin America over the past 10 years due to rising commodity prices, significant unexplored reserves, favorable tax rates, and stable regulatory frameworks.
Large global resource corporations, including Codelco, Placer Dome, Anglo American, BHP Billiton, Glencore, Barrick, Rio Tinto, Newmont Mining, Dodge, and Noranda, are heavily involved in Latin American operations.
Their work primarily focuses on nickel mining and smelting operations, as well as the production of copper, gold, and coal in Chile, Peru, Brazil, Argentina, the Plurinational State of Bolivia, Venezuela, and more recently, Colombia. Several companies, including Rio Tinto, BHP Billiton, and Xstrata, stated they will invest over $425 billion (£271 billion), mostly in Chile, Peru, and Colombia.
Obstacles Facing the Mining Sector in Latin America
From exploration to operation, mining is energy-intensive and accounts for 10% of the world’s energy consumption. This hinders net-zero ambitions and causes significant environmental impact from land-use change.
Though existing processes must be updated, mining is a risk-averse industry. It is neglected as a platform for innovation and private investment and is slow to adopt innovative solutions due to the magnitude of safety, operational, and social challenges.
The mining supply chain is complex and accounts for many separate processes, like transportation, equipment, and more, to go from mine to market. Organizational silos are common, and business divisions often operate independently with little coordination or information sharing. Companies cannot institute end-to-end solutions or make sweeping organizational changes without viewing the supply chain as an integrated process.
Mining has had a dramatic environmental impact throughout Latin America. Large-scale open-pit mining has destroyed land and forests and polluted water reserves.
According to the Colombian minister for biodiversity, Sandra Bessudo, it could take 20-40 years to repair the environmental damage inflicted by mining activities, with costs estimated at $10.8 billion (£6.9 billion). Small-scale mining also negatively affects the environment. For example, Chile’s artisanal gold mining releases 130 tons of mercury annually, making it one of the countries with the highest per capita rates of mercury pollution in the world.
Successful Mining Projects in Latin America
Explomin began operations with deep core drilling after it was founded in 2001 in Peru by an entrepreneur with entirely Peruvian capital. Over time, it added reverse circulation drilling (RC) and surface core drilling to its list of services.
The company has gained significant expertise in providing worldwide drilling services for mineral exploration, water well drilling, and production drilling due to the completion of difficult projects in various locations throughout Latin America that have extreme weather, differing ground types, and elevations up to 4876.8 m above sea level.
The company provides innovative options, including a contemporary fleet of drill rigs and multicultural crews of professionals committed to working in harsh environments and meeting the sector's changing demands.
The Pascua Lama mine is a gold, silver, and copper mine in the Andes Mountains, bordering Argentina and Chile. The Argentinean Lama project has confirmed an innovative gold-copper mineralized system in the geographically significant area between its Penelope porphyry target near Veladero and the Pascua-Lama deposit. Barrick Gold Corporation operates the USD $8.5 billion open-pit mine.
Barrick also assesses the potential for heap-leaching ore from the Lama Penelope discovery in Argentina near Veladero. Throughout a 25-year mine life, the mine has the potential to produce 775,000 ounces of gold per year along with silver and copper by-products.
Conclusion
Latin America has great potential for essential mineral extraction and processing. It could guarantee a steady, long-term supply of the minerals needed for the world's energy transitions.
Further investments in this area may offer new economic growth and diversification opportunities by expanding local processing capabilities and producing components for sustainable energy technologies. Due to the abundance of renewable energy resources (wind, solar, and hydropower), the area has a competitive edge in developing a low-carbon mining sector; several nations have already begun along this path.
Latin America's economy saw its greatest performance in decades because of the mining and commodities boom. However, the macroeconomic and social accomplishments cannot conceal the mining boom's considerable difficulties and some unfavorable consequences.
In summary, the current mining boom offers several Latin American nations a major new source of income, but it also presents some very serious risks to the stability and security of those nations.
References and Further Reading
García-Estévez, J., Vargas-Prieto, A., & Ariza, J. (2024). Mining-energy boom and local institutional capacities-the case of Colombia. The Extractive Industries and Society, 17, 101387. https://www.sciencedirect.com/science/article/pii/S2214790X23001764
Doamba, M. U. (2024). Mining booms' effects: How booms from mining sector affect firms' performances. [Online] Available at: https://ideas.repec.org/p/hal/wpaper/hal-04588824.html
Calzada Olvera, B. (2022). Innovation in mining: what are the challenges and opportunities along the value chain for Latin American suppliers. Mineral Economics, 35(1), 35-51. https://link.springer.com/article/10.1007/s13563-021-00251-w
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