PERTH (miningweekly.com) – Australian resources companies have been advised to conduct ‘basic groundwork’ when moving into the Latin American sector.

Speaking at the second day of the Paydirt Latin America Downunder conference, in Sydney, Brisbane-based mining consultancy MEC Mining said that there were lessons that could be learnt if Australian miners continued to build business links with like-minded counterparts in the region.

“It seems obvious but in our experience, a key essential is to carefully and optimally manage all relevant party expectations during project start-up and execution,” MEC MD Simon Cohn said.

“Some establishment tasks can be a bit slow moving and if not managed, will readily throw out tight project timeframes,” he said.

Cohn said that it was also essential for Australians moving into Latin America, to get in-country help early on, adding that this would include establishing and building relationships with project stakeholders, government and local communities, some of which impact on approvals for permits.

“Local mining laws need to be fully understood – and followed – and this needs to be backed up by strong and deep due diligence. Success will come only from due diligence which generates the right team or business partner.”

Cohn’s comments came a day after Australia-Latin America Business Council chairperson Jose Blanco said that there were still significant investment opportunities for Australian companies in the region.

“The situation there is definitely not as good as it was a few years ago, but neither is it as bad as some imagine,” Blanco told delegates at the conference.

He noted that the Latin American mining sector was returning to what could be considered a ‘more normal’ economic environment after the stellar performance of the decade-long mining boom.

“What we are witnessing now is a flight to quality and to fundamentals in the mining sector, and perhaps to more balanced growth – and Australian investment has a continuing role to play.”

Blanco pointed out that the region alone was responsible for 45% of global copper production, 50% of silver, 26% of molybdenum, 21% of zinc and 20% of global gold output.

“At the same time, Latin America has for more than a decade consistently captured 25% or more of the total global budget for nonferrous metals exploration, which is more than any other region in the world. This expenditure is an ongoing investment that augurs well for the continued development of the region’s mining sector, and upside for Australian miners.”

Blanco further noted that Latin America was also firmly on Asia’s economic radar, and that trade between the two regions had been marked by a clear commodities-for-manufacturing pattern.

“Both Asia and Latin America have grown faster than the world economy. Between 2009 and 2013, annual average growth was 4.6% in Asia, 2.4% in Latin America, and 1.9% for the world economy.

“Trade between the two regions has grown significantly, at an annual average rate of 20% since 2000, reaching a historic high of over $500-billion dollars in 2014 and projected to increase to $750-billion by 2020,” Blanco said.

“Australia cannot afford to ignore this trend or to merely classify Latin America as a competitor and to, therefore, shun investment in and engagement with the region.

“On the contrary, Australia should be focused on using its strong links with Asia and its proven capabilities in the sectors where Latin America has to grow to secure for itself a seat at the Asia-Latin America table."