The South American mining industry will reach an estimated compound yearly growth rate of about 6.2% from 2012 to 2017, which will take the industry to a total value of $184.3-billion.
Some of the world’s largest copper, bauxite, iron and nickel deposits are situated in South America, with the continent recording a total revenue of $136.5-billion in 2012, says global management consulting firm AT Kearney partner Dario Gaspar.
In that same year, iron and steel accounted for 44% of the continent’s market revenues, followed by base metals – including copper, lead, zinc, nickel and tin – which captured about 37% of the market. Industrial minerals, such as coal and aluminium, accounted for the other 19%.
“In terms of the breakdown by country contribution, Brazil represents almost 40% of the total region revenue. Chile contributes 36% and Argentina contributes about 10%. All the other countries collectively contribute 14%,” he adds.
Further, according to the 2013 US Geological Survey Mineral Commodity Summaries, Brazil was the world’s leading producer of niobium, the second-biggest producer of tantalum and the third-biggest producer of bauxite and high- content iron-ore.
Chile remained the world’s leading copper, iodine, rhenium and lithium producer, as well as the second-biggest producer of arsenic, refined copper and mined boron.
According to the US Geological Survey, Argentina, Bolivia and Peru were also among the world’s leading producers of base and precious metals and industrial minerals.
Argentina was the world’s second-biggest boron producer, while Bolivia was the eighth- biggest tin producer. Peru was the world’s second-biggest producer of copper and silver, but it was also the leading gold, lead, tin and zinc producer in the world, notes AT Kearney partner Francois dos Santos.
Dos Santos points out that the global economic downturn, especially slowing demand from China, caused substantial commodities price adjustments, forcing South American mining companies to revise production rates. He adds that the impact of the downturn varies, depending on the commodity.
Further, companies operating in remote mining locations in South America are often exposed to risk, owing to supply chain disruptions in terms of inbound logistics – which involves maintenance, repair, operations, equipment and services – and outbound infrastructure for product delivery.
Gaspar adds that mining operations’ logistics are disrupted if the services or materials are not delivered as planned.
“Attracting skilled resources to work in a challenging environment is difficult, espe- cially in developing countries. Too often, governments impose quota systems that make it difficult for mining companies to bring in qualified staff from abroad. Training workers locally takes time and requires long-term investment.”
He adds that Brazil expects to significantly increase mining sector jobs over the next two decades, owing to the expected increase in production, which will add to the already high demand for skilled personnel.
Dos Santos further highlights that, to mitigate challenges facing Chile’s mining industry, companies are implementing new technologies to improve productivity and minerals recovery in areas with a higher concentration of commodities. Chilean mining companies are also implementing water desalination processes to cope with demand for water in mining processes.
Meanwhile, in 2013, Colombia’s national mining agency initiated a review of 33% of the available local concessions to check the technical and environmental conditions of the country’s mining activities. This will result in some companies having to restructure their operating processes in accordance with legislation.
In Brazil, the government-led Plano Nacional de Mineração 2030 programme aims to address the various stages of geology, mining and processing in an integrated manner to ensure public investment in the mining sector and encourage private investments.
“Companies are implementing proactive productivity solutions to reduce operational costs through improved maintenance practices and strategic sourcing initiatives,” says Dos Santos.
“Each country in South America has significant growth potential, with appro- priate investment mechanisms in devel- oping areas for specific mineral exploration, such as coal, in Colombia, or iron-ore, in Brazil.
“However, investing more in environment-friendly technologies and logistics infrastructure, and fostering the social and economic development of the local communities situated around mining operations, are mandatory for the sustained business development of all stakeholders,” concludes Gaspar.