Latin American Mining shines

The mining industry in Latin America can only prosper in the coming years as all necessary factors are in place to make the mining sector the driving force for economic growth and prosperity in the region.

The reason for the boom is due to the influx of investments that the region has received in the recent past and that is expected to receive in the next decade. According to the Center for Studies on Copper and Mining (Cesco, in Spanish), a research center based in Santiago (Chile), over $200 billion will be invested during the next 10 years.

According to Cesco’s findings, the last 2 years have been filled with great challenges and transformations throughout the worldwide mining sector. In 2008 all industrial sectors collapsed as a result of the global crisis, including those in Latin American economies.

However, the growing Chinese demand for natural resources has boosted the recovery of the global mining sector and of the Latin mining sector, more specifically.  According to the Metals Economics Group (MEG), a mining research firm based in Canada, since 1993 the Chinese consumption of natural resources exceeded what was available domestically, hence China’s need to seek resources from the rest of the world.

MEG indicates how in recent years, China joined the international market for natural resources. Between 2004 and 2010, the Chinese expenditure of international metals jumped from $530 million to $7.8 billion.

The boom in the price of commodities has been stable in recent months and it has been stimulated by global investment trends. Not only are mining companies investing in the search for precious metals, but global investors are as well.  In the face of the uncertainty of the economic crisis, investors have looked for refuge with gold and other precious metals, thus driving up the price of commodities.

Additionally, some believe that the American monetary policy, oriented towards injecting large amounts of liquidity into the economy in order to stimulate recovery, has also increased the price of commodities because part of the money injected in the U.S. is invested in commodities from emerging markets because of the higher returns that are available in other countries.

MPA

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