Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
A very simple answer to the question: why invest in mining in Chile? Mining is booming in Chile; they seem to have the right government; they have the resources; the climate is right for mines in the far north; and the big companies are all in play.
At this link is a recent document called Mining Investment In Chile from December last year. If this does not persuade you, I am not sure what will. Here is the forward to the document:
This updated report issued by the Cochilco Research and Policy Planning Department reviews projects under construction or expected to start construction in 2011-2015.
In addition to investment in copper, gold and silver projects, as of this report we also include iron and industrial minerals (iodine, nitrates, potassium salts). The overall portfolio is valued at US$66.9 billion, including US$44 billion to be spent in 2011-2015 –a new mining investment record for Chile.
The report estimates copper production through the year 2020 based on both current and planned operations. It also provides a projection of gold, iron, and molybdenum production.
Investments through 2020 are expected to result in production of 7.75 million TPY of refined copper, 110 TPY of gold, 60 kTPY of fine molybdenum, and 15 million TPY of iron.
Our review shows that most of Codelco’s investment is allocated to structural projects designed to ensure long-term sustainability. Major private miners are also expanding operations to prolong their lifespan and/or implementing new projects.
A significant new development is the role of new entrants accounting for significant investment amounts, notably Japan’s Pan Pacific Copper, Canada’s Quadra FNX Mining, Far West Mining and GoldCorp, and Australia’s PanAust.
About the only issue bedevilling mining in the north of Chile is a lack of water. There are a number of desalination projects afoot to make desalted water and pump it up the hills to the mines. That is an expensive way to get water, so the focus is on ways to reduce the consumption of water, particularly via loss to the tailings impoundment. But that is another issues for another blog. For now be assured the miners are on top of the issue, and it need not affect your investment decisions.
