More capital has been spent in Latin America than in any other region in the last ten years. Since the time of the Incans and similar civilizations, Latin America has played a significant role in the mining sector and continues to develop this industry. However, the challenge for Latin America is the instability of its governments and threats of resource nationalism amid the anti-foreign investment rhetoric.
Overview of the Mining Industry
According to the World Mining Data 2020, Latin America accounted for 6.3% of total minerals production (Africa had the most negligible with 5.5%, and Asia took the majority with 58.3%). The trend for Latin America in the last decade was increased mineral production with a slight decrease in 2020 due to the global pandemic. Keeping up with mining production will be especially crucial for countries such as Ecuador and Peru, which are highly reliant on the mining industry for its GDP's overall contribution. However, most economists believe that in the long term, economies worldwide will be able to bounce back and continue to grow.
Despite having been heavily exploited for gold and silver during European colonization, Latin America still stands out as a major producer of precious metals. Peru ranks as number one in largest silver reserves, while Mexico comes in at sixth. Couple them with Chile, Bolivia, and Argentina, and you have more than half of the silver produced worldwide in 2019. Brazil is South America’s leading gold producer, with deposits in the Amazon basin accounting for much of the output. Overall, Peru, Chile, Brazil, and Mexico account for 85% of the regional mineral and metal exports. Thus, when it comes to several precious minerals, Latin America is a dominant player.
Assessing the Business Risks
According to the UN Economic Commission, Latin America remains the region with one of the most mining-related socioeconomic conflicts worldwide. There are several reasons for this, including conflicts with local communities over access to water resources; the nomadic nature of many remote communities; uncertainties over land entitlement, land access, and surface rights etc. As well as “gold laundering” where illegal miners and organized criminals try to hide the illicit origins of their gold by mixing it with legitimately mined gold, to then introduce it into the international legal market.
How to Start Tackling Some Issues
We can start with exploration. Private agreements between the right holders should be made dependent on the intensity of operations, and market-based environmental policy instruments is required. It should also include a social baseline: where and when large-scale exploration is needed, citizen participation is necessary. Private agreements negotiation on a mutual-respect basis contributes to long-term sustainability. When it comes to the indigenous communities, if their land isn’t registered or privately owned, executives should still verify how indigenous people are concerned. Most communities accept the development of mining exploration activities, and a proper consultation process goes a long way. Ideally, the reform process must be state-led to guarantee similar rights to all landowners. An Environmental Impact Assessment (EIA) and proper Terms of Reference (ToR) should be agreed on early with the local population and include a meaningful participatory process. While CyanoGuard may not have the answers or solutions to every issue at hand, we do believe we can help when it comes to having more transparent data about cyanide monitoring and empowering anyone to use our technology to test cyanide levels for themselves. Our digital solution would be especially relevant to work more closely with local and indigenous communities and create more transparent data for all stakeholders to see. If you believe this could be useful, then let’s talk.