LATAM Weekly News

5th May 2021

This week the news is all about Chile.  What’s been going on in the land of soaring mountains and good red wine?

  • With Chile being the world’s largest copper producer, I have to mention the soaring copper price once again.  Last Thursday it hit $10,000/t for the first time since 2011, and despite that being followed by a bit of a fall, it’s been creeping back up towards those levels ever since then.  Check out this plot from showing the price in April:

  • Inventories are low, with stocks in LME-approved warehouses down 20% from the middle of April, and the factors I mentioned a couple of weeks ago, such as US renewable spending, the Paris Agreement targets and tight supply, are still at play. Chile’s production was down year-on-year in March, so don’t expect the market to flood any time soon. Reuters reports that Bank of America analysts are suggesting prices could hit $13,000/t in coming months, though that’s a big bet to take.
  • The high copper price means the debate around Chile’s proposed new royalty on copper and lithium is especially hot. Chile’s National Mining Society and BHP are among those calling for the plans to be scrapped, but in the wake of civil and economic unrest in the country, the plans enjoy support, especially from opposition parties.  The new royalties would impose a marginal rate of 15% on sales when copper prices are $2-2.50 per pound, increasing incrementally to as much as 75% on prices over $4.00/lb, like now.  You can see why the big miners are unhappy, especially since some low-grade mines have production costs over $2.50/lb.
  • Moving away from copper for a moment, Chile is also looking to upgrade its investment in specifically green hydrogen in an effort to replace diesel in industrial and transportation contexts.  Fundacion Chile is a group hoping to raise $300 million to invest in near-profitable hydrogen projects in Chile, and the government is also planning to award $50 million in subsidies for the technology.  You can read the plan here.

Around the Traps

GR Silver Mining (TSXV:GRSL, OTCQB:GRSLF) has reported that silver mineralisation on its Plomosas project in Sinaloa, Mexico has been extended by its drilling campaign, with grades up to 1,184 g/t Ag, 2.3 g/t Au, 1.3% Pb and 0.9% Zn over 1.0 m. The footprints of two targeted mineralized veins have been enlarged by these results, and GR will use the data to support its upcoming maiden resource estimate for the San Juan area of the project.

April prices for Brazilian iron ore are almost double what they were at the same time last year, and as a result the red stuff has overtaken soy beans as Brazil’s largest export earner for the first time in five years, according to Reuters.  The country is looking at an $80 billion trade surplus this year, since soy beans are also going gangbusters, making iron ore’s achievement even more impressive.

Who likes gems?  Everyone!  They’re beautiful.  And they’re even better when they’re ethically sourced.  Things are moving in this space in Latin America at the moment.  We shared this article about sustainable gem mining in Brazil on Twitter this week, and top gemstone and jewellery brands have announced a new set of resources for gem companies to move towards sustainability and responsible mining and processing of coloured stones.

Chile might not be the only nation restructuring mining taxes and investment rules if the socialist front-runner in Peru’s presidential elections, Pedro Castillo, gets over the line in the poll on the 6th of  June. Castillo has vowed to stop foreign companies ‘looting’ the nation’s mining wealth and keep 70% of profits in Peru, in sharp contrast to his main opponent, free-marketeer Keiko Fujimori, the daughter of former President Alberto Fujimori. Fujimori Senior is in jail for corruption and human rights abuses.

Spotlight Mining are sponsored by Goldplay MiningRiverside ResourcesMountain Boy MineralsSolgoldVangold MiningOrigin Exploration and Mammoth Resources. This sponsorship means we may show preferential bias in the order in which we publish news and updates.