The Latin Quarter: 10th November 2021
10th November 2021
Once again, the news from Latin America this month is all about copper. The continent holds the world’s top two producers, Chile and Peru, as well as major sites for potential future development such as Ecuador. So what’s happening with copper in the Latin Quarter? The answer is lots: everything from strikes and falling grades in Chile causing state miner Codelco’s output to fall by 16% year-on-year in September, to Teck’s massive Quebrada Blanca Phase 2 project experiencing cost overruns. But we don’t want to be here all day, so let’s just look at what is probably the biggest issue: anti-mining protests in Peru.
The election of socialist Pedro Castillo seems to have emboldened those with an axe to grind with miners, and many people in Peru feel that they are giving up their farming lands as well as clean air and water to the mining industry but seeing precious little in return. These sentiments are not new, however, and the current situation seems to have been triggered by Castillo’s election promise to re-organise the government’s relationship with the copper industry and redistribute profits to Indigenous and rural communities. Unfortunately, that doesn’t seem to have happened quickly enough for the liking of the populace.
At the end of October, protestors shut down the country’s biggest mine, Antamina, with roadblocks and demands for compensation for the company transporting its products across their land. The Antamina protest, now resolved (at least temporarily), came hot on the heels of similar action against Glencore’s Antapaccay mine at the start of October, and that protest in turn followed a three-week roadblock in September that almost shut down the Chinese state-owned Las Bambas mine until a government-mediated deal was struck to secure mining-related jobs for locals. Never underestimate the power of the well-organised Indigenous and rural communities in Peru: in 2016 they caused mining giant Newmont to walk away from the $5 billion Conga project, and these recent protests have led to everything from sudden politeness from company heads all the way to the resignation of Prime Minister Guido Bellido, a key demand of the Antapaccay protestors. This isn’t even the first time this has happened to Las Bambas, or others.
And then, another headache for Peruvian miners arrived on the 28th of October, when finance minister Pedro Francke announced tax reforms that would add around $3 billion to the nation’s coffers, mostly to be extracted from miners. Some might consider this fair enough, since Peru has a tax-to-GDP ratio of only 13%, one of the very lowest in Latin America, but understandably no company wants to hand over its profits like that. Now Julio Velarde, the new head of Peru’s central bank, has explicitly warned that the country’s image as a safe investment destination is in trouble. With Las Bambas alone producing around 2% of global copper, long-running civic action of this sort in Peru cannot help but damage supply and perhaps spike prices. Good news for copper miners in other jurisdictions, I suppose.
Unfortunately, the industries reliant on affordable copper include the renewable energy sources, battery storage products and electric vehicles that will be pivotal in the fight against climate change. In Friday’s newsletter I referenced a very useful Wood Mackenzie briefing that was published in the lead-up to COP26, which outlines just how much demand for copper is likely to skyrocket over the coming years. If you think that’s a problem we can defer, just look at what happened in October when the London Metals Exchange was caught short and available copper inventories shrank by 90% to their lowest levels since 1974. So with lots of pontification and even a few tepid agreements being signed in Glasgow, it seems that right now is a bad time for more copper supply issues to rear their heads in Latin America.
Around the Traps
If you’re in the mood for some eye-popping silver grades, check out the latest news release from Silver Tiger (TSXV:SLVR, OTCQX:SLVTF), who hit 0.5 m of 82,827.3 g/t Ag at their El Tigre project in Mexico, which was part of a 17.5 m interval grading 2,608.5 g/t Ag. Incredible!
The Colombia Gold Symposium 2021 is on soon! It starts on the 16th of November and their programme looks jam-packed with quality, plus there’ll be a focus on copper as well, so if you’re in the region why not check it out?
This is the first Latin Quarter since Mammoth Resources (TSXV:MTH) announced progress on drilling at its Tenoriba gold-silver property in Mexico, so we thought we’d remind you! Unfortunately serious rain has been hampering drilling but the company says it expects the pace to pick up in short order.
Lucky Minerals (TSXV:LKY, OTCPINK:LKMNF, FRA:LKY) has got back assay results from 70 m of trenching on its Fortuna property in Ecuador, which was targeting the Wayka epithermal gold discovery. They turned up three mineralised zones and averaged 1.67 g/t Au over 61 m. The company has also mobilised a detailed soil sampling programme to complement geophysics.
Tocvan Ventures (CSE:TOC, OTCQB:TCVNF, WKN: TV3/A2PE64) has announced a private placement of up to CAD$1.2 million, with a lead order from a prominent Mexican financier. The company will use proceeds from the deal to fund trenching, metallurgical testing and further drilling at its Pilar project, as well as mapping and sampling fieldwork at its El Picacho project. Both those properties are gold-silver projects in Sonora, Mexico.
That’s your Latin American news for this month, have a good one everybody!