AMI’s mining practice is best known for analyzing pre-investment risk by executing country and counterparty risk assessments. Once a project breaks ground, we monitor, anticipate, and advise our clients on how to mitigate future risk as well as better engineer CSR, PR and government relations assets to confront risk. But AMI is also Latin America’s leading market intelligence firm, providing a wealth of other services, including delivering consumer insights, predicting future demand, gauging market readiness, and conducting partner research.
As such, over the course of two decades, we have helped mining equipment providers make difficult decisions on where to focus their market investments. We go beyond the surface level to unearth both unforeseen challenges and unexpected opportunities, and we apply thorough search and vetting processes to find LatAm partners of all types, whether it’s distributors and agents, joint venture partners, acquisition targets or suppliers.
Join us for the first of a two-piece overview of the market for mining equipment in Latin America.
The 2022 Latin America Mining Risk Index
A qualitative and quantitative analysis of the risks facing both miners and investors in the region’s 16 leading jurisdictions
Developments in LatAm Surface Mining
To understand the region’s market for mining equipment, a preliminary distinction must be made on the base of mining method: surface mining and underground mining.
The region is home to world-class surface mines, which in turn drives demand for cutting-edge equipment, commanded by Escondida, the largest copper mine in the world by production, and Chuquicamata, the biggest open pit copper mine in the world by area, both located in Chile. Other notable surface mines include the Carajás iron ore mine in Brazil, as well as the Cerro Verde and Yanacocha copper and gold mines, respectively, both located in Peru. These will soon be joined by NuevaUnión, the largest undeveloped copper and gold deposit in the Americas, located in Chile.
Although the largest operations are often found in the southernmost (Chile and Argentina) and northernmost (Mexico) countries, there is ample opportunity across the region’s 20 million square kilometers. For example, gold and copper mine Cobre Panamá in Panama is one of the largest mines opened globally since 2010 and is likely to become one of the region’s largest operations by 2026.
Excavators, trucks, and drills used in surface mining in Latin America are following global technology trends. Automation is increasingly common, especially for blasthole drilling. For example, Swedish manufacturer Epiroc has partnered with the Los Pelambres and Los Bronces mines in Chile, and with the Peñasquito mine in Mexico, to provide Pit Viper 351 blasthole drills that can be remotely controlled.
Peruvian conglomerate Ferreycorp, a distributor for Caterpillar equipment, recently supplied Cat 794 AC trucks to facilitate autonomous hauling in the Quellaveco mine in Peru. The world’s leading manufacturer of construction and mining equipment, Caterpillar has leveraged a broad network of specialized distributors in the region to reach a breadth of heavy industries.
Japanese multinational Komatsu has had a notable presence in the local markets throughout the years. More than a third of the company’s ultra-class trucks (those with capacities of 320 short tons or more) used to be distributed in Latin America. To recognize the region’s importance in its portfolio, the Veladero gold mine in Argentina became the first recipient in the world of the company’s PC7000-11 hydraulic excavator, an innovative tool for open-pit and quarrying operations.
Another Japanese multinational, Hitachi, has recently revamped its distribution strategy in the region after deciding against continuing its joint venture with John Deere. Hitachi changed to a direct distributorship relation with eight dealers throughout Latin America to better market its line of excavators and haul trucks.
Graders, shovels, and scrapers are also demanded in the region. There are new mines becoming operational on a regular basis and the equipment purchase volumes can be significative. In one recent transaction, the Araguaia nickel mine in Brazil purchased equipment worth $135 million dollars from world-class suppliers including FLSmidth and Metso Outotec.
LatAm’s Underground Mining
Examples of underground mines include El Teniente, arguably the largest underground copper mine in the world, located in Chile, and El Limón-Guajes in Mexico, which includes both surface and underground gold extraction.
Much like surface mines, underground operations require lifts, haulers, and other transportation vehicles. They also require drills, not only to place explosives but also to create shafts for miners to enter. RESEMIN is known for being the only Latin American manufacturer of underground drills. Based out of Peru, the company successfully competes with Swedish multinationals Sandvik and Atlas Copco.
Komatsu also has a strong relationship with underground miners, especially after its 2017 acquisition of heavy equipment manufacturer Joy, which used to devote half its global production of shuttle cars to mining operations in the Americas. Shuttle cars are used to transport minerals to conveyor belts.
Global trends in technology innovation are also present in underground mining in the region. A nascent trend is the usage of drones. For example, South Africa-based Rocketmine partnered with Minera Autlán, Mexico’s largest producer of ferroalloys, to conduct aerial inspection and surveying of mineral deposits. This and other partnerships are likely to kickstart interest in underground drones that can go into stopes, shafts, and other areas unsafe for humans to enter.
A second piece in this series will review the equipment used after the mining process itself, whether surface or underground. In the meantime, please contact us to find out how we can help you identify, understand, and exploit growth opportunities for your mining equipment in Latin America.