Inherent Challenges

Few industries in Latin America carry the historic political and social baggage associated with the mining sector. For many jurisdictions, their economic growth relies upon healthy pricing in the sector.  Political careers are made and lost based upon the performance of these industries and the rents levied upon them. For investors operating in mining, there is no escaping political and reputational risk. Those risks become particularly acute during times of scarcity, be they triggered by a pricing downturn or a fiscal crisis.  The result is a political battle between different levels of government and local communities, as well as unofficial stakeholders, over the spoils.

Mining companies become convenient political scapegoats when tensions arise. Throughout Latin America, royalties are disproportionately paid to central governments, little of which is empowered to local communities. As a result, much of the political risk facing the extraction industry is found locally, in isolated jurisdictions with minimal policing and ineffective governance. Community and government relations take on added importance for miners.

Protection from Pitfalls

For two decades Americas Market Intelligence (AMI) has conducted studies to evaluate and mitigate risks for mining companies and mining investors.  Our analysis of political risk, reputational risk and local community risk give companies a clear picture of what they’re facing, along with recommendations on how to avoid or best manage the challenges for optimum success with projects. Once a project is underway, our monitoring of local and national risk issues helps keep projects on track.