Contents

Introduction

Mining industry capital spending is on the rise, in Latin America and globally. BNamericas' sample of 22 major mining companies with presence in Latin America shows combined global capex is budgeted at US$43.753bn in 2018, a 21% increase over the companies' reported spending in 2017, which summed US$36.076bn.

For most of the companies, capital spending bottomed out in 2016 or 2017. Only three of the firms studied are planning lower capex in 2018, generally due to the wrapping up of construction projects.

Base metal-focused companies represent 84% of the total 2018 capex figure, while precious metals-focused miners represent 15%. The base metal companies' combined capex grew at a faster rate, with a total 21% increase in planned 2018 spending versus 17% for the gold and silver miners. Lithium and non-metallic focused SQM, in a category all its own, reported the largest single increase in spending plans, at 264%.

But while most firms are increasing overall spending, there is not a very clear pattern in terms of the drivers. Some firms, such as Brazilian giant Vale, will have similar or higher overall spending levels this year but expansionary spending will decline while sustaining capital increases. Others, such as Barrick Gold, are allocating a growing portion of overall spending to growth projects.

One trend that has been growing in recent years and is reflected in this report, is that of a greater focus on brownfield projects rather than greenfield, some of them expansions but many continuity or replacement projects.

Now that metal prices have improved and the mining industry is in a position to think about growth, after years of cost-cutting and divestments, the reality is that there are few construction-ready greenfields available. This lack of projects -combined with miners' more disciplined approach to growth- is perhaps keeping capex plans lower than they might otherwise be.

Nowhere is the lack of projects more evident than in Chilean energy and fishing group Empresas Copec's recent purchase of a 40% stake in the Mina Justa project in Peru. That a Chilean company had to go to Peru to get ahold of a de-risked, construction-ready copper greenfield, speaks to the lack of availability of new projects.

Now, as they launch back into growth, miners will continue to be focused on capital efficiency, not volume for volume's sake.

Notes to the following figures:

  • Source: BNamericas with data from companies
  • BHP figures include petroleum and correspond to fiscal years ended in each calendar year
  • Glencore figures include only mining & metals
  • Anglo American, Barrick Gold, Newmont Mining, Buenaventura 2018 figures represent guidance midpoints
  • Yamana excludes any attributions from Brio Gold
  • Minsur 2018 figure is BNamericas estimate

(Cover photo: Water management reservoirs at the Quellaveco project in Peru. Credit: Anglo American)

Figure: Global capex of biggest mining companies active in Latin America
Source: BNamericas with data from companies

Figure: Global mining capex by company
Source: BNamericas with data from companies

Figure: Global mining capex 2018 by mineral focus
Source: BNamericas with data from companies

Project Risk Analytics
Tracking project performance

Portada Risk

By providing a top-down analysis of the timeliness and costs of current Latin American projects, BNamericas provides a new tool to the industry, allowing it to learn from past events and improve planning for future projects.

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