Chinese, Japanese firms investing in Chilean, Argentine mining assets

Asian mining companies are stepping up their investments in projects in Latin America, with Chinese firms particularly keen on Argentina and Japanese companies eager to grab assets in Chile. 

China's growing influence in Argentina is in line with the expansion of its role in trade with the region. Between 2018 and 2019 the Asian giant's trade with Latin America grew 19% to over US$307bn, reported global market insights company Fitch Solutions.

“The Latin American region will be a bright spark for Chinese investment over the course of 2020,” the firm predicted earlier this year. 

According to the BNamericas project database, China has a presence in Argentina’s mining industry through Ganfeng Lithium, Hanaq Argentina, Shandong Gold, Metallurgical Corporation of China and Nextview New Energy Lion Hong Kong and its subsidiary Tibet Summit Resources. 

CHINESE DEALS IN ARGENTINA

Ganfeng Lithium

Last year, Ganfeng Lithium agreed a deal with Vancouver-based Lithium Americas to pay US$160mn for a 50% stake in the Caucharí Olaroz lithium project (pictured), currently under construction in Jujuy province, northern Argentina.

Just last week, Ganfeng and Lithium Americas agreed a definitive deal under which the former will pay US$16mn to increase its 50% stake to 51% and provide US$40mn in cash as a non-interest-bearing loan repayable in 2029. The company also agreed a 2020 funding schedule that includes an investment of up to US$400mn. 

 “The transaction reinforces our strategy of building a low-cost lithium operation in Argentina,” said Lithium Americas CEO, Jon Evans, in a release. 

“It was a win-win deal. Lithium Americas has now US$40mn more in their balance sheet and the project has US$16mn more in investment,” said lithium advisor Joe Lowry after the announcement. 

Investment decisions for the Caucharí Olaroz project will continue to be made by both companies. The construction phase is scheduled to be completed by late 2020, with production expected to begin in early 2021. 

The Chinese company is also advancing with exploration works for the Mariana lithium project in Salta province. 

Hanaq Argentina

Last week, London-based ECR Minerals sold its Argentine subsidiary Ochre Mining to Chinese-owned Hanaq Argentina, which is mainly focused on lithium. 

Ochre controls the SLM gold project in La Rioja province. The property hosts some gold prospects which have historically been mined on a small scale. 

The agreement involves a net smelter return royalty of up to 2% to a maximum of US$2.7mn for ECR over future production from SLM. 

“We believe that Hanaq has the operational capabilities and access to Chinese investment capital necessary to put the SLM project into production,” ECR Minerals’ CEO Craig Brown said in a release. 

Hanaq currently holds another four lithium projects in Argentina. Last year, the company also assessed three property blocks with uranium potential in Chubut province. 

Sierra Grande

Last year, the Metallurgical Corporation of China tried to reactivate the Sierra Grande iron ore deposit in Río Grande province and the Campana Mahuida copper project. Sierra Grande was suspended in 2016 due to low iron ore prices, while Campana Mahuida was halted in 2009 because of community issues. 

Veladero 

In 2017, Shandong Gold paid Barrick Gold US$960mn for a 50% stake in the Veladero gold and silver deposit in San Juan province, and last year Barrick CEO Mark Bristow said a US$34mn investment would be made in the project in 2020 to extend the mine life to 2027, as exploration work had shown potential to increase the mineral resource. 

JAPANESE DEALS IN CHILE

To secure more concentrates for its smelters, Japan’s Mitsubishi Materials Corp hammered out a US$286mn deal last week to buy a 30% stake in the Mantoverde copper mine in Chile's Atacama region. The acquisition also involves the Mantoverde development project, which entails building a 34,000t/d copper concentrator to process ore from the sulfide deposit at the Mantoverde mine.  

Under the agreement, Mitsubishi will make a US$263mn equity subscription in Mantoverde and a US$20mn cash payment upon achievement of certain milestones. The transaction is expected to be closed late in 2020, subject to successful execution of a project financing package. 

Last year, Japanese firm Sumitomo purchased 30% of Vancouver-based Teck’s Quebrada Blanca copper project for US$1.3bn. Teck’s Quebrada Blanca phase 2 could be in production by 2H21. 

Also in 2019, a consortium led by Japan’s Marubeni won a US$1bn contract for a desalination plant to supply freshwater to state copper miner Codelco. The tender was later scrapped because the project will be reformulated, but Marubeni will be able to participate in the new process. 

Private equity company Minería Activa was chosen by Mitsui to invest in copper. Last March, the two companies agreed a US$10mn investment in the Pampa Camarones project in Arica y Parinacota region, after it faced a bankruptcy process in 2016. 

Pampa Camarones' average annual production is around 8,000t of copper cathodes. Mitsui will not control the operation, but it will oversee the sale of copper cathodes. 

Photo credit: Lithium Americas