The new report* shows that the promise of revenue will encourage miners to exploit local reserves, but warns that the economic honeymoon period is set to end, as governments act to take advantage of this strong revenue stream. Enormous zinc reserves, located across Peru, Mexico, Brazil and Bolivia, act to spur on growth in South and Central America’s zinc mining industry. According to the United States Geological Survey (USGS), the region possesses the second largest zinc reserves in the world, and Peru and Mexico account for over 75% of this. Expansion of existing mines and new upcoming zinc projects are expected to boost the regional production during the next few years. The Antamina and Tajo Norte zinc mines, located in the Peruvian provinces of Huari and Pasco, are currently under expansion, with work at Antamina, the largest mine in the country, claiming an investment of $1.2 billion. Planned projects in Mexico are currently all in exploration and development stages, but aim to increase the region’s zinc mine production within the present decade, and have a combined capital expenditure of over $1.7 billion.

These projects include Boleo, San Marcial, Pitarrilla and San Felipe mine developments, and if these projects progress on schedule, South and Central America’s zinc mine production could potentially see significant growth during the outlook period. The zinc mining industry in South and Central America is primarily export orientated, and during 2011 the region exported an estimated 3.6 million metric tons (MMt) of zinc ores and concentrates, while imports stood at an estimated 270 thousand metric tons. However, since 2000, zinc metal consumption in South and Central America has been on the increase, at a modest average annual growth rate (AAGR) of 2.5%, and in 2011 the region accounted for 7% of global consumption.

Financial constraints are arising in the South and Central American zinc mining industry, however. A new royalty scheme in Peru, and expected royalty hikes in Brazil and Bolivia, show government objectives to maximize profits and preserve competitiveness in their national mining sectors. This could reduce mining companies’ profitability, but reflects the optimism surrounding the mining industry for future years. South and Central America produced an estimated 2.7 MMt in 2011, showing a significant increase from 1.5 MMt in 2000. During the outlook period 2012-2020, zinc mine production in the region is estimated to increase at a CAGR of over 1.5% to reach 3.4 MMt in 2020. 

*Zinc Mining Market in South & Central America to 2020 - Mine Expansions, Upcoming Projects and Abundant Reserves Poised to Boost Regional Mine Output: Information/Orders: www.gbiresearch.com/Report.aspx