28 May 2020

Key points

  • Across Latin America, mining companies have slowly resumed operations but have stopped new investments.
  • Chile is fast-tracking its green hydrogen agenda, considered to be one of the best opportunities for the country to start a new industry.
  • In Mexico, the National Agriculture Council is working directly with the Mexican Government to help agriculture producers restart exporting.
  • Nissan, General Motors and Daimler Trucks Mexico are ready to restart operations in Mexico.

Resources and energy

  • LATAM – Base metals companies will be hit harder by the COVID-19 crisis than precious metals firms (especially gold, which is more shielded). Base metal companies had planned for an 11% increase in CAPEX pre-COVID and are now seeing a 3% decrease in CAPEX investment. Base metals companies such as Vale, Anglo American, Codelco, Southern Copper and Antofagasta have reduced their CAPEX guidance – but still plan to spend more this year than last year. Precious metals firm Newmont has cut its CAPEX guidance by 13% and Yamana has cut its guidance by 5%. The cuts are related to slower operations and the need to keep essential workers at home.
  • Argentina – The national government has issued a decree subsidising local oil production. The government has set a barrel price of US$45 for local producers, assuming the cost difference with the international market price.
  • Chile – The Chilean Government is fast-tracking its green hydrogen agenda, action plan and national strategy. According to the Energy Minister, Chile has the opportunity to produce green hydrogen at US$1.50 to US$2 per kilogram by 2030. Former Chilean President and former Special UN Envoy on Climate Change, Ricardo Lagos, will be leading an advisory council to elaborate on an action plan to 2025. Benchmark analysis, including Australia, found Chile needs to address education and regulation.
  • Chile – The Antofagasta region is under quarantine, affecting transportation to mines. Mining companies have reduced the number of workers onsite by between 30–60%. Mining projects under construction continue to be on hold and new projects are unlikely to start. Despite this, the mining industry expects to finish the year with production levels similar to 2019.
  • Mexico – The Mexican Government has reclassified mining as an essential activity, enabling companies to restart operations from June 1. Between now and then, mining companies must adapt their operations to meet new workplace health and safety measures.
  • Peru – Mining operations restarted in Peru last week. Major copper mines such as MMG’s Las Bambas and Grupo Mexico’s Southern Copper resumed operations in the midst of rising copper prices as a result of increasing Chinese demand. To date, 85 mining units from 30 companies have requested approval to restart, of which 49 have been granted. The reactivation will expand to include mid-tier underground mines.
    Peruvian miners are turning their attention to new technology and will accelerate the implementation of their innovation plans to make up for lost time.

Agriculture

  • Mexico – The National Agriculture Council is working directly with the Mexican Government on a plan that will help agriculture producers export their products shortly. The National Agriculture Council wants to take advantage of Mexico’s network of free trade agreements and start exporting again.

Advanced manufacturing

  • Mexico – Companies such as Nissan, General Motors and Daimler Trucks Mexico have announced they are ready to resume operations. 
  • Mexico – The Mexican Aerospace Federation has expressed the need to depend less on Asia, and start looking for other suppliers. Several key stakeholders have acknowledged that Mexico has a great opportunity to become a logistics centre in North America. This is due to the impending entry into force of the US-Mexico-Canada Agreement and the regionalisation of supply chains as a result of the impact caused by COVID-19.

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