Source: http://www.mining-journal.com/Breaking_News.aspx?breaking_news_article_id=4561
Miners see big challenges ahead despite high prices Reuters, April 10,2008

Miners at the CESCO conference warn of future challenges in Latin America

Mining companies operating in Latin America have benefited recently from the best period ever for the sector, but now they also seem convinced that the challenges have never been bigger.

A relative lack of major discoveries, political and regulatory difficulties, rising operating costs with projects in remote areas and scarcity of highly qualified labor are among the main problems raised by executives after days of discussions at the CESCO/CRU conference in Chile.

"There is an enormous people challenge," John Thompson, technology and development vice-president for Teck Cominco Ltd said, adding that new areas of exploration such as those in the high altitude areas of Chile demand extensive geological knowledge.

He said the industry needs to advance in "geometallurgy" to have a full sense of deposits to optimize mining and milling. "An average worker can not look at a rock and see how much it is worth." he said.

Raymond Jannas, geology and exploration vice-president for Hochschild Mining plc, says the number of large discoveries have fallen to 12 in the 2000-2006 period against 32 between 1996 and 2000.

"Mining will reach deeper areas and costs will increase. Companies will have to look for new areas, the sea bed maybe," Jannas said.

"The mining industry is reaching a moment of difficult tasks," Vale`s director of Mineral Projects Development Eduardo Jorge Ledsham said. "There is increased competition, a greater dispute for exploration areas."

Tamaya Resources Ltd chairman Hugh Callaghan said practically all key costs in the industry went up lately: natural gas, sulphuric acid, freight, labor, taxes and royalties.

Governments, especially in Latin America, are trying to pocket a larger share of sector`s profits amid record metals prices.

"Resource nationalism is here to stay like it or not," he said.

Xstrata Copper chief executive Charlie Sartain says governments in the region might be successful in securing a larger share of the mining financial movement now, but they risk damaging the flow of investments in the future as companies could move to other countries.

"There are a lot of investment opportunities nowadays for miners in the world," he said.

Executives said Latin America countries need to improve the regulatory framework and infra-structure in remote areas.

Peruvian Alturas Minerals Corp chief executive, Miguel Cardozo, said that despite the difficulties there were many opportunities in Latin America.

"There are still many unexplored areas with good potential, but companies need clear and reliable rules to explore them," he said.

(Reuters, April 10,2008)