Goodman forges new deal in Brazil - ALABC€¦ · Goodman forges new deal in Brazil ... Logistics and Unilever. Goldman Sachs analyst Simon Wheatley said Goodman's move in Brazil

Goodman forges new deal in Brazil On November 21, Industrial property powerhouse Goodman Group outlined an ambitious agenda to increase its $24 billion global investment and funds empire, with news that it is eyeing a mammoth deal in Brazil. The group and local partner WTorre are making a play for $1.49bn worth of warehouse and logistics assets being sold by Brazilian real estate developer BR Properties as they look to expand in the fast-growing South American market. Goodman chief executive Greg Goodman said the Australian group's commitment to the Brazilian portfolio would be split with WTorre and backed by wholesale funds in line with its global business model. "The development book is really what's driving the funds management business and the quality of that development book, so then you can share those investments with your partners, which is the key to it," he said. The Brazilian portfolio includes multinational tenants that are existing Goodman customers worldwide. Mr Goodman noted the shift to operating with major players such as DHL, CEVA Logistics and Unilever. Goldman Sachs analyst Simon Wheatley said Goodman's move in Brazil might be being made to access the adjoining undeveloped land on some properties and to increase the venture's exposure to new markets in Brazil. He said Goodman might call in global pension fund backers to support the deal. "We expect that if not immediately, the majority of Brazilian investment exposure in time will be owned by third parties in a newly established fund," Mr Wheatley said. Mr Goodman said the group had a successful first quarter, raising $1.8bn of new equity commitments from its investment partners, bringing its undrawn equity and debt commitments to $6bn, which it planned to plough in to new development and investment ventures. He said that over the next decade the group was targeting economies with strong consumption patterns. He singled out opportunities in China and Hong Kong. "The growth of our business has now seen almost half of the group's earnings come from our offshore operations. In turn, we expect to see the benefits of our global business increase significantly in future years," Mr Goodman told security holders. ↑Return to Index

This issue (Click on heading to open article)

Goodman’s new deal in Brazil 1

Austrade’s 2014-17 strategy for Latin America 2

Austin Engineering wins new work in Chile 3

Hot Rock departs Chile and Peru 3

ALABC’s annual Canberra Summit 4

‘Trading Nation’ book promotes Latin America 5

Chairman’s message 6

Strong Australian presence at Expo Minera 7

Latin Resources secures foothold in Brazil 7

2014 Perth Anniversary Dinner – Book Now! 8

Ecotech wins award 8

Connecting mining with people Australian-style 9

Alejandro Toledo visits Sydney 10

Brazilian in running for ‘Future Unlimited’ prize 11

Argentina to play Australia in Polo in Sydney 12

Orocobre making progress in Argentina 12

Modernizing Brazil’s mining sector 12

Chile, Peru and Colombia lead growth 13

NZ meat gains access to Peru 15

Economists call for greater investment in Brazil 15

Chile’s mining sector embraces change 16

What next for Latin America? 17

Peru aims to become industrialised nation 18

Santiago is the new luxury capital 19

Americas-wide FTA back on the agenda 19

Australian cruise operators look to Chile 20

For the Diary 21

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Edition: December, 2013

Newsletter of the Australia-Latin America Business Council Page 2

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www.alabc.com.au Tel: 02 9357-4441

Austrade defines its 2014-17 strategic vision for Latin America

Austrade’s Latin American senior management team met in Sao Paulo, Brazil, in November to shape a new framework to position Australian capability in Latin America. Grame Barty, General Manager, Growth and Emerging Markets, led the discussion that highlighted the Australia-Latin America trade success story, particularly in education, training and the export of services across a range of sectors. The Latin American story continues to evolve with many more Latin American economies aligning themselves closer to, and more competitively with, the world’s leading economies and Institutions. “As a result, our previous strategy of focussing on six Latin economies (Brazil, Argentina, Peru, Colombia, Chile, Mexico) has now expanded this twelve Latin American economies (including Uruguay, Paraguay, Bolivia, Ecuador, Costa Rica and Panama)” said Barty. As a result of recent rapid economic development many Latin American nations are now moving ahead on the prosperity index, with most countries in the world’s top 50 ‘most prosperous’, and their citizens are seeking a social and personal dividend from this economic progress.

‘Every government wants to makes a positive impact towards improving the standard of living for their people that will allow for a better quality of life through new services, stability and effective management of the country. Australia is seen to be a global benchmark to prosperity because of those very systems and frameworks that underpin its society and way of living.’ Austrade also sees education in all its forms – graduate, post graduate, scholarships, vocational training, English as a second language, transnational research links - as a key strategic driver and focal point for deepening Latam links through the development of human capital across a range of sectors including mining, environmental management and water sustainability, agribusiness, health and well-being and financial services and wealth management.

Image from left: Rebecca Parish, Marketing Manager Growth and Emerging Markets; Daniel Havas, Trade Commissioner Peru; Kym Fullgrabe, Senior Trade Commissioner Brazil; Grame Barty General Manager Growth and Emerging Markets; Radek Divis Trade Commissioner Mexico; Crispin Conroy Senior Trade & Investment Commissioner Latin America and Consul-General, Colombia; Julie Myers, International HR Manager for Americas; Elizabeth Rozas Marketing Manager Latin America; Daniel Sullivan, Trade Commissioner Chile; Norma Ramiro, Post Manager Buenos Aires; Sheila Hunter, Trade Commissioner Brazil; Sofia Pereira, Education Commissioner Latin America


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‘Austrade is focused on broadening and deepening our services and investment relationship with Latin America. In addition to finalising formal trade and investment agreements the most effective way for this happen is by creating within our Austrade trade promotion team a comprehensive methodology to understand all of the issues affecting a market from policy and regulation, to research or equipment, technology, skilling and services. We call this internally the PRETSS approach’ said Mr Barty. ‘Our 2014 – 2017 strategic focus then could be simply summarised as L6 to L12; Economic Development to Quality of Life; and implemented through a PRETSS approach and we look forward to working with ALABAC members to make this happen.’ Austrade has six trade and investment offices in Latin America located in Brazil, Chile, Argentina, Peru, Colombia and Mexico. ↑Return to Index

Austin Engineering wins more work in Chile

Austin Engineering has secured a four-year contract worth at least $A7.3 million at Chile’s Gabriela Mistral copper mine. The contract with state-owned miner Codelco includes maintenance and repair of dump truck bodies, buckets and ancillary mobile equipment, with Austin’s recently acquired Servigrut business expected to supply equipment lifting and other services.

The base value of the contract is $5 million for the first three years and $2.3 million for the fourth. However,

Austin said the eventual value of the work could be higher than this, depending on the extent of repairs and maintenance undertaken. Austin managing director Michael Buckland said his company was now a major force in Chile for supply, maintenance and repair of equipment, and that further contracts were expected to be announced over the next three months. “This new contract follows the two contracts for the Calama region announced in August 2013 and brings the total base value of these contract awards to over $US30 million,” Buckland said. “The new contract also further enhances our presence in the major copper mining precinct of northern Chile. “This contract further enforces our previous announcements on second-half FY 13/14 earnings and beyond for our Chilean operations exceeding those of the first half.” Last August, Austin declared earnings before interest, tax, depreciation and amortisation for FY 12/13 of $A51.1 million. It said it expected FY13/14 results to be flat, with a distinct bias of earnings towards the second half of the year. In October, Austin’s $US21 million ($A22.9 million) acquisition of Servigrut represented a broadening of the company’s Chilean footprint providing synergies in relation to the transportation of equipment to mine sites in the country. Gabriela is located 120km south of Calama, has significant reserves and an expected operating life of more than 15 years. ↑Return to Index

Hot Rock sells out of Chile and Peru

The Philippines Geothermal energy producer Energy Development Corp. has bought out its Australian partner from two geothermal projects in Chile and Peru. In a disclosure to the Philippine Stock Exchange, EDC said its subsidiary EDC Hong Kong sealed the share sale agreement with a subsidiary of Hot Rock Limited on November 16. Under the deal, EDC HK will acquire all of Hot Rock's shares in Hot Rock Peru and Hot Rock Chile. Hot Rock, in separate statement, said both parties have agreed to a sale price of $3 million. A deposit of $500,000 of the purchase price is payable by EDC within five business days of execution of the contract. EDC will acquire all of the geothermal authorization and application interests (including Hot Rock's 30% interest in the Quellaapacheta joint venture oroject) and other assets held by Hot Rock Peru S.A in Peru except for the Chocopata Project; and all of the geothermal concession and application interests and other assets held by Hot Rock Chile S.A and Hemisferio Sur SpA, in Chile except for the Longavi and Calerias Projects. ↑Return to Index


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ALABC engages with key stakeholders at 2013 Canberra summit On November 26, the directors of the Australia-Latin America Business Council gathered in Canberra for the annual Latin America Networking Day. The event, which was held in Parliament House, brought together the Latin American Heads of Mission, strategic allies such as the Department of Foreign Affairs and Trade, Austrade, Trade & Investment Queensland and Victoria’s Department of Business & Innovation, and the Council on Australia Latin America Relations (COALAR). Also present were representatives of some of the ALABC’s Patron Members, including John Barbagallo, Chief Executive of Arrium Mining Consumables; Susan Elliott, Deputy Vice-Chancellor Engagement of the University of Melbourne; Mick Buffier, General Manager, Corporate Affairs, Government & Industry Relations of Glencore; Joseph Keenan, Chief Operating Officer of Pacific Hydro; Alan Lawson, Pro-Vice-Chancellor (Research and International) of the University of Queensland and Nicholas Myburgh, Partner of PwC. The event provided an opportunity for the ALABC and its allies to review the Australia-Latin America relationship from a number of perspectives and was crowned by the participation of the Hon Julie Bishop MP, Minister for Foreign Affairs, and the Hon Andrew Robb AO MP, Minister for Trade and Investment, who both provided their plans for engaging with Latin America within their respective portfolios. The plans outlined by both ministers were very well received by all the participants and suggest that we can look forward to greater interaction with the region during the term of the Abbott government.

After opening remarks from ALABC Chairman, Jose Blanco, other keynote speakers included HE Pedro Villagra, Ambassador of Argentina and Dean of the Diplomatic Corps; Chris Gale, COALAR Chairman; and Sam Gerovich, Australia’s recently appointed APEC Ambassador. Stephen Biggs, Director of Overseas Market Development (Europe/Americas) at Trade & Investment Queensland and George di Scala, Director of Trade Engagement – Americas at the Department of State Development of Victoria, provided overviews on how their respective states where going about engaging with Latin America.


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Insights into creating opportunities for students in Australia and Latin America where provided by Dr Anna Ciccarelli from the University of Queensland and Diana van Woerkom, Managing Director of Australian Internships. Jane Mckeon, COALAR member and Group Executive, Government Relations at Virgin Australia reviewed issues relating to travel facilitation and Dr Adrian Hearn, Research Fellow at the University of Sydney analysed the growing trade and investment relationship between Asia and Latin America, including the relevance of same for Australia. Austrade’s Grame Barty, General Manager, Growth & Emerging Markets, briefed the meeting on Austrade’s plans for Latin America in 2014 and up to 2017, providing an insight into Austrade’s expanded focus in the region. In terms of 2014 and the involvement of several Latin American countries in Australia’s hosting of the G20 summit, presentations were provided by Victor Perton, G20 representative from Treasury; Daniel Sloper, G20 Taskforce Head from DFAT and Kerstin Wijeyewardene, Principal Adviser, G20 Division of Treasury. ↑Return to Index

New book advocates closer engagement with Latin America A new book written by three former senior Department of Foreign Affairs and Trade officers - Mike Adams, Nicolas Brown and Ron Wickes - examines the history of Australia’s trade since Federation and identifies the reforms that Australia must make to remain a competitive twenty-first century economy. The book, titled ‘Trading Nation – Advancing Australia’s interests in world markets’, was launched in Sydney on November 27 by the Hon Mr Andrew Robb AO MP, Minister for Trade and Investment. One of the key recommendations of the book is that ‘While Australia’s economic future lies predominantly in Asia, a long hard look is needed at how the countries of Latin America are changing their region and the rest of the world as markets, competitors and shapers of global policy, and at how Latin America might come to fit more firmly within Australia’s international perspectives’.

The authors state that ‘. . . by 2025, 500 million middle-class Latin Americans will be potential customers for Australian products and services. Latin American companies will be competing more keenly with Australian companies for access to Asian and other markets across a range of commodities, food and services’. Nominating areas of the relationship that require attention, the book highlights that ‘Australia’s relationship with Latin America is woefully under-resourced at the diplomatic level.’ ‘Our diplomatic and trade presence does not reflect current imperatives, let alone future ones as Latin America’s influence grows economically and politically.’ To remedy the situation, the book’s authors state that ‘. . . Latin America and Australia need to see each other in new ways and be more certain about what each can offer the other. At a strategic level, the political and global weight of Latin America, especially of Brazil and Mexico, needs to be more fully understood and acted upon by Australia’s leaders’. ‘At a commercial level, relationships with Latin American countries also need to be seen in new ways. Bilateral trade and investment relationships can go much further than the current focus on mining and spread beyond their epicentre in Chile.’

The book then goes on to outline what governments can do to increase the likelihood that the Australia-Latin America relationship ‘takes off’ and concludes that, ‘At one level, the answer might simply be to work on the basis that Australia-Latin America engagement will intensify to the extent that Latin American business becomes more interested in Asia and sees Australia as part of enhancing engagement with Asia’. The Australia-Latin America Business Council welcomes the analysis of the Australia-Latin America relationship contained in the book and hopes that it will encourage government and business alike to take a much closer look at what the markets of Latin America have to offer to Australia, and brings about a more concerted effort to boost Australia’s representation in the region and to deepen the commercial engagement with the region. ↑Return to Index


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Chairman’s Message As 2013 comes to an end, we can look back at a very successful year for the ALABC and look forward with excitement to the year ahead, which will mark the 25

th anniversary of the

Council’s establishment. An important milestone in the Council’s history and a great opportunity to reflect and to celebrate the deepening of Australia’s engagement with Latin America that has taken place over the past quarter century. From modest beginnings, the Council has grown into an over 200 member strong entity that has carved out for itself an enviable reputation for the quality of the work that it does in promoting Latin America in Australia, and for the successful relationships that it has forged with key allies and stakeholders, both in Australia and in Latin America. It has survived the test of time and can look forward to the next 25 years with enthusiasm and optimism. As satisfying and rewarding as the past 25 years have been, the Council readily acknowledges that much remains to be done if Australia is to extract maximum benefit from its relationship with Latin America. The challenges are extensive and daunting, and time is of the essence, for opportunities are never permanent and must be seized as fast as possible. That said, we can draw encouragement from the solid platform that has been established and from the progress that a growing number of countries in Latin America have made in building their economies. Amongst the highlights that 2014 holds in store are Brazil’s hosting of the football World Cup, the start of a new presidency in Chile and the expected flow on effects from the historic reforms introduced in Mexico by President Enrique Peña Nieto. At the same time, countries such as Peru, Colombia and Uruguay are expected to continue growing and to offer increasing opportunities for Australia. As is explained in this newsletter, Austrade has broadened its focus on Latin America and this should ensure that more Australian companies are able to access a greater number of the region’s markets. This is welcome news and will hopefully, in time, be reinforced by the strengthening of our diplomatic representation in the region. An embassy in Colombia should be our next priority, in recognition of that country’s growing economy and considerable interest in forging closer ties with Australia. Similarly, we should take note of the recommendations contained in the recently-published book, ‘Trading Nation’, which is also reported on in this newsletter. Amongst the conclusions expressed by the book’s authors are that ‘. . . Latin America and Australia need to see each other in new ways and be more certain about what each can offer the other. At a strategic level, the political and global weight of Latin America, especially of Brazil and Mexico, needs to be more fully understood and acted upon by Australia’s leaders’. ‘At a commercial level, relationships with Latin American countries also need to be seen in new ways. Bilateral trade and investment relationships can go much further than the current focus on mining and spread beyond their epicentre in Chile.’ The key message is that Australia should not focus exclusively on China and the Asia region, and that there is an important role for Latin America to play in Australia’s political and commercial strategy. On the home front, the Council will be striving to host even more events than in any previous year and to bring to Australia 2 or 3 high profile visitors from the region, around whom it plans to schedule nationwide ‘roadshows’ that should help to reach an even wider audience and to thus draw greater interest to engaging with Latin America. In this regard, we are delighted that the Latam Airlines Group, which comprises LAN and TAM and operates the largest airline in South America, has agreed to partner with the Council to bring these high profile visitors to Australia. Other partners will be sought so as to give the visits maximum impact. All companies that are engaged in doing business in Latin America are encouraged to see 2014 as their year of celebration. An opportunity to wave the corporate flag on behalf of Latin America and to support activities that acknowledge the growing importance that the region has for them. On behalf of everyone at the ALABC I extend to all of you our best wishes for the festive season and for a successful and memorable 2014. Jose Blanco, Chairman ↑Return to Index


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Australian presence prominent at Expo Minera in Mexico

Australian mining expertise featured prominently at Expo Minera, held in Acapulco from 16-19 October 2013. Seven companies (Acquire, Emeco, Gekko Systems, LeapFrog, Machinery Automation and Robotics, Russell Mineral Equipment, and Westech/Austin Engineering) participated with the Australian Trade Commission (Austrade) at the Australia Unlimited Pavilion. Another twelve Australian firms participated independently.

Expo Minera, Mexico’s largest mining expo, is held biennially and the 2013 edition was attended by more than 900 exhibitors and over 10,000 visitors. The show offers unparalleled access to key players in the Mexican mining industry. Australia was only one of two foreign countries (the other being Canada) invited to participate in a “High Level Seminar” at a session entitled the Future of Mining. Australian Ambassador to Mexico Tim George delivered a presentation

which highlighted the strengths of Australia’s mining sector, commitment to sustainable mining practices, sound water management, relations with communities and advanced approaches to vocational training and skills development. The Ambassador also participated in the official inauguration of Expo Minera by the state governor of Guerrero and senior federal mining authorities. A highlight of the opening of the Australian Pavilion by Ambassador George and Mexican Mining Coordinator Mario Cantú was the signing of a technical cooperation agreement between Australian company IntierraRMG and the Mexican Geological Survey, a collaboration initially facilitated by Austrade. A separate VIP dinner reception organised by Austrade’s Mexico office provided excellent networking opportunities for the Australian contingent with senior Mexican mining figures, including Jaime Lomelín, head of Peñoles and Fresnillo, two of the largest mining groups in Mexico. Mexico ranks fourth among countries with the largest exploration budget worldwide, and first in Latin America, according to Metals Economics Group’s (MEG) World Exploration Trends 2013 report, but the presence of Australian companies, both Juniors and METS (Mining Equipment, Technology and Services) providers in the Mexican market has been limited to date. “Mexico offers untapped potential for Australian METS companies, and their stronger presence at this year’s event shows that they are now starting to look seriously at market opportunities here, “Austrade’s Trade Commissioner in Mexico City, Radek Divis, said. For more information about mining opportunities in Mexico: www.austrade.gov.au or contact: [email protected] ↑Return to Index

Latin Resources secures foothold in Brazil Perth explorer Latin Resources has acquired the Borborema iron ore project from Rio Tinto Exploration Brazil for US$200,000, plus taxes and legal costs. The project is in the iron ore district of Rio Grande do Norte state near the east coast of Brazil. Latin said the acquisition was in line with its objective of identifying iron ore projects in South America that were close to port and infrastructure. The mineral rights cover 40,483 hectares and analysis of rock chip samples has returned values of 36-41% iron. Latin said Borborema was consistent with its strategy and had potential for near-term production of iron ore in conjunction with a joint venture partner. “We are very pleased to have been able to capitalise on Rio’s exploration work in this very exciting iron ore district in Brazil,” Latin managing director Chris Gale said. “This move fits with our strategy of developing projects close to port and infrastructure to enable near-term production.” ↑Return to Index

http://www.austrade.gov.au/

mailto:[email protected]


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2014 Perth Anniversary Dinner – 18 March Book Now!!!! The Australia-Latin America Business Council’s 2014 Perth 25

th Anniversary Dinner promises to be something special, with Daniel

Malchuk (pictured), President – Aluminium, Manganese & Nickel, BHP Billiton, as guest of honour and keynote speaker. Chilean-born Daniel commenced working with BHP Copper in the US in 1996. After spending a number of years with other companies, Daniel joined BHP Billiton in 2002 and worked in a number of roles in the Base Metals division. In 2007 he was appointed Vice President of Strategy and Development for the division, based in Santiago (Chile). Daniel held this role for five years before moving to Singapore in 2012 to take on the role of President of Minerals Exploration. In May, 2013 Daniel was appointed President of Aluminium, Manganese and Nickel and relocated to Perth, where he is currently based. Daniel has a Civil Industrial Engineering degree from the University of Chile and a Masters of Business Administration from the University of California in Los Angeles. The Dinner will bring together ALABC members and guests, including senior business leaders from organisations throughout Australia and from a wide variety of industries, as well as government officials who have interest in doing business in Latin America and in Australia’s overall relationship with the region.

Silver Sponsors

Bronze Sponsors

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Ecotech acknowledged at 51st Australian Export Awards

Melbourne based company Ecotech picked up the ‘Environmental Solutions Award’ at the 51st

Australian Export Awards that were held in Melbourne on November 26 and attended by the Prime Minister Mr Tony Abbott amongst other dignitaries. The Awards recognise Australian companies who are involved in international business and succeeding in their engagement strategies.

Ecotech’s Managing Director, Mr Nicholas Dal Sasso was present at the ceremony to collect the award on behalf of his staff. “To be recognised by our peers in the export industry and the Australian government for all our hard work is an honour and a privilege” he said.

Mr Dal Sasso went on to say that “the night was a truly memorable one made possible by the partners of the award; Austrade and the Australian Chamber of Commerce and Industry, as well as the platinum sponsors, Commonwealth Bank of Australia and EFIC.”

Ecotech has been exporting its environmental monitoring solutions since the early 1990’s, with an extensive network of agents in Latin America. One of the world’s leading manufacturers of environmental monitoring systems, they also operate the systems they build which allows them to understand the needs of the technicians, consultants, engineers and data operators who use their equipment on a daily basis. ↑Return to Index

Event Details Date: Tuesday, 18 March, 2014

Time: 7.00pm for 7.25pm

Venue: Hyatt Regency Perth, 99 Adelaide Terrace, Perth

Dress; Business Attire

Cost: ALABC Members: $140 per person or $1,200 per table

Non-members: $190 per person or $1,700 per table

Register: www.alabc.com.au/Events-Activities

Contact: Rosie Atherfold, Marketing & Events Manager, ALABC

Tel: (02) 9357 4441 or email [email protected]

http://www.alabc.com.au/Events-Activities



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Australian courses on connecting mining with people In November, the International Mining for Development Centre (IM4DC) held a short course in Santiago, Chile on Connecting Mining Activities to Human Development Goals. The course was aimed at improving capacity to analyse and understand the connections between mining activity and socio-economic progress in mining regions The course was presented by IM4DC in collaboration with the University of Queensland’s SMI Centre for Social Responsibility in Mining (CSRM) and NGO Casa de la Paz (Chile), as part of the SR Mining Conference 2013. The approach being to build a new value proposition that places the people at the centre of the analysis and to contribute significantly to human development, poverty reduction and social conditions in developing countries. In addition to providing concepts and practical group exercises, the course inspired discussions as well as sharing of knowledge and experience across various contexts and areas of concern. The course addressed the failure of many mining endeavours to meet the human development needs of the most vulnerable and fragile communities in their midst. It drew upon extensive research by SMI-CSRM’s Christian Parra in Latin America and many years’ experience of Casa de la Paz, which is one of Latin America’s most well reputed NGOs operating in this area. The CSRM team that delivered the course included Cristian Parra, Lynda Lawson and Fitsum Weldegiorgis in collaboration with Pablo Valenzuela from Casa de la Paz. Targeted to a broader audience including representatives from governments, civil society and academic institutions, it was also of interest to company directors, CSR executives and practitioners in the industry wishing to build a new value proposition that enables mining to contribute significantly to human development, poverty reduction and social conditions in developing

countries. The five-day program comprised of a two-day educational workshop, followed by participation in the three-day conference. The two-day course provided both a theoretical frame and practical tools with many opportunities for interaction and sharing experiences, with a total of 50 participants attending from Chile, Peru, Ecuador, Bolivia, Columbia and Uruguay.International workshop on Dialogue and Conflict in the Mining Sector in Peru. In late November, IM4DC along with the Centre for Social Responsibility in Mining (CSRM) and Societas Consultora de Analisis Social and the Grupo de Dialogo Mineria y Desarrollo Sostenible of Peru led a participative research project about dialogue processes in the mining sector and their role in conflict management and prevention in environmental impact study (EIS) assessment and approval processes.

The project was delivered through two workshop activities held over four days. The first workshop entitled ‘Open dialogue on mining and sustainable development in the mining sector: Building on the Latin American experience’ focused on the experience of multiple Peruvian and Latin American dialogue spaces for the mining sector. The second workshop on ‘Political and institutional aspects of environmental impact study approval processes in the mining sector: Conflict management and prevention’ dealt with how to enhance conflict management and prevention during the EIS assessment and approval process. Both workshops invited participants to reflect and share ideas based on concrete Latin American experiences and built on the results of previous CSRM research. The workshops also featured presentations from researchers from IM4DC’s new sister organisation, the Canadian International Institute for Extractive Industries and Development. Participants came largely from Peru and also Chile, Argentina, Columbia, Brazil, Panama, The Dominican Republic, Ecuador and Guatemala with representatives from civil society organisations, dialogue spaces on mining and sustainable development, academia, government and industry ↑Return to Index


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Peru’s former President, Alejandro Toledo, makes visit to Sydney

The Palmer Resort in Coolum was the venue for the 2013 annual meeting of the Club de Madrid, an independent non-profit organization composed of over 90 democratic former Presidents and Prime Ministers from more than 60 different countries, who come together to respond to a growing demand for support among leaders in two key areas: democratic leadership and governance and response to crisis and post-crisis situations. Although the meeting received no local media coverage, it was notable for the calibre of its participants, amongst which were a number of former Latin American heads of state, including: Felipe Calderon (Mexico), Ricardo Lagos (Chile), Osvaldo Hurtado (Ecuador) and Alejandro Toledo (Peru). At the conclusion of the meeting, Mr Toledo and his wife, Eliane Karp-Toledo, were able to make a short visit to Sydney and were guests of honour at a luncheon hosted by the ALABC, and sponsored by the University of Sydney and Karoon Gas. The luncheon was attended by representatives of local companies with a presence or interest in Peru, as well as other invited guests, including HE Mr Luis Quesada, Ambassador of Peru, and the Consul General, Elizabeth Castro.

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Brazilian semi-finalist in Australia’s ‘Win your future unlimited’

Ms Juliana Reis from Brazil has been announced as the sixth of seven finalists in Austrade’s Win Your Future Unlimited global competition, which asks students to design a digital postcard that describes how studying in Australia would help them achieve their future ambitions. The global competition, run from 1 October to 18 November, allows entrants to have the chance to win a year of study in Australia, including flights, tuition, accommodation, a stipend of more than USD14,000, an internship and more.

"The opportunity to go to Australia as a finalist means a big step in achieving what I always wanted to do [film], but was afraid to try," said the Brazilian. Juliana also said she wants to follow in the footsteps of photographer Roberto Seba from São Paulo, who in 2013 was announced the winner of the Tourism Australia contest “Best Job in the World". Through this opportunity Roberto won a job vacancy in Australia and now works as a photographer in Melbourne. Juliana Reis lives in Belo Horizonte (Minas Gerais), she completed her undergraduate studies in writing at the State University of Montes Claros (Unimontes) and is also a graduate in English from Universidade Federal de Minas Gerais. From over 30,000 postcards, from across 128 countries seven semifinalists were nominated. In addition to Juliana, the other semifinalists

include: Aditya Nur (Indonesia), Uttam Kumar (India), Yaroslava Vasina (Russia), Nguyen Minh (Vietnam), Mark Gil Caparros (Philippines) and Abigail Engleman (USA). The judges described Juliana’s postcard to be captivating, with a visual style that instantly reflects the power of the film industry to make a positive change in the world. "Studying filmmaking where communications and media courses are internationally recognised as leaders in the field, will help me explore the potential of films in making a world positive change and the possible potential of people in making good, just as good as this project when offering a life changing opportunity" said Juliana in her postcard, which can be seen at: http://futureunlimited.com.au/postcard/23161 The Australian Trade Commission in Sao Paulo hosted a special event for Juliana in Belo Horizonte this week to congratulate and wish Juliana all the best in the next stage of the competition. The second and final phase of the process will be held in Australia from 5 to 17 December. Juliana and the other six finalists will spend two weeks visiting 22 Australian educational institutions in the cities of Adelaide, Brisbane, Gold Coast, Hobart, Melbourne, Perth and Sydney. During this period they will be judged on their motivation, their conduct during the visit, their technical English skills and personal skills. The winner will be announced on December 17. “This competition has been a very positive initiative which has encouraged Latin American students to consider Australia as a high quality education destination offering a wide range of highly innovative courses," says Sofia Pereira, Education Commissioner, Latin America, Austrade. “For one of these students, the dream to study in Australia will become a reality. They have the chance to discover all the benefits that Australia has to offer, not only as an educational destination but also experience a country which has a high standard of living and that welcomes international students from around the world. This cultural exchange enriches Australian society, creates personal bonds that last a lifetime and opens a world of opportunities and possibilities for international students - A real Future Unlimited” ↑Return to Index

The postcard that enabled Juliana Reis to be chosen as one of the semi-finalists for the Win Your Future

Unlimited global competition

Patricia Monteiro, Education Manager Brazil, Austrade Sao Paulo congratulates Juliana Reis for beinge chosen as one of

the semi-finalists for the Win Your Future Unlimited global competition

http://futureunlimited.com.au/postcard/23161


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Argentina to play Australia in polo in April, 2014

Aficionados of polo and all things Argentinean will be pleased to learn that the Windsor Polo Club is hosting the 2014 Australia vs Argentina Polo International on Saturday, 5 April next. The event promises to attract a large crowd, as it has been a very long time

since Argentina (the leading polo nation in the world) has played against Australia. The match promises to attract the leading Australian polo ponies and players, who will also assist with providing mounts for the Argentineans. Polo at this International level is sport in its purist form and is synonymous with blue ribbon brands and associations. With players coming from throughout Australia wide and Argentina, it should be great polo and a very enjoyable day. The Windsor Polo Club is also organising an Estancia Polo Bar and hope to incorporate a fun Latino After Party, thus giving the entire day a very Latino touch. Anyone wishing to explore opportunities for sponsorship of this prestige event or to simply learn more about what promises to be one of the sporting highlights of 2015 is asked to contact: Julie McIntosh President – Windsor Polo Club Old Kurrajong Rd Richmond NSW 2753 Australia M: 0412 297 678 W: www.windsorpoloclub.com ↑Return to Index

Orocobre secures funding to progress in Argentina

Argentina-focused miner Orocobre has completed a $A30 million share placement. Although the placement was reduced from previous plans, it built on earlier offerings by the company in 2009-10, which helped fully fund the company’s Olaroz lithium project. While the reduced funding will not impact Olaroz, Orocobre said it would reduce working capital allocation for its Borax Argentina project from $20-10 million. Confidence in initial studies on Borax Argentina led the company to raise funds for future construction of a boric acid plant with capacity of 16-24,000 tonnes per annum. Along with its focus on boron and lithium, Orocobre is also targeting other lithium-potassium-boran and potash projects in Argentina through a number of exploration efforts. ↑Return to Index

Slowly modernizing Brazil’s mining industry (Written by Simon Tarmo is the Brazilian General Manager for Aspermont Limited, publisher of Mining News Brazil (Notícias de Mineração Brasil).

Brazil´s mining sector is passing through a period of major change with a number of legal, economic and cultural shifts set to shake up the character of the local industry. First and foremost is the ongoing overhaul of Brazil´s mining code, with the existing 36 year old legislation set to be replaced in a bid to ‘modernize the sector’, in the words of President Dilma Rousseff. Almost four years in the making and still not even close to coming into effect, the new code has taken significantly longer to be developed than initially expected and, with key changes to directly affect the profitability and risk levels of projects, the delay has put a tangible dampener on investment in the sector, with many decision makers waiting to see what happens.

http://www.windsorpoloclub.com/


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The main changes to the existing code involve three aspects: higher royalties on selected commodities, new processes for the concession of mining titles, and the creation of a new regulatory agency for the industry.

While royalties for some key categories look set to rise considerably, the new levels remain within reasonable limits compared to other mining countries, including Australia. It is the change to the concession process that has been the most contentious issue, with strong criticism of the government’s initial proposal to introduce compulsory auctions for almost all new concessions; a measure brought across from the oil and gas sector with little regard for the unique and significantly more diffuse nature of the mining industry.

While the government has argued that this will increase competition and stop opportunists from locking up areas for years on end, the main wave of opposition has focused on how such an approach would stifle exploration and geological research, and therefore the potential for new projects, by removing the first-mover advantage that gives smaller players the security to invest in new prospects and opportunities. As it currently stands, a strong campaign from exploration-focused groups looks set to result in a watered-down version of the initial plans, featuring the first-mover advantage retained in a range of situations, accompanied by more rigorous rules concerning the development of mining concessions – essentially a “use it or lose it” provision to discourage pure speculators. Whatever the final framework, implementation of the new code is still a way off, with the latest version unlikely to be approved by the lower house until the end of February at the earliest. Under the best case scenario, the senate would sign off by mid Q2 2014, which would see the changes take effect around the end of Q3 2014 (180 days later), just before the next presidential election. Worst case could see the October balloting push the new code´s commencement well into 2015. ↑Return to Index

Chile, Peru and Colombia lead growth in Andean region

After a year of sluggish returns in “sounder” emerging markets across the globe, many investors have been searching for yield in the hope that low prices and potential growth will outweigh risks in some “darker” corners of the planet. Increasingly, some have become used to the idea that along the Andes mountain range is where future growth lies. That has some truth, as in the second quarter of this year Peru’s economy accelerated 5.6 per cent, Colombia’s expanded 4.2 per cent and Chile grew 4.1 per cent.

This new dynamism is part of an Andean trend and underscores the fact that global pension fund managers are becoming tempted by the growing depth of the Chilean, Colombian and Peruvian domestic markets. Neighbouring markets such as Venezuela, Ecuador and Bolivia appear more risky. “International pension fund managers are attracted not just to the growing depth but also the political stability of Chile, Colombia, and Peru,” says Marc Beale, an equity analyst with Bancolombia in Medellín. “Those countries are known as very international investor friendly and they don’t tend to mess around with the capital markets too much. They recognise the

importance of foreign investment in the development of the country.” Certainly that is the case in Chile, where investors can find the best established private pension system in the region. Six private groups administer five different funds, or AFPs, that invest in fixed income and stocks, with total assets worth around $160bn, which equates to some 60 per cent of gross domestic product. The Chilean pension funds are the country’s largest institutional investors and have been crucial in developing the local stock market.


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The pension fund system in Colombia manages assets worth close to 18 per cent of GDP, some $60bn. Late last year, BBVA sold its Colombian pension fund management business, Horizonte, for about $530m to Porvenir, the retirement business arm of the country’s biggest banking group, Grupo Aval. Not satisfied with the depth of the local market, fund management groups have set up pension administration companies elsewhere in the region. Grupo Sura, the Colombian financial group, owns Capital in Chile, Protección in both Colombia and Mexico and Integra in Peru,

In Peru, pension funds have a similar status to those in Colombia. “Pension funds are very important players in our country, they are key [and] have a lot of weight in the economy, almost 20 per cent of GDP,” says Luis Miguel Castilla, finance minister. Peru’s private pension system was established in 1992 during a financial crisis and the collapse of the state-run system, and as the country was emerging from a bloody war against Maoist guerrillas. “In the 1990s, I realised that pension funds were the kings of the game,” says Melvin Escudero, a former regulator who heads El Dorado Investments in Lima. “History proved me right.” Peru’s big three pension funds – Integra, Profuturo, Prima – and the newcomer

from Chile, Habitat, jointly manage about $39bn. Now, they can invest up to 50 per cent of total assets overseas. They also see infrastructure as a promising area for investment. The government of President Ollanta Humala has a series of reforms to overhaul Peru’s capital markets. Changes to pension rules should make more funds available for investment, something that should enhance the attractions of a country viewed positively by fund managers. Reform in Peru should help consolidation of Mila, the Mercado Integrado Latinoamericano, a tie-up between the Chilean, Colombian, and Peruvian bourses aimed at attracting international investment to local markets. Mexico’s Bolsa Mexicana de Valores, which recently bought a stake in the Lima exchange, is expected to join. All of that marks a stark contrast with regional markets, such as leftist Ecuador, Venezuela, and Bolivia, where investor confidence is elusive. Critics say that in Ecuador, President Rafael Correa, a US-trained economist, has partly relied on the $13bn public pension system, the Instituto Ecuatoriano de Seguridad Social, to help finance the country since it defaulted on its debt in 2008. “Ecuador is not a tempting market because it is small and because there are no clear rules of the game,” says Ramiro Crespo, who heads Analytica Securities, a Quito-based investment company. “Unlike other Andean countries, one of the main reasons why the Ecuadorean capital market is not developed is the lack of big pension fund investors who buy and sel l. There is a state-owned pension fund monopoly.” When it comes to Venezuela, investors lost any remaining faith two years ago. A scandal over pension funds at the state-run oil company PDVSA fuelled concerns about alleged mismanagement. Against a backdrop of mutual suspicion between the then government of Hugo Chávez and much of the financial services sector, confidence unsurprisingly collapsed. Comparable suspicions prevail in Bolivia. According to Marcelo Urdininea, general manager of the Banco Mercantil Santa Cruz in the capital, La Paz, the country’s two pension funds – Previsión managed by Spain’s BBVA and Futuro managed by Switzerland’s Zurich – handle some $8.5bn, or about 30 per cent of GDP. Three years ago, the senate, controlled by the socialist party of the country’s first indigenous president, Evo Morales, approved a plan to nationalise the administration of the funds, although this is yet to happen. Meanwhile, Bolivia’s presidential elections are scheduled to be held next year. For private sector interests, this adds to the uncertainty in a country whose leader needs to satisfy the forceful social demands of groups that form his power base. “Chile, Colombia, and Peru have very sound policies compared with Ecuador, Venezuela, and Bolivia,” says Mr Escudero, the former Peruvian regulator. “It is that simple.” ↑Return to Index


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Peru opens borders to New Zealand meat exports Peru has opened its borders to sheep meat and beef exports from New Zealand, the National Service of Agrarian Health (Senasa) reported on December 5. Peruvian authority SENASA has approved the listing of all New Zealand exporters currently interested in exporting beef, sheep meat and offal into the country. The listings are valid for three years and the Ministry for Primary Industries (MPI) has the option to request the addition of further exporters. "The approval shows the importance of trade deals in helping drive New Zealand's primary industries. This reinforces the importance of the Trans Pacific Partnership (TPP)," said MPI's head Nathan Guy. "This new arrangement also provides opportunities for Peruvian manufacturers and retailers to benefit from the enhanced supply chain arrangements, providing their customers with access to New Zealand's high quality red meat products." The arrangement marks the culmination of three years of negotiations with SENASA by MPI and the Ministry of Foreign Affairs and Trade, business.scoop.co.nz reported. Dairy trade to Peru has already been successful and worth around US$120 million and this has now been strengthened with formal listing and recognition of New Zealand dairy premises. ↑Return to Index

Brazilian economists call for boosting investments (Editor’s Note: The following article was written by Tom Murphy and was published in the Financial Times on November 18)

A rare consensus exists among Brazilian economists — the country not only needs to increase investments, it needs to do it at a pace faster than overall economic growth and for at least several years in a row. “From 2004 to 2011, economic growth was generated by fostering consumption,” says Raul Velloso, managing partner of Brasília‘s ARD consulting group. “But that model for development has reached a point of exhaustion.” Rising salaries, massive welfare and benefit payments, and steadily increasing government spending have led to a huge increase in demand for goods and services. Yet investments haven’t kept up, and industry can’t keep pace, bringing hefty imports, a yawning current account deficit and inflation.

Brazil’s current account deficit ballooned to a 12-month level of $80.5 billion as of September from $54.0 billion at the end of 2012. The public sector deficit, for the 12 months ended in September, hit 155 billion Brazilian reais ($66.8 billion), more than a third higher than the 109 billion reais posted at the end of 2012. Inflation, running at the same 5.8% rate as in 2012, is still well above the government’s 4.5% target. Growth has taken a hit too. Once the emerging-market darling of global investors, Brazil is now in its third year running of sub-par growth. A hoped-for 2013 rebound is likely to fizzle amid a consensus growth forecast of 2.5%. A bit less is expected for 2014.

Economists, in and out of government, agree the problem is on the supply side. “Brazil needs more investment,” declared Luciano Coutinho, president of the government-run National Bank for Economic and Social Development, or BNDES, at an October investment seminar in São Paulo. “And Brazil is already getting it. A rise in capital goods orders shows this. So does an increase in loan applications to the BNDES.” BNDES invested around 105 billion reais in the first eight months of 2013, up 48% over the same period of 2012. Mr. Coutinho’s financing writ extends over the whole of Brazil and virtually every segment of its potent but stiff economy. He said he expects a modest rise in Brazil’s investment rate this year to 18.9% of GDP from 18.1% in 2012. He sees a slow but steady advance to 22.2% by 2018.


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Critiques of that view follow two routes. For one thing, even 22.2% isn’t enough. “To get the sustainable 5% annual economic growth we’re looking for, we need an investment rate equal to 25% of GDP,” says Gesner Oliveira, founding partner of São Paulo’s GO consulting group. “We’re way behind. It’s Brazil’s biggest challenge.” For another thing, the critics argue even that modest level isn’t attainable under current policies. The strain from social spending has made it frustratingly difficult for Brazil’s government to boost its contribution on the investment side. Social spending has increased significantly, but public investment has advanced at a snail’s pace. Meanwhile, the faster pace of BNDES lending has merely compensated for a concomitant deceleration by private lenders. “In the past, Brazil depended on foreign investment and government, but that left us vulnerable to foreign exchange volatility, international crises and the inherent limitations of federal treasury resources,” says José Francisco de Lima Gonçalves, chief economist at São Paulo’s Banco Fator. “The next phase of investment in Brazil will need to be based on capital markets and internal savings.” But the latter come with their own limitations. Punishingly high interest rates have made companies reluctant to issue bonds. Brazil’s base rate is already a towering 9.5% and likely to go higher as the central bank fights down inflation. Domestic and global economic uncertainties have led to diminished share offers. Total domestic offers of shares and bonds in the first half of 2013 were 62.2 billion reais, down from 63.2 billion reais in the first half of 2012. Overseas issues were even weaker at $25 billion, down from $30.25 billion in the first half of last year, according to the Brazilian Capital Markets Association. As for domestic savings, the rate has advanced since 2008 but not by much, from 6.9% of GDP to 7.9% in 2012. Nor can Brazil rely on foreign investment to fill the gap. Net direct foreign investment has actually declined, on a 12-month basis, to $61.5 billion, or 2.7% of GDP, as of September from $65.3 billion, or 2.9% of GDP, at the end of 2012. “Governments are supposed to plan for the long term, but we don’t do that in Brazil,” says Roberto Luis Troster, a partner at São Paulo’s Delta consulting group. “If the government plans for the year 2020, investors will invest because they’ll have an idea of what 2020 is going to look like. If government thinks only of the short term, the country doesn’t get the investments it needs.” ↑Return to Index

Chile’s mining industry embraces change to improve community relations

Chile has seen a rising tide of social opposition to development projects, especially in the mining and power sectors, in recent years. "Today's communities are insisting on a different kind of treatment. They no longer want to be spectators of the development of mining projects... or of any project that affects their lives," mining council president Joaquín Villarino told guests at the annual council dinner, held in capital Santiago on November 20. Major mining projects that have hit development hurdles due to community opposition include Barrick Gold's Pascua Lama gold-silver project, Goldcorp's El Morro gold-copper project and an expansion at Antofagasta Minerals' Los Pelambres copper

operation. At the same time, large thermo power projects such as the 2.1GW Castilla, the 566MW Barrancones and the 740MW Punta Alcalde have faced strong social opposition and subsequent legal battles as an ever more litigious Chilean society looks for more environmentally friendly ways to produce power in the wake of the massive coal build-up in the late 2000s. In addition to allocating part of mining taxes to affected communities, the industry needs to develop homogeneous standards by sharing successful experiences and implementing best practices, according to Villarino. The executive also called for a new mechanism to ensure early stage civil participation and the use of a "common language" between communities

and companies. "We admit, honestly, with humility and transparency, our mistakes, and we confirm our commitment to working together based on trust and the creation of value for the communities," Villarino said.


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The executive also called for coordination between authorities, local civil organizations and companies to avoid what he called "social activism" which he said is putting the country's development at risk. PERMITS A mining company currently needs more than 500 permits to start operations in Chile, according to Villarino. "There is duplication, and a lack of coordination and consensus in criteria," he said. Chile implemented new environmental legislation in 2012. In a speech at the dinner, President Sebastián Piñera announced the presentation of a new bill in congress (on Nov 20) to accelerate administrative procedures and avoid the duplication of water permits. The new bill is also designed to improve the workings of national geology and mining service Sernageomin, as well as regulate mine closure. ENERGY Chile has the third highest copper mining cash costs in the world, after Canada and Australia, according to Juan Carlos Guajardo, the director of Chile's copper study group Cesco. One of the main reasons is the high cost of power in the country. Energy accounts for up to 15% of costs at some of state copper producer Codelco's mines and top mining companies have been calling for change to current policy. While the government has been taking steps to improve the situation, such as drafting new laws for power concessions, Villarino suggested increasing competition in the sector by allowing more players to participate, promoting LNG and improving relations with local communities. The executive also called for more progress in land use zoning. TRAINING The quality and quantity of people available to fill the upcoming needs of the mining sector is another industry concern. In his speech, Piñera said he was drawing up a bill to be presented in "the next few days" to set up 'sector skills councils' in an effort to train people in areas specifically related to mining. WHAT IS AT STAKE? As of November, Chile's portfolio of mining projects in construction totalled US$22.6bn. Another US$45bn in planned projects remains without a firm investment decision. The mining sector provides 14% of the government's income, represents 13% of GDP and accounts for 60% of the country's exports. ↑Return to Index

What does end of ‘commodity super-cycle’ mean for Latin America?

The end of the commodity super-cycle and rising yields look set to combine to pose significant challenges to the Latin American region in the coming years. Following a year in which expectations have changed markedly for the largest economies in the region, what can be expected of the year ahead? After an unprecedented period of monetary easing in Brazil which saw interest rates fall to 7.5%, attention at the end of 2012 shifted to what was to be the next exciting story in the region, namely Mexico. As 2013 draws to a close Brazilian interest rates have touched 10% and growth has disappointed across the region as Chinese demand waned and warnings over the tapering of stimulus by the US Federal Reserve spooked investors and led to fund withdrawals from the region. Throughout 2012, analysts at BNamericas warned repeatedly of the impact of cheap money on the region and the threat posed by a change in policy. Following record issuance of sovereign debt at rates which defied belief, the signs were there for all to see. Could some of the other changes in the past year have been forecast earlier? According to Alberto Ramos, managing director and head of Latin American economics at Goldman Sachs, to a certain extent they could have been. In a wide ranging interview with BNamericas, Ramos highlighted structural issues and a weak cyclical management of the Brazilian economy that have kept growth low and inflation high.


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Going forward Ramos suspects that the overall picture may become even more challenging, given a global macro backdrop that appears to be shifting in a direction that is not particularly friendly to emerging markets and to Latin America. "We do not expect the global environment to be outright adverse, but it will certainly be less favourable than that we have seen in the last few years," said Ramos. "We expect global growth to accelerate in 2014-15, driven chiefly by the developed economies, not the emerging markets. We expect growth accelerating to above trend in the US (around 3.0%), we see Europe emerging from a two year long recession and we also expect growth in Japan to moderate in 2014 but to still remain above trend."

As a result Ramos expects Chinese demand to remain solid and translate into firmer external demand for Latin American exports. "There will, however, also be important challenges ahead," said Ramos. "Global dollar yields are moving up which will render external funding conditions for our countries more exigent. External financing will likely be more expensive and access to it more selective which will make things more difficult for countries with large current account deficits and significant external financing requirements. Furthermore, capital inflows into the region should moderate as global risk-free rates are expected to go up which will undermine the attractiveness of the so-called carry-trades (i.e., yield seeking portfolio inflows). Finally, we see an additional challenge posed by the fact that the commodity price super-cycle is likely over and we actually see downside risks to a number of key commodity prices towards late 2014 (copper, iron ore, soybeans, etc)."

In sum, Ramos outlined his expectations for broadly stable growth on aggregate reaching a still uninspiring level of 2.8% in 2014 but with very marked differences in growth across countries. Venezuela, for one, is expected to dip into recession as it faces hyperinflation and other large macro imbalances while Goldman Sachs also expects Argentina to face a significant deterioration and rising inflation despite decelerating growth. "We expect growth to decelerate further in Brazil (to just 2.3%), to accelerate visibly in Mexico and to remain broadly stable at a reasonable level among the small open Andean economies of Chile, Colombia and Peru." "Altogether, it is a bit of a complex and heterogeneous map in terms of growth and inflation outcomes, but fortunately, perhaps with the exception of Venezuela, and to a lesser extent Argentina, external balance sheets are all relatively strong and will allow these economies to navigate these challenges relatively smoothly. That is, without major overshooting of the local currencies or a collapse of growth," added Ramos. ↑Return to Index

Peru on course to become an industrialised nation

President Ollanta Humala has reaffirmed his government's commitment to ensuring Peru achieve the industrialised nation status by focusing on production-oriented industrial revolution that will create a strong manufacturing base. "In pursuing this aim, the Peruvian government has conducted a National Industrial Development Plan which is being reviewed by the Production Ministry and is aimed at promoting value addition to the country's raw materials," Humala told TV Peru on December 4.

The Peruvian leader said that domestic industrialisation cannot be achieved without a government's policy framework which seeks to modernise the public administration by implementing reforms on core sectors such as education, health, security and defence. "We have created new reforms that enable the Peruvian state to be prepared for industrialisation", Humala said.

He said the nation needs to develop world-class universities to increase competitiveness and have more skilled professionals in various branches, thus creating the conditions to operate axes of economic development. Furthermore, in order to promote this process, the head of state stressed that the government has declared the country's industrialisation as a national target. ↑Return to Index


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Santiago, Chile – the new luxury capital of South America

Up until now, the market of luxury in South America was divided between São Paulo, Brazil, and Buenos Aires, Argentina. However, in the last year a competitor has risen: Santiago, in neighbouring Chile. Sales of luxury items have reached $30 million this year so far, according to the Chilean Asociación de Marcas de Lujo (Luxury brands association, or AML), 14 percent increase from last year. Financial stability, favourable tariffs and a population with increasing purchase power have made Chile an attractive market for high-end brands, which have established their own boutiques in the capital, as opposed to opening shops in department stores like in other countries like Mexico.

Jorge Sandoval, director of AML, said that Chile has surpassed Argentina in growth. “Changes in regional policies benefited Chile,” he said. Argentina, currently in the midst of a financial crisis and with a 25 percent inflation, has increased its import tariffs and luxury taxes, prompting many high-end boutiques to close. Constanza Sierra, with Essentia Consulting in London, told El Economista América that this exodus from Buenos Aires to Santiago brings Argentinian revenue to Chile. “Even though São Paulo is a bigger market, the closeness of Chile’s capital brings many Argentines that can still afford luxury items,” she added.

Luxury items are also cheaper in Chile, due to lower tariffs compared with Brazil. Imported wine, for example, is taxed at 75 percent; cosmetics and perfumes, 50 percent; and cars, 55 percent. It does not help that Brazil has not signed trade agreements with any countries outside of the Mercosur alliance, with the exception of Israel. Chile, on the other hand, has a slew of free trade agreements, including with the U.S., the E.U. and other manufacturers of luxury items such as Japan and South Korea. Nevertheless, AML clarified that while the market is growing, Chileans are still not big consumers of luxury items. “It is still not part of their lifestyle,” said AML's Nicholas Parkes to Chilean financial newspaper Emol.

Most Chileans buy things like expensive watches and designer clothes just a couple of times a year, even though many could afford to do so more regularly. Insurance company Allianz (FRA:ALV) revealed in a report that Chileans are, on average, the richest Latin Americans, with a median per capita household income of $14,000. “Luxury brands face the challenge of creating their customers from scratch, a process that in Chile is just starting,” said Parkes. ↑Return to Index

America’s ‘Free Trade Zone’ back on the agenda The Obama administration, which is negotiating separate free trade deals with Asian and European countries, is “exploring” a regional trade plan for the Americas that would be the most ambitious hemispheric initiative in years. U.S. Secretary of State John Kerry (pictured below) said in an interview in early December that he would like to first seek an agreement to deepen the existing North American Free Trade Agreement (NAFTA) with Mexico and Canada, and to expand it afterward to the rest of Latin America.

“It’s something I actually have asked some folks here to explore, and I’ve had conversations with a couple of people outside of here who were very knowledgeable about hemispheric relationships,” Kerry said. “And they’re very encouraging about it, so we’re going to try to do our due diligence on this, and I’m really hopeful.” NAFTA will turn 20 years old in 2014, and has lost much of its earlier impetus in recent years. U.S. officials say next year’s anniversary will be a golden opportunity to re-launch it.


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In the rare interview on Latin American affairs that he gave me for the Miami Herald and “Oppenheimer Presenta” on CNN en Español, Kerry suggested that the idea of strengthening NAFTA is more than a theoretical aspiration. He said he has been discussing it with former U.S. ambassadors and trade representatives, and that he plans to put it on the table. The United States, Mexico and Canada would be “the major block of it, reaching out to the rest of Central America, the Caribbean, Latin America,” Kerry said. He added that the plan would be to start in North America, because several South American nations are not yet willing to forge closer commercial ties with the United States. “We ought to be able to forge an even stronger set of partnerships,” he said, referring to his plan to strengthen NAFTA. “We will push forward with it.”

Asked when he would do that, Kerry noted that he has only been on the job for eight months, and that he has another three years ahead of him. “We’re not finished, unless I screw up,” he said, laughing. Top aides to Kerry say the plan to relaunch NAFTA could come as early as February, when President Barack Obama is scheduled to meet with his Mexican and Canadian counterparts at a North American Leaders’ Summit in Mexico. That summit is supposed to be a regular annual meeting, but it did not take place this year. The United States has not proposed a new trade bloc in the Americas since negotiations for the Free Trade Area of the Americas collapsed in 2005, when Brazil, Argentina and Venezuela effectively killed the idea at a summit in Mar del Plata,

Argentina, attended by then President George W. Bush. Since then, the United States has signed separate trade deals with Peru, Colombia and Panama, but has not tried to resurrect plans for a regional free trade deal in the Western Hemisphere. Instead, the Obama administration has launched a Trans-Pacific Partnership (TPP) negotiation with 11 Pacific rim countries — mostly Asian countries such as Japan and Malaysia, but also including some Latin American Pacific Coast countries, such as Mexico — and a separate Transatlantic Trade and Investment Partnership (TTIP) with 28 European Union nations. If Washington signs the proposed trans-Pacific and trans-Atlantic trade agreements, several major Latin American countries not included in the TPP — such as Brazil, Argentina and Venezuela — would be left outside the two biggest global trading blocs. ↑Return to Index

Australian cruise operators show interest in developing Chilean option

Australian travel agents linked to the cruise industry visited Puerto Williams in the extreme south of Chile to check on the facilities, services and infrastructure with the purpose of planning cruise calls on a regular basis. Puerto Williams in located on Navarino island across from Ushuaia in Argentina. Lisa Bolton from Aurora, together with Thomas Holik, Polar Operations manager, and Milenko Buljan, regional agent for Agunsa, met with Governor Nelson Cárcano to discuss the situation and prospects for the near future. “We believe Puerto Williams is back on the path of growth following a long stagnation period, and this is good news because it is a strategic port for traffic between the Pacific and the Atlantic”, said the visiting Australian delegation. “It is also a jumping board for Chilean policies referred to Antarctica”, pointed out Governor Cárcano. Since the IAATO annual meeting held in Punta Arenas last April, the International Association of Antarctica Tourism Operators have expressed a growing interest is the development of Puerto Williams as an alternative for Ushuaia. “Puerto Williams is more attractive for domestic and international operators beginning in the 2014/15 season, although some basic infrastructure is still missing such as the main jetty for docking and sufficient infrastructure to ensure services” pointed out the Australian delegation. Among the services mentioned were fuel, drinking water, garbage disposal and other requirements which have become mandatory for the cruise industry. Governor Cárcano described the Australian delegation visit “as a great first step forward and an enormous opportunity both for local tourism operators and the region ”because competition is always positive” particularly for customers. ↑Return to Index


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For the diary

In 2014, the ALABC celebrates the 25th

anniversary of its founding, a significant milestone that the Council plans to mark through with an increased number of events and a Gala Dinner in Sydney in September. We invite you to join with us in making our 25

th year the best ever, by supporting our events

and sponsoring one or more of them, as a way of highlighting your engagement and commitment to the Latin American region. If you would like to know more about how your company can take advantage of the events that the ALABC will be hosting in 2014, please contact our Marketing and Events Manager, Rosie Atherfold, at [email protected] or Tel: 02 9357 4441

Date: March 3 and 5, 2014 Event: Investor Roadshow to Australia by Peru’s Proinversión Venue: Sydney and Melbourne

Organiser: Austrade/Proinversión/ALABC

Contact: Daniel Havas, [email protected] OR Rosie Atherfold, [email protected] or Tel: 02 9357 4441 Date: March 18, 2014 Event: ALABC Perth Annual Dinner - Guest of Honour, BHP Billiton’s Daniel Malchuk Venue: Hyatt Regency Hotel, Adelaide Terrace, Perth Organiser: ALABC

Contact: Rosie Atherfold, [email protected] or Tel: 02 9357 4441 Date: April 21-25, 2014 Event: Expomin Mining Exhibition Venue: Santiago, Chile Organiser: Australian Involvement coordination by Austrade/ALABC/Others

Contact: Daniel Sullivan, [email protected] OR Rosie Atherfold, [email protected] or Tel: 02 9357 4441 Date: May 28-29, 2014 Event: Latin America Down Under Venue: Sheraton on the Park Hotel, Sydney Organiser: Paydirt Media

Contact: Lauren Carey, [email protected] or Tel: 08 9321 0355

Date: June, 2014 Event: ALABC Melbourne Annual Dinner Venue: The Australian Club, Melbourne Organiser: ALABC

Contact: Rosie Atherfold, [email protected] or Tel: 02 9357 4441 Please visit our website www.alabc.com.au for regular updates. ↑Return to Index









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