Weighing the risks in South America's mineral wealth - The McKinsey Quarterly - weighing risks in south american basic minerals - Energy, Resources, Materials

Growing global demand for metals has kindled intense interest in South America’s mineral wealth: some of the world’s largest—and most competitive—deposits of alumina, bauxite, copper, iron ore, nickel, and zinc.
But some multinationals, concerned primarily about political risk and macroeconomic volatility, still seem too wary of making further investments.
Despite the resurgence of populism, overall political and institutional risk in the mining sector is relatively low in most countries, and the macroeconomic situation has stabilized.
Many attractive growth opportunities remain in South America. But to execute projects, companies need local management teams with a long-term commitment to the region and world-class skills in managing stakeholders.

Note: This article includes translations in Portuguese and Spanish.

Exhibit 1: Latin America holds a large share of the world's minerals.
Exhibit 2: Over the next five years, Latin America will account for 28 percent of global investments in new mining projects.
Exhibit 3: Valuations of some Latin American mining companies are nearly as high as those of international peers.

Efforts to reduce climate change can profoundly affect the valuations of many companies, but executives so far seem largely unaware.

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