Industry Trend Analysis - Americas - Risk/Reward Index - Q1 2017 - NOV 2016


BMI View: The Americas will remain a cost-competitive and productive mining region, supported by improving precious metal prices and stable business environments in key markets over the coming years.

Key Takeaways

  • The wide range in our Americas Mining Risk/Reward chart, with the majority of countries falling in either the lower left-hand or upper right-hand quadrant implying high risk/low reward and low risk/high reward respectively, reflects the divergent trends in established mining markets and underdeveloped mining industries.

  • Overall, there is little movement in Q117 scores compared to last quarter, with average rewards of 41.1 and average risks of 52.4 in line with previous averages.

  • Peru maintains the top score in the region's Risk/Reward index in Q117, supported by a strong copper project pipeline and low operating costs.

  • The US and Canada will remain the region's lowest risk mining destinations due to well-established legal and regulatory frameworks, as well as minimal corruption.

Clear Winners And Losers
Americas - Mining Risk (vertical) & Reward (horizontal)
Note: Scores are out of 100 with 100 the best. The intersection of the vertical and horizontal lines represents the regional average. Source: BMI

Latest Revisions

Bolivia - For Q117, we added Bolivia to BMI's Americas Mining Risk/Reward index, as the country is a top global producer of tin, zinc, silver and lead. In Q117, Bolivia scores an overall 44.9 out of 100, placing 11 out of 17 countries in the region. The country's muted score is the result of both poor labour market infrastructure, high risk of resource nationalism and muted mining industry value growth outlook. Nonetheless, Bolivia will remain a key mineral producer and exporter, supported by vast reserves and stabilising prices.

Mexico - Mexico rises to fourth from seventh place in Q117, on the back of improving precious metal prices which increased the country's industry risks score from 52.8 in Q416 to 64.8. We forecast gold prices to average USD1,400/oz in 2017 and climb to USD1,500/oz by 2020. Further, we maintain a bullish view on silver prices, a key driver for the top global silver producer.

Argentina - In Argentina, rising precious metal prices and an improving long-term economic outlook account for the uptick in both industry and country risk score ( see ' Rebounding Investment Will Drive Growth Acceleration', August 18). Argentina's industry risk score increased from 47.0 in Q416 to 61.0 in Q117, pulling the overall risk score up from 49.6 the previous quarter to 56.1.

Peru, Chile Come Out On Top
Latin America - Mining Risk/Reward Indices Q117
Note: Scores are out of 100 with 100 the best. Source: BMI
Americas - Mining Risk/Reward Indices
Rewards Risks
Note: Scores out of 100 with 100 the best. Accurate as of September 29 2016. Source: BMI
Industry Country Rewards Industry Country Risks Risk/Reward Index Regional Ranking
Peru 75.0 51.4 70.3 64.0 56.6 60.3 67.3 1
Colombia 60.0 47.5 57.5 55.0 60.9 58.0 57.6 2
Chile 52.5 66.7 55.3 55.2 67.8 61.5 57.2 3
Mexico 47.5 43.8 46.8 64.8 67.2 66.0 52.5 4
United States 35.0 77.5 43.5 64.0 83.1 73.6 52.5 5
Canada 32.5 72.9 40.6 60.2 88.5 74.3 50.7 6
Brazil 52.5 41.6 50.3 47.8 51.2 49.5 50.1 7
Ecuador 52.5 53.9 52.8 58.0 27.4 42.7 49.8 8
Argentina 42.5 41.3 42.3 61.0 51.3 56.1 46.4 9
Panama 37.5 42.4 38.5 56.0 64.8 60.4 45.0 10
Bolivia 50.0 35.9 47.2 34.0 44.9 39.4 44.9 11
Jamaica 27.5 44.7 30.9 45.0 59.8 52.4 37.4 12
Dominican Republic 30.0 43.6 32.7 51.2 21.7 36.4 33.8 13
Honduras 25.0 34.1 26.8 46.0 43.2 44.6 32.2 14
Guatemala 22.5 45.7 27.1 35.0 50.9 42.9 31.9 15
Cuba 12.5 37.2 17.4 54.0 37.7 45.8 26.0 16
Venezuela 12.5 41.0 18.2 29.0 24.0 26.5 20.7 17