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Uruguay, A Capitalist Mining Oasis?

By Charles Kubach, Mine-Engineer.Com
February 16, 2013




" Over the last few years the Uruguayan mining industry has experienced sustained growth." A direct quote from the government ministry of Uruguay. It would appear that the people and government of Uruguay are tired of the failed Socialist government model that has left the country in a poor financial shape, and is looking towards a model that actually works, Capitalism. Through foreign investment in the mining sector in Uruguay productivity in the mining industry will be realized by utilizing current technology, capital to develop mines that produce salable products, and most important of all, provide good paying jobs to the citizens of Uruguay, and a revenue stream to the government, as well. With a solid capital investment from foreign mining companies, Uruguay can surpass it's larger, but more socialistic neighbors, and become a flourishing, prosperous nation. All that Uruguay needs to do is give the mining companies a legal system whereby they can invest capital in worthy projects, know the rules, environmental and regulatory costs going in, and be able to count on a government that will not change their mind in a few years and want to re-negotiate everything, because they got greedy.

Mines are long term investments, ranging from 10-20 years or longer. This type of investment provides stability to the company, its employees, the government and local suppliers, as they will have a source of income for that period of time. A company that is willing to risk billions of dollars investing in a project, needs to be assured that the political risk is minimal, because there is enough economic risk to raise their blood pressure during such a undertaking. The state of high political risk is most often a deal breaker.

But enough words, now for reality, is there any ore there that would justify such a investment? Well, according to the government ministry, "Uruguay is pretty much unexplored, geologically, but it has great potential." As evidence they offered the following facts.

" Recent works using modern techniques have confirmed the existence of base metal and precious metal deposits within lower Proterozoic and Archaean aged Greenstone Belts. This highly prospective host assemblage in Uruguay can be correlated (prior to the drifting of the continents) with the Craton complex which contains the major base metal, precious metal and diamond deposits in west Africa. Similar geological settings in South America, Australia and North America host some of the largest ore deposits in the world.

The attractive geological basement setting in Uruguay has been further enhanced by more recent tectonics of major scale, as exemplified by the broad Mobile Belt which dominates the geology in the eastern portions of the country. In the southern part of Uruguay, a thin cover (1 to 20 metres thick) of recent fine grained river silting concealed many of these attractive geological features from early mineral prospectors. It is only now, with the use of more modern exploration methods (geophysics and sensitive geochemistry) that the discovery potential in southern Uruguay has made itself manifest."


Ok, so it appears that facts do back up their assessment that Uruguay is a very good country for valuable mineral potential. But what minerals are potentially there in commercial quantities? Gold, silver, iron, copper, zinc, nickel, platinum, manganese, palladium, diamonds, tin, titanium, rutile, ilmenite, molybdenum, magnesium, cadmium, antimony, vanadium, lithium, and a few others.

Now the most important part of the equation must be worked out and that is to set up a fair legal system whereby the mining companies can have a fair regulatory environment and legal system, whereby they can invest, operate the mines, sell the product and make profits. This part is usually the difficult part, because politics always seems to intervene in common sense approaches and make it a quagmire of bizarre laws which leave little confidence to all but the most speculative gamblers. However, if Uruguay can solve this part of the equation, they will have a very bright future, their citizens will enjoy a much higher standard of living and the country can flourish. I hope that they can accomplish this, and join the rest of the more prosperous capitalist countries of the world. Unfortunately Obama Land (The USA) is heading in the other direction to socialism, and as it continues to do so, perhaps Uruguay is a country where they could flourish


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