Local investors need to reassess mining risks - Licancabur CEO - Chile

Chilean investors need to change how they assess financial risks associated with mining activities to ensure the successful development of a segment on the local stock exchange for the sector, the CEO of local small mining company Minera Licancabur, Juan Orellana, told BNamericas.
The listing of mining companies' shares or new projects for financing on the local bourse is possible, but local investors need to understand that mining is not as risky in terms of future returns as they think it is.

Parex "bias" for 2011 capex up on this year - Colombia, Trinidad & Tobago

Calgary-based Parex Resources (TSX-V: PXT) could increase 2011 capex plans following a successful drilling campaign in Colombia and Trinidad this year, according to company CEO Wayne Foo.
Parex this year plans to drill eight wells in Colombia and three in Trinidad.
"We're obviously pleased by what we've seen to date and if we were going to go either up or down, I think our bias would be towards up in order to incorporate development capital," said Foo, when asked about next year's capex plans.

Alcoa prices US$1bn debt offering

US-based aluminum producer Alcoa (NYSE: AA) has priced its public offering of US$1bn of notes, the company said in a statement.
The interest rate has been set at 6.150% and the notes are due August 15, 2020. The offering is expected to close by August 3, the statement said.
Alcoa expects to receive aggregate net proceeds of approximately US$993mn, after deducting underwriting discounts and estimated offering expenses.
The company intends to use the net proceeds together with cash on hand, if necessary, to fund the purchase price of its 6.50% notes due 2011, 6.00% notes due 2012 and 5.375% notes due 2013 that are tendered and accepted for purchase in its tender offers launched on Monday, the statement said.
Earlier this month, Alcoa announced Q2 net income of US$136mn, compared to a net loss of US$454mn year-on-year on higher revenues and average prices.
Revenues jumped to US$5.19bn from US$4.24bn in the second quarter of 2009.
A drop in aluminum production to 893,000t from 906,000t was offset by an increase in the average realized price to US$2,309/t, compared to US$1,667/t.
In Latin America and the Caribbean, Alcoa has operations in Chile, Peru, Argentina, Colombia, Jamaica and Brazil, the last of which represents the bulk of its earnings from the region.

Votorantim Siderurgia plans to become industry leader in the Americas

Votorantim Siderurgia, the steel arm of Brazilian conglomerate Grupo Votorantim, is aiming to be a leading player - both in terms of quality and cost - in long steel production in the Americas, according to company director Ricardo Henriques Leal.
As part of its growth strategy, the company is also planning to increase output to 3Mt/y from the current 2.53Mt/y. The increase will be achieved through improvements in productivity and developments at its existing units in South America, Leal said.
Votorantim Siderurgia's operations in Brazil comprise a plant in Barra Mansa and another in Resende, both in Rio de Janeiro state. It also has units in Argentina and Colombia.
The company also plans to increase long steel exports from Brazil as part of its growth strategy. Currently, exports accounts for 5% of Votorantim Siderurgia's sales, according to Leal.
In 2009, the company's revenues were 2.2bn reais (US$1.25bn), equivalent to 10% of the group's sales.
PRODUCTION
In Brazil, production capacity is 1Mt/y at Resende and 800,000t/y at Barra Mansa.
At Argentine subsidiary Acerbrag, Votorantim Siderurgia produces 330,000t/y, while Acerias Paz Del Rio in Colombia produces 400,000t/y. In Colombia, Votorantim also has iron ore and coal mining operations, supplying 100% of the raw material for its local steel plant.
Output will be increased by 20% in both Argentina and Colombia, according to Leal. "The hike in production capacity will be achieved through improvements at the current units," Leal told reporters during the Latin American Iron & Steel Trends conference, held in Rio de Janeiro last week.
Leal's outlook for the rest of the year in the Brazilian steel sector is optimistic. "The market has grown consistently this year compared to 2009 and I think that growth level will be maintained," he said.
By Fernanda De Biagio

Stocks in steel distribution sector at record 1.2Mt - Brazil

Brazil's steel distribution sector increased purchases by 85% to 2.35Mt in the first six months of this year, leading to a record stock level of 1.2Mt, according to the president of local steel distributor Frefer, Christiano da Cunha Freire.
The inventory is enough to supply the domestic market for 3.6 months, compared with a historical average of 2.7 months.
Through 2008, stocks stood at an average of 800,000t.
However, purchases from mills have already experienced a significant drop and stocks are expected to return to more favorable levels over the next three months, according to the executive.
From January to June, distribution sales totaled 1.97Mt, up 28% year-on-year. For the full year, national steel distributors association Inda is forecasting sales to reach 4Mt compared to 3.39Mt in 2009.
While sales have been increasing over the last few months, the pace has not been as fast as in Q1 or in the last quarter of 2009, Freire said at the Latin American Iron & Steel Trends conference, held in Rio de Janeiro last week. The executive also said that while the market remains strong, it has not fully returned to pre-crisis levels yet.
With Brazilian steelmakers increasing their prices and end users calling for decreases, the distribution sector will face an imbalance through the end of the year. However, Freire expects prices in the distribution chain to remain steady in H2At the same time, some distributors have been turning to the international market where prices are approximately 15% less, Freire said. Imports have been increasing and currently supply approximately 25% of local demand.
By Fernanda De Biagio

APM considering international arbitration over Karachipampa - Bolivia

Canadian miner Atlas Precious Metals (APM) is considering going to international arbitration over the reactivation of the Karachipampa polymetallurgical plant, APM's legal representative Betsy Miranda told BNamericas.
"If we keep experiencing the kinds of irregularities that we have up to now, it clears the path for us to go to international arbitration because we see more and more that we are right," Miranda said.
At the beginning of July, APM asked the Bolivian chamber of commerce, the local regulator, to dissolve its JV contract with state miner Comibol for the latter's failure to meet the agreements for the reactivation of Karachipampa.
Among APM's reasons for deciding to terminate the contract are the government decision to cash in the company's surety bond despite the fact that it expires in 2011, and the lack of land to construct sulfuric acid and zinc plants.
IRREGULARITIES
Among the reasons for going to international arbitration are the irregularitiessurrounding the hearing to create a tribunal and proceed with the dissolution of the contract with Comibol, according to Miranda.
"It's not that entity's responsibility to make observations about my ability to take on the process as APM's representative. The tribunal should have been appointed first and, once formed, it could have made the observation about the scope of the power given to me by the company," Miranda said.
The national chamber of commerce did not even allow the tribunal to be created, according to Miranda, who added: "Unfortunately, there is political interference at every level here."
In addition, just a few days ago, APM received the notice from Comibol giving the company a period of 90 days to move forward with the investments or it would cash in the US$850,000 surety bond.
"It doesn't make any sense - the warning arriving weeks after they have cashed in the bond. They are doing things backwards," she said.
The agreement Comibol signed with APM workers, guaranteeing their jobs, is another reason for going to international arbitration.
"It's disloyal of our partner [Comibol], guaranteeing jobs to workers without APM's knowledge or consent," she said.
APM has presented four plans for the plant's reactivation, with different shifts to start lead and silver production in July 2011.
"But they haven't accepted any of these plans. It's as if they don't want us to move forward with the project," she said.
In June 2005, Comibol and APM signed a JV agreement to reactivate the 51,000t/y plant in Potosi department. APM has a 65% share and the Bolivian state holds the remainder. Karachipampa will treat silver concentrates.
By Harvey Beltrán

Two groups secure contracts in second renewables call - Peru

Peru's energy and mining investment regulator Osinergmin has awarded two groups contracts in the second auction round to supply the national grid with renewables for 20 years.
The winners are Empresa de Generacion Hidroelectrica de Chancay and Empresa Electrica Rio Doble, according to a notary document from the watchdog. Contract signing is scheduled for next month.
The first group will develop biomass project Lambayeque (1.5MW) and hydro Patapo (1MW), and the second winner hydro Las Pizarras (18MW). The three projects are due to come online in 2012.
Second round requirements were for 419GWh/y from biomass, 8GWh/y from solar and a maximum of 338MW from hydro.

Olmos power component bidding timetable extended - Peru

Peru's Olmos hydro project (PEOT) has extended the bidding timetable to carry out the power generation component.
The deadline to purchase bidding rules is August 13, while the data room will remain open until September 16, according to a notice from PEOT.
Prequalification documents are due by August 16 with prequalifiers scheduled to be announced August 19. Offers are due September 17 and awarding slated for October 1.
The power component is due to take 3.5 years, with plant 1's price tag at US$90.6mn and US$98.4mn for plant 2. The plants will be built at the exit of a 20km tunnel which will transport water from the Limon dam, generating 2.39TWh/y. The tunnel is due to be ready in the second quarter of next year.

MIEM releases names of wind tender participants - Uruguay

Uruguay's ministry of industry, energy and mines (MIEM) released the names of companies participating in the tender to develop up to 150MW of wind capacity organized by state power company UTE.
Twenty-two bids from 15 different firms were received earlier this month, with each wind farm ranging in capacity from 30MW to 50MW. Tender results are due out in coming months.
Local company Polesine submitted three separate bids, while firms Aguas Leguas, Ensol, Kital and Ladaner each proposed two projects. Generacion Eolica Minas, the local subsidiary of German renewable energy group Sowitec, also made two bids.
Six of the projects are submitted for Maldonado department on the country's southeast coastline, where UTE currently operates its 20MW Caracoles wind farm.
The bidding process is part of UTE's drive to add 300MW of wind capacity by 2015, when the company expects 50% of its capacity to come from renewable.

Impsa lands US$150mn Embalse contract - Argentina

Argentine firm Impsa has landed a US$150mn contract to upgrade four steam generators at the Embalse nuclear facility in Cordoba province, a company spokesman told BNamericas.
Impsa will develop the new generators at its Argentine facilities. The new generators will increase steam supply to turbines at the 648MW plant.
Work on the units is due to start this year, with Impsa expecting to complete installment by 2013, the spokesperson said. The firm is hoping to develop further projects for state nuclear company NA-SA in the near future.
The Andean Development Corporation (CAF) approved a US$240mn loan for the redevelopment of the Embalse facility earlier this year.
At the time, CAF estimated that investment in the project to extend the plants
useful life by 25-30 years could hit US$1.02bn.
Embalse and Atucha I, Argentina's second nuclear power plant, account for about 7% of power supply in the country.

Santo Antonio hydro to launch operations in December 2011 - Brazil

Brazilian concessionaire Santo Antonio Energia aims to launch commercial operations at the 3.15GW Santo Antonio hydro by December next year, a spokesperson for the firm told BNamericas.
"Works are being done to launch commercial operations in December 2011. The last generator unit will be online by 2015," the spokesperson said.
The hydro plant is being built on the Madeira river in the Amazon region.
Construction is now 29% complete, according to the spokesperson.
Brazilian power company Eletrobras Furnas holds a 39% stake in the Madeira Energia group that controls Santo Antonio Energia.
Madeira Energia also includes Odebrecht with a 1% stake, its subsidiary Odebrecht Investimentos em Infra-estrutura (18%), engineering firm Andrade Gutierrez Participacoes (12%) and Brazilian power company Cemig (NYSE: CIG) with 10%.
By João Carvalho

Software industry still has major challenges - Chile

Considering that Chile's software industry grew 12% in 2007 and by about 22% last year, growth has been positive and steady, despite economic problems resulting from the global crisis and the earthquake that hit the country in February. This is mainly because today ERP is no longer exclusive to large companies or corporations - small and medium enterprises have come to understand the importance of investing in these management systems, specifically to optimize business. Today, for a million dollars you can access a 100% web-based ERP solution that will improve the management of a company while also reducing costs and increasing productivity, allowing for the solution to be managed from anywhere in the world.
Thus, the industry has defined the challenge of competing abroad, opening new markets for Chile to earn its place as an exporter of software. While there are many developers that are already operating in other latitudes and software exports have grown positively, the idea is that these efforts increase.
On the other hand, it is important that ERPs incorporate new tools such as electronic invoicing, business intelligence and/or CRM (Customer Relationship Management), and that these tools conform to the particular requirements of various sectors, such as in the areas of mining and construction. Moreover, there are certain companies that need to operate these systems because of their business partners' requirements, which makes it evermore necessary that they are compatible and can communicate with each other.
Finally, SaaS - software as a service - is a trend that is beginning to consolidate, growing at an annual 40%, mainly due to irresistible advantages and benefits when compared to the classical solutions. Particularly when considering that in a globalized world, a company that can be managed from anywhere in the world and at any time, with information online and updated in real time, becomes an unparalleled competitive advantage. In fact, international consultancy Gartner identifies cost, speed and resources as the three elements that lead companies to opt for software as a service, since it means less expense than the traditional model, it is easier and faster to implement and requires fewer resources than the traditional model. The challenge that this trend represents, is clearly related to a safe and world class service.
by Diego Gonzalez, general manager of Defontana

San Juan: Mercosur Cumbre

Los cuatro países que integran Mercosur (Brasil, Argentina, Uruguay y Paraguay) aprobaron ayer, en una cumbre celebrada en la provincia argentina de San Juan, el nuevo Código Aduanero que se negociaba desde hace más de seis años y que supone un paso importante en el camino de construcción de un mercado común. El principal obstáculo, la supresión del doble arancel externo, se superó gracias a un acuerdo con Paraguay. La presidenta argentina, Cristina Fernández de Kirchner, se felicitó del esfuerzo: "Apostamos desde el primer día en que esto iba a salir adelante y ahora damos testimonio de que no se trata de retórica sino de hechos", aseguró.

Cepsa to kick off block 131 seismic campaign - Peru

Spanish company Cepsa will in coming days begin seismic acquisition on Peruvian block 131 in the Ucayali basin.
The energy and mines ministry approved the EIS for the work last month, state news agency Andina quoted Cepsa Peru general manager Antonio Masias as saying.
The work will entail the acquisition of 564km of 2D seismic, BNamericas reported previously.
The company will invest around US$10mn on the 4-5 month campaign, said Masias, adding that drilling could begin in 2012 following approval of a separate EIS.
The project would be developed if reserves of 20M-30Mb are found, according to the executive.
Masias also announced that Cepsa is considering participating in the E&P round for 25blocks.

Authorities allow BPZ to re-open Albacora well - Peru

US oil firm BPZ Resources (NYSE:BPZ) has reopened the A-14XD well on its Albacora field in Peru after receiving permits for extended well testing (EWT) and gas flaring from authorities, the company said in a statement.
The A-14XD well was closed earlier this month after averaging production of around 1,510b/d during 2Q10.
The permits are valid for the next six months and are subject to gas flaring limits. The firm believes that production will remain around current levels.
BPZ is awaiting further EWT and flaring permits for an additional six wells on the Covina field. The firm announced the discovery of 75f (22m) of net oil and gas pay at the CX11-22D well on Corvina earlier this month.
Both the Corvina and Albacora fields are located on the offshore BZ-1 license. Second quarter production from the BZ-1 license fell 46% from the previous quarter due to the closure of wells lacking permits.

Alange spuds Topoyaco-1 well - Colombia

Toronto-based Alange Energy (TSX-V: ALE) has spudded the Topoyaco-1 exploration well in Colombia's Putumayo basin, the company said in a statement.
Topoyaco-1 is the first well drilled as part of a Cdn$17mn (US$16.4mn), three-well campaign. The firm estimates that drilling will take 40 days to complete.
Alange Energy operates the Topoyaco block with a 50% working interest. Fellow Canadian firm Pacific Rubiales (TSX: PRE) holds the balance.
Engineering consultants Petrotech estimated gross reserves of around 45Mb for the Topoyaco field in a report produced last year.
Alange is currently producing around 4,700b/d across its 12 Colombian concessions and targeting a production rate of 8,000b/d by end-2010, the firm's CEO Luis Guisti told BNamericas earlier this month.

M&P finds oil at Sabanero-1 - Colombia

Paris-based Maurel & Prom (M&P) has encountered hydrocarbons at its Sabanero-1 well on the Sabanero license in Colombia's Llanos basin.
Around 40f (12m) of net pay has been identified with potential flow rates yet to be confirmed, the firm said in a statement.
M&P will now drill the Sabanero-SE1 well in order to judge potential reserves and commerciality levels on the block.
The firm also plans to announce drilling results for its Cascabel-1 and Bachue-1 wells next month.
M&P holds four licenses across Colombia and was awarded the COR 15 concession by the country's national hydrocarbons agency (ANH) in last month's open round 2010 tender.

Subsea 7 awarded services contract from Petrobras - Brazil

Norwegian oil services company Subsea 7 has picked up a contract with Brazilian state-run energy group Petrobras (NYSE: PBR) to provide remotely operated underwater vehicles (ROVs) for operations offshore Brazil.
Subsea 7 will also provide underwater positioning survey services onboard a ROV support vessel, the company said in a statement.
The contract has an estimated value of US$50mn. The contracted services will start in the third quarter this year, the company said.
"The award allows us to provide additional services encompassing the provision of a number of high precision ROV mounted sensors, including inertial navigation and sound velocity equipment, all of which are linked to a navigation software program to allow the integration of all positioning sensors onboard the vessel," Subsea 7 executive Bruce Masson said in the statement.

LPG stocks sufficient to meet winter demand - Enargas - Argentina, Uruguay

The head of Argentina's natural gas regulator Enargas, Antonio Pronsato, denied that there is a shortage of LPG in the country and insisted that production levels are sufficient to satisfy national demand, state news agency Telam reported.
Pronsato blamed any supply shortfalls on local distributers. He also rejected recent reports in the Argentine press that the country is planning to import LPG.
"Our country is a net exporter of LPG and does not import one ton at any time of the year," Telam quoted Pronsato as saying.
Record low temperatures across the Southern Cone have caused stress on regional gas supplies.
As well as reports of LPG shortages, industrial and residential customers across Argentina have complained of service disruptions on the national gas distribution network.
Press in neighboring Uruguay, meanwhile, reported that LPG supplies have returned to normal in Montevideo. The resumption of service followed strikes at a plant that caused supply problems.

YPFB reports record LPG demand - Argentina, Bolivia

Bolivia's state hydrocarbons company YPFB is dispatching record levels of up to 123,000 canisters a day of LPG in response to the current spell of lower than average temperatures affecting the country.
Around 77% of the deliveries are going to the urban centers of La Paz, Cochabamba and Santa Cruz, YPFB said in a statement.
On average 38,000-40,000 canisters a day are being dispatched to Santa Cruz alone, according to the firm, with demand up 16% on the same period last year. Demand is also up in the western mountainous regions of Potosi and Oruro.
The firm guaranteed that LPG supplies are sufficient across the country to cope with recent demand increases. Diesel and gasoline supplies will also not be affected, YPFB's commercial director Guillermo Acha said in the statement.

New hydrocarbons law to increase government revenues by US$550mn - Ecuador

Reforms to Ecuador's hydrocarbons fiscal regime will bring the government extra revenues of around US$550mn a year, the country's non-renewable natural resources minister, Wilson Pastor, announced.
The reforms came into force after the country's President Rafael Correa approved the legislation late last week, state news agency El Ciudadano reported.
The approved legislation has three chapters that cover service payment rates, institutional environment and taxes, BNamericas previously reported.
For investment in fields in production, 15% of profit would be recognized for operational costs and up to 25% for new investment in exploration, depending on the estimated geological risk.
On the institutional front, the initiative aims to create a hydrocarbons department and a national hydrocarbons agency. The first would manage oil assets, evaluate reserves, identify production areas and carry out bidding; the latter would act as regulator.
The second chapter also envisions the restructuring of state oil company Petroecuador into two companies, one for E&P and the other for refining and commercialization.
The reform package includes a transitory clause that establishes a timetable for replacing current production sharing contracts with service payment contracts.
A period of 120 days would be given for large contract holders to reach an agreement with the ministry, and 180 days for smaller contracts. A total of 22 contracts would be modified.
The government is expected to set a contract liquidation price for companies that do not accept modifications.

Multiple opportunities in Latin America - Technip CEO

There are multiple upstream and downstream opportunities in Latin America, according to French oil and gas services company Technip's CEO Thierry Pilenko.
"There are quite a number of opportunities both upstream and downstream but the timing of the final investment decision is much more difficult to forecast in countries like Venezuela, Chile or Colombia," Pilenko said in a presentation.
The executive highlighted Technip's push to increase its footprint in Brazil for work from non pre-salt and pre-salt areas. "We see Brazil on a strong path."
Technip reported that its Americas backlog at end-June represented 18% of the group's 8.26bn-euro (US$10.7bn) backlog. The bulk of the backlog is from the Middle East (37%), followed by Europe, Russia and Central Asia (21%), the Americas, Africa (16%) and Asia Pacific (8%).
This geographic balance will be maintained through year-end, added company CFO Julian Waldron.
At end-March, Technip's Americas backlog accounted for 18.1% of the company's 8.02bn-euro backlog.
The firm's Americas revenue in the second quarter fell 20.4% to 347mn euros compared with 2Q09. Companywide revenue reached 1.49bn euros.
By David Casallas

Regional reserves in peril if access continues to be restricted

Latin America's significant 3P reserves of up to 430Bboe might not be unearthed if national oil companies (NOCs) do not act within the next five years, according to Arnold Volkenborn, VP for Schlumberger Business Consulting.
"Latin American reserves can take decades to develop," Volkenborn said in a presentation. "The reserves in Latin America are often heavy crude, capital intensive and have longer development cycles."
Moreover, access to reserves is restricted in the Americas by NOCs that control the rights to the resource, according to Volkenborn.
"The net effect of restricting access to reserves by NOCs is the deferral of development over many decades," he said.
"The underlying assumption is oil will be more valuable in 50-100 years," he continued. "If this is not the case, the vast majority of Latin American reserves will never be developed."
By Christopher Lenton