Latin American riches lure mainland miners

Mainland energy and resource firms are eyeing opportunities to acquire more assets in Latin America, a new frontier for China's outbound investment, according to a Latin American partner of global law firm Baker & McKenzie.

Roberto Martins, the Sao Paulo, Brazil-based head of energy, chemicals, mining and infrastructure at Baker & McKenzie, said oil and gas, especially in offshore Brazil, were the biggest draw for mainland firms in Central and South America.

Iron ore and non-ferrous metals such as copper, of which China is a big importer, could also see some deals if sellers were willing to lower prices amid weaker demand.

Mainland investment in the energy and resources sector in Latin America rocketed from US$105 million in 2008 and US$362 million in 2009, to US$18.41 billion in 2010, according to Dealogic data. The 2010 figure included US$6.6 billion spent by offshore oil and gas major CNOOC in an oil and gas firm in Argentina.

Last year, deals valued at US$4.8 billion were completed, compared with just US$940 million so far this year, according to Dealogic.

Martins said the Brazilian government was finalising the regulatory framework for auctioning a batch of licences for exploration of offshore oil and gas. Previously, projects were auctioned one by one.