Financial Times' Special Report Says China is now Latin Americas Biggest Trade Partner

A new Financial Times special report underscores, once again, the international nature of the natural resources sector.

In "The New Trade Routes: Latin America" (published April 26, 2011), the FT reports that, "Over the past decade, fast-growing emerging countries, be they in Asia, India, or Africa, have shown a near insatiable demand for the commodities that Latin American has in such abundance, whether Argentine soya, Brazilian iron ore, Chilean copper or Peruvian gold."

China, in particular, has played an enormous role in this development. In 1999, according to the FT, trade between China and Latin America was not even $10 billion. Ten years later, that number had exploded to $130 billion, or nearly 16 times as much. And the growth of trade with the U.S.? Well that's another story entirely with an increase of only about half in the same period.

At Denver Law, we are intimately familiar with the rising importance of Latin America as a geographical powerhouse. Not a day goes by that someone or some group at the law school is not talking about or considering the impressive developments in Latin America, and particularly growth opportunities associated with the extraction of natural resources.

There are all manner of issues to be considered including resource nationalism, why nation states and local governments should ensure that communities where this development is taking place must have a "seat at the table" when the future is discussed, and how businesses in this sector can and must operate in a time when their every move is watched closely by NGOs and financial institutions, among others.

To be sure, the development has considerable challenges associated with it, but it has substantial opportunities as well. We will continue to prioritize recruiting the best and brightest in Latin America to study at Denver Law.

One clear indication of Denver Law's commitment to this continent is the number of LLM students that are recruited from Latin American countries. For example, in the academic year that is just finishing Denver Law's Environmental and Natural Resources Law Graduate Program has hosted LLM students from Argentina, Brazil, Chile, Columbia, and Peru. To round out our hemispheric coverage, we also have students from Mexico and Canada. And, of course, we have U.S. students who come from coast to coast.

We aspire to provide a broad look at environmental and natural resources issues, and if our success in recruiting a diverse group of students is any indication we are doing just that.

Chilean President Sebastián Piñera has said the following about Latin America: "If we do things right, this 21st century will be our century."

Editor's note: The picture of Latin America at night from space is from NASA.

Students Hear DU LLM Graduates Discuss Natural Resources-Related Opportunities in Latin America: Opportunities Need Careful Analysis, Students Told

Two Latin American-based natural resources attorneys -- Diego Parravicini and Leonardo Rodriguez -- who earned LLM degrees at the University of Denver Sturm College of Law spoke to more than 30 current students last week in a teleconference originating from Buenos Aires, Argentina. The two gentlemen presented on the opportunities and risks that should be managed as part of mining investment.

Mr. Rodriguez, a 2008 LLM graduate who practices at Marval O'Farrell & Mairal, began by noting the significant growth Argentina has experienced in recent years in the mining sector. He pointed out that Wang Xuelong, General Director at the China Geological Survey, has said, "We believe Argentina is the most appropriate destination for mining investments due to its huge geological potential." Mr. Rodriquez also noted that while Chile and Peru have been extensively explored for natural resources potential, less than half of Argentina has been similarly explored. As a result, in 2009 about $1.9 billion (US) was invested in the Argentina mining industry, a more than 1,000 percent growth rate since 2003. He also pointed to the rapid rise in minerals-related exports during the last decade. Mr. Rodriguez finished his presentation by describing a "favorable legal framework," which has resulted in large foreign investments in Argentina.

Mr. Parravicini, a 2009 LLM graduate who now practices law at Estudio Beccar Varela, spoke about the relative risks of investing in mining in Argentina. He began by noting that some provinces have banned the use of cyanide for mining. He also discussed the taxation on companies with fiscal stability benefits and zoning regulations that need to be taken into account of before investing. He emphasized that some risks need to be evaluated and managed by potential investors.

Looked at as a whole, the joint presentation provided students an excellent view of how these two Latin American lawyers analyze potential mining projects on behalf of their clients.

Don C. Smith, Director of the Environmental and Natural Resources Law & Policy (ENRL) program, said, "What made the session so valuable was for students to hear what it is like to operate 'on the ground,' to speak, in a Latin American country that has attracted considerable outside investment interest. Few U.S. law schools can boast that they have graduates who are working on a daily basis in Latin America on resources issues that must be undertaken in a considered and careful way by investors."

Lucy Daberkow, Assistant Director for the ENRL Graduate Program said, "DU is very fortunate to have among our graduates Leo and Diego, who are establishing themselves as mining law experts in Argentina and Latin America more broadly. Our current students benefited from hearing Leo and Diego talk about the realities of investing in Argentina, both in terms of the upside and in terms of risks to be managed."

DU has a long history of attracting some of Latin America's best lawyers to the LLM program. These students enrich the overall diversity of the ENRL program as well as contribute to the global nature of how natural resources are taught at DU.

Mr. Rodriguez' presentation can be accessed by clicking here. Mr. Parrivicini's presentation can be accessed by clicking here.

Two DU LLM Graduates Who Practice Law in Argentina to Speak January 27 About Latin American Natural Resources Developments

Two Latin American natural resources experts, Diego Parravicini and Leonardo Rodriguez, who are graduates of the University of Denver Sturm College of Law will speak about recent developments in the Latin American natural resources sector on Thursday, January 27, at the College of Law.

The presentation, which will take the form of a video conference from Buenos Aries, where the two men work, to Denver, will take place in room 270 from 12 noon to 1 p.m.

Mr. Parravicini will address natural resources developments in Argentina while Mr. Rodriguez will talk about Chinese interest in investing in Latin America. There will be time at the end of the presentation for questions and answers.

Mr. Parravicini earned an LLM in Environmental and Natural Resources Law in 2009. While at DU, he was awarded a Scholastic Excellence Award for International Environmental Law. Following his study at DU, he worked as a foreign attorney at the office of Kaplan Kirsch & Rockwell LLP in Denver. Currently he works at Estudio Beccar Varela in Argentina. His practice areas include natural resources and environmental law.

Mr. Rodriguez earned an LLM in Environmental and Natural Resources Law in 2008. While at DU, he earned the 2007-2008 Outstanding Student Award in the LLM program. Following graduation from DU, Mr. Rodriguez worked as a foreign associate in the mining law department of Holland & Hart in Denver. Mr. Rodriguez, whose current work focuses on mining law, has been a member of Marval, O'Farrell & Mairal since 2000.

Don C. Smith, director of the Environmental and Natural Resources Law Program at DU, said, "The world's need for natural resources is steadily rising. One of the areas of the world where significant opportunities exist is Latin America. We are delighted that Leo and Diego, two of our most accomplished LLM graduates, will share their insights with us. I strongly encourage any students interested in natural resources, environmental, foreign, and business law to join us for what will be an informative and enjoyable session."

Students interested in attending are encouraged to RSVP before January 26 to Mike Dietrich by clicking here.

A Fundamental Change in U.S.-Latin American Relations? It is About Time

There are many reasons that the United States and its neighbors in Latin America should work closely together. Not least of these is the abundance of national resources in Latin America. But over the course of time, the relationship between the U.S. and many Latin American countries has not been an easy one. There are many reasons for this that go way beyond the scope of this blog.

However, is the sometimes "chilly" relationship set to change? It is hard to say with certainty. But recently U.S. Secretary of State Hillary Clinton spoke to Latin American leaders assembled in Ecuador, and her words seemed more aligned with a U.S. commitment to partner with its Latin neighbors rather than hector them with oftentimes unwanted (and not entirely useful) advice.

Secretary Clinton's speech, entitled "Opportunities in the Americas," was short on advice and long on establishing a basis for partnership. In fact at one point Secretary Clinton admitted that "We have had -- the United States and Latin America -- at times a contentious relationship. I would never deny that."

However, from there she pointed to the future:

"[T]his is more than, at any time, a moment of opportunity for the Americas. But it is up to us to decide whether this moment will be seized or allowed to disappear. We have this moment of opportunity to consolidate democracy and economic growth, to play a role in solving regional and even global problems together, to deepen our progress and enhance our values, and to recognize that we are interdependent and to use that interdependence to improve the future for our peoples."

Among the opportunities that the western hemisphere has relates to energy issues and natural resources. Latin America enjoys vast amounts of the type of resources that all areas of the world will need to move global economies forward as well as populations that are anxious and ready to expand their own economies. On the other hand, the U.S. is a center of world finance and infrastructure expertise (although one wonders about this latter one when pondering what is going on right now in the Gulf). Both northerners and southerners in this hemisphere have to recognize the interdepence of each and the fact that a strong and vibrant western hemisphere brings security and prosperity to all. Of course, there are different views of the future of the hemisphere. But mutual respect and a willingness to address differences can set the foundation for a hemispheric partnership that should pay huge future dividends.

A column in the Financial Times ("U.S. Fine Words Replace Lack of Interest in Latin America," June 17, 2010) underscored the potential importance of this seemingly new approach from Washington:

"The change in the U.S. tone, emphasizing co-operation rather than a more traditional 'drugs and thugs,' was potentially significant. It was also realistic: U.S. regional influence is much diminished. Long gone are the years of the 'Washington consensus' when the U.S. exercised much of its power through multilateral proxies such as the International Monetary Fund."

Will things really change? Maybe. Maybe not. But what is for sure is that while the good and the great in Washington and Latin American capitals think about such things, China, India, and other expanding economies are on the move to cement their own relationships with Latin American countries.

Better for the western hemisphere to get its house in order, one would think, than complain 10 years from now when interests outside the hemisphere have locked up their own strategic interests.

--Don Smith

European Parliament Calls for "Complete Ban on Use of Cyanide Mining Technologies" in European Union and for EU States to Oppose Cyanide Use Elsewhere

The European Parliament's (EP) call to ban the use of cyanide mining technologies throughout the European Union's 27 member states by the end of 2011 and to not support cyanide's use in mining outside the EU has drawn the ire of Mercosur ministers just days ahead of EU-Mercosur meetings on establishing a free trade zone.

Mercosur is a trading bloc that includes Argentina, Brazil, Paraguay, and Uruguay, as well as several associate member countries.

The EP, the "greenest" of all EU institutions, laid the foundation for the dispute when on May 5 it adopted a Resolution of a General Ban of the Use of Cyanide Mining Technologies by a vote of 488 in favor to 48 opposed, which asked the European Commission to propose legislation aimed at banning the use of cyanide in mining in the EU by the end of next year. It also requested the Commission and EU member states to withhold "support for any...projects [that involve cyanide technology] in third countries." The resolution was important since in the EU institutional structure, the Commission has the primary power to propose legislation while the EP generally does not. Thus, without the Commission's action nothing will happen.

The resolution said banning cyanide mining technologies "is the only safe way to protect our water resources and ecosystems against cyanide pollution from mining activities." The preamble to the resolution noted that in the past 25 years "more than 30 major accidents involving cyanide spills have occurred worldwide, the worst taking place 10 years ago when more than 100,000 cubic meters of cyanide-contaminated water were released from a gold mine reservoir into the Tisza-Danube River system..."

The resolution's claim that "alternatives to cyanide mining which could replace cyanide-based technologies do exist" was immediately disputed by the European Association of Mining Industries, which told the BNA International Environment Reporter that gold recovery would be significantly reduced without the use of cyanide ("EU Parliament Wants Cyanide Banned, Alternatives Used for Gold Processing," May 12, 2010).

Mercosur representatives said that approval of legislation along the lines proposed by the EP would have a significant adverse impact on mining in South America. As reported by UPI Energy ("Mercosur Unhappy With EU Mining Rules," June 17, 2010), "Given the latest restrictions sponsored by the EU Parliament which propose impediments to the industrialization and commercialization of products from productive sectors, such as the mining industry of our continent, countries of the region reject such measures which are considered restrictive and harmful for the development of our productive activities."

Concern about this type of legislation also was voiced by two key South American mining law experts, Leonardo G. Rodríguez and Francisco A. Macías of the Buenos Aries-based law firm Marval, O'Farrell & Mairal. In a recent newsletter Mr. Rodríguez, a May 2008 LLM graduate of the Sturm College of Law Environmental and Natural Resources Law & Policy Graduate Program, and Mr. Macía wrote, "The fact that the resolution requests the European Commission and [EU] member states not to 'endorse projects of such nature in third countries' is troublesome." The writers noted that while mining is not a substantial component of the EU economy it is a "pillar" in some other countries. Moreover, they wrote,

"[T]he non-endorsement of projects upheld by the Resolution...affects European mining companies carrying out activities in countries in which cyanide lixiviation technology is applied, this would damage mining development severely in said countries...On-going projects would be destined to fail once left unsupported. Even worse, if the non-endorsement being promoted were to reach financial institutions, it would be practically impossible to obtain European financing for new projects."

Several thoughts are worth bearing in mind about the EP's actions:

• As mentioned above, only the Commission can propose this type of legislation (although the EP can try to "persuade" the Commission to follow its recommendations).
• The EU has a long history of trying to regulate environmental-related matters outside of its boundaries; U.S. firms, in particular, have often chafed at what they claim are the EU's aggressive environmental policies that negatively impact foreign firms. The EU's response is firms are not required to do business in the EU and thus be subject to EU legislation.
• While environmental issues are at the top of the list for European voters, the upper-most environmental issue in the EU is without question climate change, not the regulation of cyanide in mining activities.
• The EP frequently passes resolutions or makes pronouncements that the Commission simply ignores.

The mining industry will no doubt pay close attention to what happens in Brussels, the EU's capital city. But any quick action by the Commission seems unlikely. For the time being, the Eurocrats have plenty on their plates with the not so small matter of the health of the common currency, the Euro, on their minds.

--Don Smith

A report issued last week by the United Nations "calls for greater efforts to advance environmentally sustainable development in Latin America and the Caribbean, which has witnessed the constant reduction of forest areas and the sustained increase of carbon dioxide emissions."

The report, "Millennium Development Goals: Advances in Environmentally Sustainable Development in Latin America and the Caribbean", says that the region's deforestation is nearly twice the world's average.

Moreover, carbon dioxide emissions have grown more than 40 percent from 1990 to 2005. The primary factors in the growth have been the production of cement and the use of fossil fuels.

(Thanks to Joan Policastri, Foreign, Comparative & International Law Librarian at DU's Westminster Law Library for calling this to our attention.)