LatinFinance - July 2013 - 48

Parting Shot

What’s at stake
Commodities prices are likely to remain high over the longer term, argues Roger Agnelli. But Chinese
demand will remain central to Latin America’s near term success

ommodities have completely changed the landscape
of Latin America. In Brazil, for example, the middle
class was able to grow significantly thanks to the hard
currency commodities brought in. As a result,
social disparity was also reduced.
It is important to state that commodities
have been very, very important in reducing
social disparity – not only in Brazil but in
other countries in Latin America. Some
countries – including Peru, Colombia and
Chile – took advantage of this: they did their
homework well.
Other counties failed: for example,
Argentina and Venezuela now both face a
very tough reality.
Today, there is much uncertainty in the
financial sector and much uncertainty about
growth in the developed world. There are
also many doubts about China and whether
or not the country is doing the right thing.
There is also concern about currency
volatility.
For the short term – looking two or three
years from now – no one can say that they
are bullish about prospects for the global
economy.
Countries in Latin America have faced
completely different challenges from the
previous decade: how to manage currency
appreciation, the lack of skilled labor, the
lack of infrastructure.
These kinds of issues became real
bottlenecks to growth.
Meanwhile, today’s mining industry is
completely different from 10 years ago: the
cost, the grade of the ore and the quality are
completely different. We must go to areas with much poorer
resources to mine copper, iron ore, phosphate or potash. This is
a reality. Now we’re in the worst parts of the mining resources
and the costs are growing.
Natural resources are limited: the planet is becoming
too small to provide for everybody around the world. Some
countries must therefore become much more rational about

consumption.
Other countries that are growing richer, like China, will
need to buy more natural resources. And they are going to buy
much more.
If we analyze the long term, we see
that the middle class around the world is
growing. Urbanization is a reality. The world
will continue to grow. People around the
world are demanding much more protein,
so food consumption is growing, and will
continue to grow. But land for agribusiness
is limited.
This is why I am also bullish about Africa
– the last frontier for new mining, for new
natural resources to supply the world.
Of course, demand for natural resources
has slowed because China is slowing. But
the second largest economy in the world
is still growing at around 7% – we can’t
complain. There is no doubt that the market
is still demanding natural resources.
I always say that I pray for China every
day, because for Latin America, China was
a kind of a miracle. The demand for natural
resources that China brought, and is still
bringing, to the market has been incredible –
demand for food, energy and mining. South
America benefitted very, very much from
Chinese demand, as did other countries in
Asia and even Europe at the beginning of the
last decade.
We have to keep praying for China to
do what it has been doing for the last 20
years: grow. And if China grows, everybody
in the world will benefit, including in Latin
America. LF

“I pray for China
every day, because
for Latin America,
China was a kind of
miracle”

48 LatinFinance

July 2013

Roger Agnelli is executive chairman of B&A Mineração, an
exploration and development company founded in 2012,
and founder of AGN Participações. He was appointed
chairman of Companhia Vale do Rio Doce in 2000, moving
the following year to become CEO. He left Vale in 2011.
He was interviewed by Katie Llanos-Small.

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