Will gold save Portugal from crisis ?
In a country who’s name derives from the precious metal – the Roman called the Douro River the ‘river of gold’ and the town of Porto sit along it’s banks - the government is looking to it’s natural resources to save it from financial and economic crisis in the wake of mass unemployment and Europe-wide recession. Will mining have the ‘Midas touch’ for Portugal’s fortunes ?
After a 78-billion-euro bailout from the European Union and IMF, Portugal introduced far-reaching austerity measures, tax increases and wage cuts.
Portugal’s new government is attempting to attract mining companies to extract everything from iron ore to gold, silver and tungsten in the hope of a return of 4 percent of revenues it will gain from each operation. To date 30 mining concessions have been announced in the first year of the new government’s leadership, totalling approximately 300 million euros in initial investments.
Already, Rio Tinto and the Portuguese government are finalising an experimental concession contract to mine iron ore in the north of Portugal in an investment that could be worth over 1 billion euros.
“With the strategy we have been pursuing for the mining sector, Portugal’s resources and its potential could rise up to twice current gross domestic product, which is to say more than 200 billion euros,” said Ricardo Pinto, a mining advisor at the economy ministry, estimating the value of all possible future mining projects.
“We see mining taking a key role in Portugal’s recovery. The geology and infrastructure is excellent and it is a void the private sector will fill,” said Peter Rose, an analyst at London-based Fox Davies, an independent natural resources investment bank.
Portugal’s mining industry is a “pretty compelling story,” Rose said, thanks to the high quality of resources, good local infrastructure and modest wages.
The country possesses several world class deposits, such as tungsten in Panasqueira and iron in Moncorvo, both in the north, as well as copper in Neves Corvo, in the south of the country. It is currently Europe’s fourth largest copper producer and a major producer of tin, tungsten and uranium.