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The story of the discovery of gold and gold mining in Paraguay is an interesting and relatively recent one. Although rumors of gold had been circulating for years in the area of Paso Yobai, it’s only in the last ten years or so that there has been any serious attempt to tap into Paraguay’s gold resources.
Paso Yobai is historically known for the high quality of its production of yerba mate. Is also known for the production of sugar-cane, cotton and soy.
The story of this new Klondike-style gold rush begins with Ecuadorian who, on a trip to the Paraguayan capital Asunción, fell in love with a young lady from Paso Yobai – a fertile and green place with beautiful undulating hills. Shortly afterwards the two were married, and the Ecuadorian discovered gold in a stream on his father-in-law’s property. From there began the gold rush fever that changed the life of many local families, as well as investors around the world looking to profit from the spectacular rise in the gold price over the past ten years.
Mining activity started on a small scale. Local gold bugs known as “garimpeiros” are really artisan miners. It generally takes between one and two days for a small scale miner to extract a gram of gold. But this gram is difficult to obtain. A garimpeiro can gernerally survive strictly of their mining activities if he can obtain 25 grams or more of gold a months.
The grams of gold are sold locally to other companies who process and export it. From there, the gold may be used in industrial processes or more commonly it is stored in international banks and bullion dealers in the form of gold coins and gold bars for investment purposes. Gold, after all, is the only real international currency that cannot be devalued.
Anyway, I digress. Back to Paraguay! Although mining has brought increased prosperity to Paso Yobai, it has also created serious environmental issues. Miners use mercury to separate gold from sand an clay. Unfortunately, the mercury often enters and contaminates creeks. Arroyo Gasory, Paso Yobai’s largest creek, is now highly contaminated with mercury and the fish are unsafe to consume.
The Canadian TSX-quoted company Latin American Minerals Inc. bought a local mining company in 2007 and negotiated an agreement with the Paraguayan government to begin mining in the district. Latin American Minerals claims that that Paso Yobai may contain one of the largest gold veins of the world. Others talk of gold reserves in the huge and virgin Chaco.
It remains to be seen how Paraguay’s gold business develops over the coming decade. But I for one believe investing in an undiscovered, low cost country that is so rich in natural resources has to make very good sense. Paraguay has water, clean electricity, oil, gas, gold and friendly people. Plus, it is an undiscovered tax haven. What more could a foreign investor want? Why not consider Living, Investing and Doing Business in Paraguay?
According to a report by a Bloomberg correspondent based in Rio de Janeiro, citing Brazilian Foreign Minister Celso Amorim, the Brazilian government has outright refused to take on the $19 billion of debt contracted to build the Itaipu power plant.
Paraguay’s suggestion was that Brazil take over 97 percent of the debt, leaving Paraguay with approximately $600 million, because Brazil uses almost all the power. Currently, the two countries both share responsibility for the deb under the original treaty that resulted in the dam, completed in 1984, being constructed. Brazil does not wish to renegotiate the treaty.
The recently elected Paraguayan President Fernando Lugo has recently celebrated his first hundred days in office, to distinctly mixed reactions from both the general population and the blogging community online. Seattle-based Paraguayan blogger Muna, who writes the most informative and best-established blog on Paraguay, has recently collected together views of different bloggers.
You might have seen something on the news about the protests in Paraguay. Protests seem to be a regular occurence in Asuncion, something that has not changed under the new Presidency. I was last there in November and saw thousands of people being bussed in from the countryside to protest about various matters. The most controversial lately was the story about Brazilian farmers taking over indigenous lands – and the legal victory of an indigenous tribe.
The first question many people ask when I talk about investing in Paraguay, particularly when it comes to land in the Chaco, is whether title is safe and new landowners won’t be accused in the way that happened with these high profile cases.
The answer is that the Chaco is an entirely different case. Generally, when people are looking at buying land in the Chaco, they are thinking of buying land on which there simply are no people, indigenous or otherwise. The Chaco is a vast, barren expanse, in no way comparable to the populated areas in the south and near the Brazilian border where the problems have occured.
Lugo, however, does give the impression that his initial strategy is to dig himself in politically, strengthening and reinforcing his political power. While this might well be necessary to get things done, it will not reassure his detractors abroad, who have watched how Chavez took over Venezuela using democratic institutions then changed things around to make his power absolute.
100 days is still a short time. We will reserve judgement. Anyway check the link to Muna’s blog above for more commentary from the Spanish language Paraguayan bloggers.