PARAGUAY: OPEN FOR BUSINESS

Here’a a recent article by Tom Dyson, reproduced by kind permission of Daily Wealth:

“Yesterday I visited the world’s largest hydroelectric power plant. The name of this plant is Itaipu. It sits on the border between Brazil and Paraguay, on one of the largest rivers in Latin America, the Rio Parana.

A few months ago, I visited the largest coal-fired power plant in America, Plant Scherer. When Scherer operates at full capacity, it produces 3.5 gigawatts of power. A nuclear reactor produces around one gigawatt of power.

Itaipu produces 14 gigawatts of power. In other words, it’s four times the size of America’s largest coal power plant… and 14 times the size of most nukes. Itaipu provides 93% of Paraguay’s power and 25% of Brazil’s power.

I can’t explain in words what a beast this dam is. It stretches four miles across and 65 stories high. The iron and steel used to build it would give you 380 Eiffel Towers. It’s one of the seven modern wonders of the world, alongside the Panama Canal and the Golden Gate Bridge.

According to their joint agreement, Paraguay gets 50% of the electricity from the dam. Brazil gets 50%. But Paraguay is a small country. It has a population of 6 million people… versus 200 million in Brazil. So Paraguay only keeps 5% of Itaipu’s power and sells the rest back to Brazil.

This makes Paraguay the largest exporter of hydroelectric power in the world.

Here’s the thing: Paraguay sells its electricity to Brazil at $3 per megawatt-hour. Right now, Brazil can sell the same unit of electricity to its private utilities at $150 per megawatt-hour. There is an electricity crisis in Latin America right now, especially in Chile, and electricity prices are very high. It’s immediately obvious Brazil is not paying Paraguay the right price for its power. And Paraguay is losing billions of dollars.Corrupt politicians set this low price in 1973… under a 50-year contract. The Brazilians bribed the Paraguayan government to sell them power at a rate that’s far too low. Now, there are calls to change this rate, but who knows if that’ll happen…

The thing is, Paraguay doesn’t have to sell its power to Brazil. It could consume the power itself. I think it would be a great business to set up an aluminum or zinc smelter here. These businesses are electricity-intensive. The problem is, Paraguay is a poor country and has absolutely no industry. It’s all agriculture here.

According to the people at Itaipu, the energy the dam creates every day is the equivalent to 433,000 barrels of oil. That’s about half of what Canada’s Athabasca oil sands produce each day. Except it’s renewable, it’s clean, and it takes no energy to produce.

This cheap electricity is one of the reasons I like Paraguay as an investment. But it’s hard to get your money into the country…

Paraguay has no stock market… only a small bond market. So to invest in Paraguay, you’ll have to go there yourself and buy assets from the locals. That’s a good thing. It means everything is cheap.

In Paraguay, for example, you can buy companies for book value… that pay 45% dividends, according to one broker I met. You can buy real estate with 10% rental yields. And cattle farms with 18.5% cash yields.

More to come from Paraguay in my next column…

Good investing,

Tom

P.S. The Three Gorges Dam in China will be the largest hydroelectric dam in the world by volume. It will operate at full capacity by 2011. China hopes it’ll produce 18 gigawatts. That’s bigger than Itaipu.

Our tour guide wasn’t convinced Three Gorges would be able to produce that much power. “The Yangtze isn’t as powerful as the Parana,” he said. “We’ll see…”

P.P.S. There is talk of a hydro plant twice the size of Three Gorges in Africa, on the Congo River. But it’ll never happen. For a start, only 10% of Africans have access to the grid… What will they do with all that power? And secondly, it will require cooperation from seven different central African countries… and hundreds of billions of dollars in loans.

Originally sourced here

TORONTO, ONTARIO–(Marketwire – Sept. 3, 2008) – Latin American Minerals Inc. (TSX VENTURE:LAT) announces that it has retained Hedenquist Consulting, Inc. and Smee & Associates Consulting Ltd. to provide advise in the Paso Yobai Gold Project in Paraguay.

Dr. Jeffrey W. Hedenquist, Ph.D., President of Hedenquist Consulting, Inc., provided advice on the exploration model, the nature of the epithermal system and the ongoing exploration and proposed drilling program aimed at a resource definition. Dr. Barry W. Smee, Ph.D., P.Geo., of Smee & Associates Consulting Ltd., audited the Paso Yobai preparation laboratory, reviewed the company quality control procedures and examined the soil geochemical data generated to date.

Both independent complete reports can be reviewed on www.latinamericanminerals.com under the Technical Reports folder.

“We are extremely pleased to have internationally recognized and respected experts visit Paso Yobai to provide guidance on the mineralization, deposit model, quality control procedures and sampling protocols. Their insights provided the basis for an expanded exploration plan, including detailed resource definition diamond drilling and metallurgical testing to supplement the ongoing bulk sampling program,” commented Dr. Waldo Perez, Senior VP Exploration of Latin American Minerals Inc.

The drilling will be carried out on the Discovery Zone, a 2km portion of the 7km Paso Yobai gold anomaly, on sections established at 25m intervals. Prior drill results from this area include DDH-LAT-11 reporting 26.64gpt Au over 6.5m and DDH-LAT-6 reporting 15.3gpt Au over 6.5m. This program is expected to commence in September.

Hedenquist Consulting Inc. provides consulting to major international mining companies on exploration for and assessment of hydrothermal ore deposits (Au, Cu) and geothermal energy systems. Dr. Jeffrey Hedenquist has over 24 years of experience in over 30 countries, and is an advisor to the U.S. Geological Survey and to the governments of New Zealand, Japan and Sweden. Additionally, Dr. Hedenquist has published extensively and holds adjunct professorships with Colorado School of Mines, USA, and University of Ottawa, Canada.

Smee & Associates Consulting Ltd. provides geochemical and geological consulting to major international mining companies encompassing field techniques, sampling programs, training, analytical methods, statistical manipulations, data presentation and interpretation. Specialization includes methods suitable for detecting blind deposits, geochemical data imaging, data base and analytical quality assurance and control programs, including the manufacture of standards, and laboratory audits. Dr. Barry Smee has over 35 years of international experience with mineral deposit types which include porphyry copper, volcanogenic massive sulphide, stratabound massive sulphide, skarn precious and base metal, iron formation gold, vein and shear gold, epithermal gold, and unconformity-associated uranium. Dr. Smee’s work has been published extensively.

Latin American Minerals is a mineral exploration company focused on the acquisition and development of mineral projects in under-explored but highly prospective countries of Latin America.

This news release contains forward-looking statements, which can be identified by the use of statements that include words such as “could”, “potential”, “believe”, “expect”, “anticipate”, “intend”, “plan”, “likely”, “will” or other similar words or phrases. These forward-looking statements, including statements regarding the Corporation’s beliefs in potential mineralization, are based on current expectations, assumptions and projections about future events and entail various risks and uncertainties that are beyond the Corporation’s ability to control or predict. Actual results may materially differ from expectations as more information regarding a property is gathered or if the Corporation’s estimates or assumptions prove inaccurate. Factors that may materially affect actual results include, but are not limited to, political, business and economic conditions in jurisdictions where the Corporation conducts business, and risks associated with mineral exploration and production. The Corporation does not intend, and does not assume any obligations, to update forward looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities law. Readers should not place undue reliance on forward-looking statements.

The TSXV has not reviewed and does not accept responsibility for the adequacy or the accuracy of this release.

In a Spanish language press release dated April 1st, 2008, Sudameris Bank SAECA announced that its major shareholder, the Irish Abbeyfield Group, had acquired the remaining shares in Sudameris Bank (Paraguay) that were held by Sudameris S.A., a French subsidiary of the Italian banking group Intesa San Paolo SpA.

This makes Abbeyfield the holder of 98.01% of shares in the Paraguayan company Sudameris Bank SAECA, and completes Intesa’s withdrawal from South America after many years, a process started in 2003 when Intesa decided to concentrate on the emerging markets of Central Europe.