Paraguay: A nation with abundant minerals and natural gas resources

By Peter Tase

Paraguay, a relatively unknown country to U.S. strategic investors, is located in the heart of South Common Market Block, also known as the Mercado Común del Sur (MERCOSUR), lined in the parallels 19º 20’ and 27º 30’ of South Latitude, and 54 20’and 62 38’of West Latitude. Paraguay’s territory is 406.752 sq km2; shares borders with Brazil (from the east to the north), Bolivia (north to northwest) and Argentina (covering the western and southeastern part of the border).

The Paraguay River separates two natural regions, very different from one another: the Oriental Region, containing 98 percent of the population, and the Occidental Region or the Chaco. Both regions comprise important natural resources and a great potential for strategic investment projects. Paraguay’s topography is rolled with chains of hills and broad valleys, with abundant rivers and fresh water streams with native subtropical forests suitable for sustainable tourism projects and the median annual temperature is about 20 ºC.

The Chaco region is sparsely inhabited, containing only 2 percent of the total population, it is a vast alluvial plain that softly climbs up to the Andean fronts and belongs to the tropical dry life zone. The mining sector in Paraguay has been developed from when iron was found and extracted among other minerals in the Tebicuary River Craton, becoming one of the first countries with a mining industry in South America.

Mining activities are identified since the period of Spanish conquest in which was gold is used vastly especially in the sacred Catholic artistic work, as well as the exploration of forts found in the Apa River Craton, in the Oriental region. After its independence in May 14-15, 1811, Paraguay became a powerhouse in the building of railroads, mining, the use of telegraph and an extensive fleet of merchant ships in South America.

Paraguay has an enormous geological potential, with the same geology that other countries currently have and exploit. With its unexplored pre-Cambrian and alkaline provinces, Asuncion is open for business and welcomes foreign investments focused in mining activities – this industry combined with local hydroelectric resources could be greatly lucrative for investors and entrepreneurs. [1]

The current Paraguayan government has taken various economic decentralization steps and is eagerly exploring ways to develop rural areas that are not suitable to agricultural production and cattle raising, through the implementation of strategic mining projects that continue to be in initial stages. Asuncion has unrestrained taxes on the investments and movement of capital, personal rent tax is not present and the value aggregate tax (VAT) is only 10%. Price Control is not influenced by the government, and there are only rigorous programs of monetary stabilization, and there are currently some initiatives that will re-evaluate and eliminate the zeroes of the local currency, Guarani. Furthermore inflation control is the focus of current administration.

Thanks to the Law 117/91, foreign investments are guaranteed, foreign investors have the same guarantees, rights and obligation as the local businesses. Every investor has the right to choose the insurance for investments, in the country or abroad and permits the establishment of joint ventures. The mining industry is protected and sanctioned by the Constitution and its laws. It’s controlled by administrative and cartographic mechanisms, guaranteeing property limits, protected by legislation that establishes trusted judicial mechanism to solve any potential conflicts that could arise.

For the prospective investor there is a term of five years for project execution, and an exploitation term that lasts for 25 years, which may be extended for another 25 years. Therefore, the investor becomes proprietary of the minerals extracted and conducts its operations within his property. Investors can freely sell minerals domestically and export them globally. Alto Paraná has large natural gas reserves In February 28th, 2013 the then president of Paraguay, Dr. Federico Franco visited the City of Juan O’Leary, department of Alto Paraná, where he announced that this region of Paraguay may have the largest natural gas reserves in Latin America. President Franco had presented the local farmers with agricultural equipment such as covers for gardens that reduce the Sun’s heat and preserve soil moisture.

These half shadow covers will enable local farmers to increase their vegetable production and use less water. President Franco said in his statement that Paraguay currently has received many proposals by international oil companies that are interested to drill oil in the Chaco, and to add into this commodity leverage there is also the presence of the largest gas reserves in the area of Juan Leon Mallorquin and Juan O’Leary. This marketable gas will enable the locals secure a steady income and better living conditions. According to President Franco, Juan O’Leary and city of Juan Leon Mallorquin, will generate a revenue that would exceed that of Itaipu Bi-national Dam, which is administered by Paraguay and Brazil.

On April 26th, 1973, Paraguay and Brazil signed the treaty for the development of a major hydroelectric project that would belong to both countries and generate electricity on the Parana river, nearby the opening of Yguazu River and Ciudad del Este, which is considered as the Comercial Capital of Paraguay. The treaty was ratified by Paraguayan Law N389 on July 11th, 1973, enacted and promulgated by the National Congress by a federal decree on August 28, 1973. Since then Itaipu is considered to be the ATM machine of the Paraguayan state together with the Yacyreta Hydroelectric Dam, whose administration and profits are shared with Argentina.

President Franco is confident that when the day of exporting natural gas from Alto Parana comes, this region will be the wealthiest area of the republic; he also added that “it is also important to protect and maintain a healthy soil for organic agricultural products.” In 1992-93, there were drilled three exploration wells in the district of Juan León Mallorquín; the first, named Majorcan I, was undertaken by Texaco, Co., and the other two drills were led by Guarani Co, of the exploration in the area and the other two, Inés I and II, in charge of the company Guarani, everyone in the town of Potrero Jardín, were confident that first results indicated the presence of oil in this area of the country. During the examination of the drilling well named Inés II, engineers had announced positive results and that they had found five types of marketable pentane gas; this initiative proved to be a great technological accomplishment, 20 years ago, and only recently is being rediscovered with the hope to use these natural resources for the benefit of the local people.

Once the natural gas and crude oil is exported from Alto Parana to the neighboring Brazilian Provinces, the potential income generated from such resources is expected to change the lives and economy of local families. [2]

The Following is a list of Departments (provinces) and their mineral Presence Department (Province) – Minerals identified

Concepcion ————– Copper, Zinc, Lead, Gold, Molybdenum, Tungsten, Barium

Cordillera — ————- Quartz, Fresh Water

Guairá ——————– Titanium, Gold

Caaguazú —————– Lignite, Fresh Water

Caazapá —————–-– Uranium, Iron

Itapúa ——————– Iron, Coal

Misiones —————– Copper, Lead, Silver, Zinc, Manganese, Gold, Iron

Paraguarí —————- Copper, Lead, Silver, Manganese, Gold, Iron

Alto Parana ————– Titanium

Amambay —————- Niobium, Tantalum, Iron, Manganese, Gold

Alto Paraguay ———— Iron, Silver, Oil, Copper, Molybdenum, Lead, Zinc, Manganese, Gold

Boquerón —————– Natural Gas, Oil, Fresh Water

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