Canada is becoming an increasingly important source of FDI for Latin America and the Caribbean, with the total stock of outflows from the country to the region topping $100bn last year.
According to the UN’s Economic Commission for Latin America and the Caribbean, more than half the stock of outward FDI from Canada to the region is destined for three offshore centres: Barbados (30.9%), Cayman Islands (15%) and Bermuda (14.9%), and it is hard to know whether this money is reinvested in Latin America and the Caribbean or goes elsewhere.
Canadian FDI into the region is also concentrated in mining, financial services and some manufacturing sectors, and Argentina, Brazil, Chile, Mexico, Peru and Trinidad & Tobago are the main recipients.
Toronto-based mining explorer Aquiline Resources owns the Navidad silver-lead project in Chubut in Argentina, which contains one of the top five silver deposits in the world. Martin Walter, Aquiline executive vice-president, said: “Today, exploration and mining are global businesses and Latin America is receiving much more attention from miners. The biggest opportunities lie in Argentina and Brazil, as these countries have not been fully explored.”
Toronto is the global leader for mining finance with 38% of the world’s equity raised in 2006. Furthermore, Latin America and the Caribbean represent almost 15% of Canadian banks’ foreign operations. Scotiabank, Royal Bank and CIBC have been the main banks to expand into the region, pursuing market-seeking outward FDI strategies. Other institutions, such as fund management companies and pension funds, are also taking controlling stakes in companies in the region.
Anatol von Hahn, executive vice-president for Latin America at Scotiabank, says: “We have undertaken a number of important banking acquisitions in the region and made significant strategic investments. We realise that every country is different, and we try to harness local knowledge.”
Canadian companies that have made the biggest total investments in the region are miner Goldcorp ($8.1bn), fund manager Brookfield Asset Management ($45.5bn), mining company Yamana Gold ($3.8bn) and Scotiabank ($3.4bn).