A report from Bank of America (NYSE:BAC) said Latin America companies could invest up to $100 billion over the next five to ten years from its mining, steel and fertilizer markets, in order to keep up with the growing domestic demand.
In a note to clients, Bank of America analysts Felipe Hirai and Thiago Lofiego said returns on investment will drop from the 30 percent over the last several years, to a range of 10 to 25 percent. They based their assertions on increasing costs and the probability that the price of metals will drop over the next three to four years.
The two analysts said, "Higher investments are coming with lower returns in an environment of a weaker global economic growth and with still significant execution risks."
Companies best positioned to invest in according to the report, were Vale (NYSE:VALE), CSN, and Southern Copper (NYSE:SCCO). Vale is the world's largest iron-ore producer, CSN is the third-largest producer of steel in Brazil, and Southern Copper is the largest producer of copper in Peru and Mexico.