Loading ...JOHANNESBURG (miningweekly.com) – Re-establishing diplomatic relations between Cuba and the US after 54 years has rekindled fresh hopes that Cuba’s mining and petroleum industries will benefit from potential US investment in these sectors. On January 15, the US Department of Commerce and the Treasury published regulatory amendments to the Cuba sanctions regime, which resulted in changes to the implementation of the embargo, but not its total lifting. Most transactions involving Cuba, including private and public investment in mineral production, continue to be prohibited in accordance with the Helms-Burton Act. Nonetheless, Cuban Ministry of Energy and Mines general mining director Juan Ruiz Quintana tells Mining Weekly that restoring diplomatic relations between the US and Cuba, including the revocation of the economic blockade, will create a generally favourable investment climate in Cuba, as this will result in the country’s risk profile rating improving. “This will also allow for the participation of US investors in Cuba,” he points out. Independent research-driven investment dealer Salman Partners VP and senior mining analyst Raymond Goldie explains, however, that the US government still deems the mines that are currently operated by diversified Canadian miner Sherritt International, in Cuba’s Moa Bay, in Holguin province, as stolen assets of US-based diversified miner Freeport-McMoRan. Therefore, the US is still demanding that compensation be paid to Freeport for these mines that were seized from the company by the Cuban State in 1960. When former Cuban Prime Minister Fidel Castro’s Communist Party seized power in Cuba in 1959, it swiftly nationalised the assets of most foreign corporations as the country transitioned to communism, including that of Freeport’s Moa Bay operation. Nonetheless, Goldie notes that Sherritt will certainly benefit from using US mining and oil and gas extraction technologies as they could improve the company’s recovery rate on these wells by “20% to 50%”, should the trade embargo on Cuba be lifted. He stresses that the Helms-Burton Act has to be rescinded, which will require an Act of Congress to be passed, before the US embargo on Cuba can be lifted. However, the Republican Party, currently with a majority vote in US Congress, has voiced its opposition to rescinding the Helms-Burton Act and it might, therefore, take several years before it will be legal for US companies to restart trade relations with Cuba. Goldie also points out that, while Sherritt shares are traded on the NYSE, the company’s executives are barred from entering the US making it quite difficult for Sherritt executives to market their operations and meet with investors in the US. “If this limitation on Sherritt executives entering the US were lifted, it would provide significant new opportunities for the company to raise capital in the US,” he states.
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