TOROMOCHO, Peru (By Robin Emmott, Reuters) Fri Jan 21, 2006 — The copper-red rock of Peru's central Andes glares out through patches of white snow as geologist Luis Rivera enthuses about the host of minerals waiting to be dug up from deep beneath his feet.

The long-neglected Toromocho project could be Peru's biggest copper mine in 2010, and at a time of high metal prices, it is one of dozens of prospects making Latin America one of the world's top mining destinations in 2006.

"Latin America is the place to be right now. The legal framework is there and these incredible mineral prices mean that sites we know about can finally be developed," said Rivera at Toromocho, 14,760 feet above sea level.

Not even a string of presidential elections in the region appear to be putting investors off. Mexico and Peru, who both go to the polls in 2006, expect record mining investment of at least $1 billion this year, with no sight of copper, gold and zinc prices falling to earth any time soon.

With strong demand for metals for everything from pipes to computers and air conditioning units in rapidly industrializing China and India, Brazil also plans to expand iron ore, copper and gold production. Venezuela hopes to hike its aluminum smelter output to more than 1 million tons this year.

Chile's Codelco, the world's top copper producer, aims to boost production of the red metal to 3 million tons a year from 1.8 million tons and plans $15 billion in investment over the next six years.

"Chile, Peru and Brazil will play host to much of the investment in base metals in the next few years in Latin America," said Patricio Cartagena, executive vice-president of Chile's state-run copper commission Cochilco.

MICHIQUILLAY, MEXICO TURN HEADS

For Peru, the world's No. 3 copper producer, a major challenge in 2006 will be to auction its Michiquillay copper deposit, which has mineral resources of 544 million tons.

"Things are looking very good for Peru, especially as the anti-mining protests appear to have died down," said a foreign diplomat with wide knowledge of Peru's mining scene.

High metals prices mean Mexico, the world's top silver producer, is diversifying into copper and gold in 2006.

Penoles' delayed 55,000 tonne-a-year Milpillas copper project is due to start up this year, while Frontera Copper's Piedras Verdes mine is scheduled to start producing copper at a rate of 32,000 tons per year in 2006.

Goldcorp's Los Filos project in the central Guerrero state is slated to come on stream too, with annual output of 300,000 ounces a year, making it Mexico's biggest gold mine.

"Our free-trade agreements, the economic stability ... the lack of royalties such as those in Peru ... mean that Mexico has dynamism and many mining companies are turning to us," said Sergio Rendon at the Economy Ministry's mining promotion arm.

Meanwhile, Mexican-Peruvian mining giant Southern Copper Corp expects slightly higher copper output in 2006, at 720,000 tons, due to higher ore grades.

CVRD, GOLD SPARKLE IN BRAZIL

Brazilian miners hope presidential elections in October will be beneficial as the government increases infrastructure investment to win voter support.

"The panorama for the production and sale of Brazilian minerals in 2006 is favorable," said Jose Mendo Mizael de Souza of the Brazilian Mining Institute in Brasilia.

Companhia Vale do Rio Doce plans to expand iron ore output at Carajas in northern Brazil by 20 percent to 85 million tones a year in 2006. In July, the company is due to open the Paragominas bauxite mine in the northern state of Para with initial output of 5 million tons a year.

On the gold front, Canada's Desert Sun Mining Corp has six Brazilian projects in the pipeline which should yield a total of 55,000 ounces of gold a year from 2009.

Yamana Gold Inc. also aims to start up the Chapada gold and copper mine in the central Goias state this year, where production should rise to 260,000 ounces.

WORRIES OVER ENVIRONMENT, VENEZUELA

Meanwhile, Argentina, which has seen its metals industry boom since 2003, expects rising exports and around $350 million in investment in 2006, according to government estimates.

The country's biggest upcoming project could be the $1.5 billion Pascua-Lama gold mine, which Canada's Barrick Gold Corp. aims to begin building in September.

But that project has kicked up stiff environmental opposition because of fears a mine would damage glaciers that lie over the area that Barrick wants to excavate.

Argentina also expects to begin construction on the promising San Jose-Huevos Verdes gold and silver mine in the Patagonian province of Santa Cruz.

But while Latin America is the darling of mining companies — with open investment regimes and free-market economic policies — gold-rich Venezuela worries investors with its tightening of state control over the minerals industry.

Venezuela's left-wing President Hugo Chavez says deals signed before his 1998 election were "robbing" the country of its key resources.

Mining companies hope to receive news this month of the broad review of contracts and concessions as Venezuelan authorities create a new state mining company to oversee the minerals industry.

"A lot of us have been praying for the best. We're pretty sure this won't mean mine nationalization," said a mining company executive who declined to be named because his company was considering prospecting in Venezuela.

(Additional reporting by Peter Blackburn in Rio de Janeiro, Pav Jordan in Santiago, Patrick Markey in Caracas, Frank Jack Daniel in Mexico City and Hilary Burke in Buenos Aires)