Portugal Turns to Natural Resources in Crisis Times

In the two centuries Rome ruled the Atlantic coast of Iberia, the army mined and shipped home 129,000 ounces of gold and 25 million ounces of silver.

More than two millenia later, faced with recession, record-high unemployment and a stubbornly high debt, modern Portugal is following in the Romans' footsteps to take advantage of its natural assets.

The new government is trying to draw mining giants to extract everything from iron ore to gold, silver and tungsten in the hope of cashing in on the 4 percent of revenues it will gain from each operation.

Mining giant Rio Tinto and the Portuguese government are currently putting the finishing touches on an experimental concession contract to mine iron ore in the north of the country in an investment that could be worth over 1 billion euros.

"With the strategy we have been pursuing for the mining sector, Portugal's resources and its potential could rise up to twice current gross domestic product, which is to say more than 200 billion euros," said Ricardo Pinto, a mining advisor at the economy ministry, estimating the value of all possible future mining projects.

It has granted 30 mining concessions since it came to power last year, which should add up to about 300 million euros in initial investments. About half of the concessions are at the prospecting stage, but many are expected to lead to production soon, drawing potentially much bigger investments.

The gold deposits currently being investigated at Boa Fe in sunny Alentejo will be extracted in an open-air mine, which takes much less time to activate than an underground mine. Existing mines that have been abandoned are now being reactivated.

"We see mining taking a key role in Portugal's recovery. The geology and infrastructure is excellent and it is a void the private sector will fill," said Peter Rose, an analyst at ondon-based Fox Davies, an independent natural resources investment bank.

Portugal's mining industry is a "pretty compelling story," Rose said, thanks to the high quality of resources, good local infrastructure and modest wages.