Mining and quarrying
Paraguay has relatively few proven mineral resources, and most mineral deposits are found east of the Paraguay River. Manganese is located near Emboscada; malachite and azurite (copper ores) near CaapucĂș, EncarnaciĂłn, and San Miguel; feldspar and mica near ConcepciĂłn; and talc and piroflita (hard iron-bearing flagstone) near CaapucĂș and San Miguel. Ochre is found in the Cordillera region, and gypsum and limestone are found near the Paraguay River; there is some peat near Pilar. Copper, bauxite, iron, and uranium ores have been reported, and, beginning in the early 2000s, concessions were granted to companies for gold and diamond prospecting. Extensive drilling in the Paraguayan Chaco has failed to find any commercially viable hydrocarbons. Despite the varied mineral resources, mining and quarrying are among the least-developed economic activities. Because of the limited quantities of proven mineral reserves, there is quarrying of only limestone, gypsum, and clays, which are used mostly for construction.
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Energy
Paraguayâs most important natural resource is its hydroelectric potential. Most electricity in Paraguay came from wood- and oil-burning thermoelectric plants in AsunciĂłn until the Acaray hydroelectric power plant began operating in 1968. When the plantâs capacity was expanded, Paraguayâs total production increased more than 15-fold from 1970 to 1990. Nearly all of that increase came from hydroelectric sources. Distribution of electricity is controlled by the National Power Company, which was created in 1949.
A dramatic and far-reaching economic event in Paraguayâs history was the construction, in partnership with Brazil, of the hydroelectric plant at ItaipĂș Dam on the ParanĂĄ, about 10 miles (16 km) north of the Friendship Bridge at Ciudad del Este. ItaipĂș Dam is one of the largest dams in the world and has one of the worldâs highest planned generating capacities. Work was completed in 1982 on the main gravity dam, 643 feet (196 meters) high and 4,045 feet (1,233 meters) long, spanning the ParanĂĄ. The reservoir created by the dam covers about 870 square miles (2,250 square km) of Paraguayan and Brazilian territory. The last of its many turbines was completed in 2007. At the beginning of the 21st century, many Paraguayans had begun to question the terms of the 1973 Treaty of ItaipĂș, believing that Brazil was not paying enough for the energy it was using. Under the treaty it had been agreed that Paraguay would own one-half of the electricity generated but that it would sell its excess power exclusively to Brazil at predetermined rates for 50 years. After several rounds of negotiation in 2009, Paraguay and Brazil reached an agreement on July 25 in which the Brazilian government agreed to triple the amount it paid for Paraguayâs excess electricity. The deal also allowed Paraguay to sell electricity directly to the Brazilian market. A 2013 study commissioned by the Paraguayan government argued that Paraguay had effectively paid off its share of the outstanding debt for the ItaipĂș project through the subsidized sale of energy to the Brazilian grid.
The YacyretĂĄ hydroelectric project, a joint Paraguayan-Argentine effort in the YacyretĂĄ-ApipĂ© islands zone of the ParanĂĄ, was established by a 1973 treaty. Its construction was hindered by delays, however, and the plant operated below capacity for many years because of lack of financing to complete the ancillary works. In 2004 Paraguay and Argentina reached an agreement to complete the necessary work so that the reservoir on the ParanĂĄ River, which was first filled in 1994, would reach its optimum depth and boost the damâs electricity-generation capacity. (That came about partly because Argentina had been experiencing energy shortages.) On February 25, 2011, Paraguayan Pres. Fernando Lugo and Argentine Pres. Cristina FernĂĄndez de Kirchner officially commemorated the completion of the YacyretĂĄ project. Because domestic demand absorbs only a small percentage of the combined output of ItaipĂș and YacyretĂĄ, Paraguay has become one of the worldâs largest exporters of electricity.
Manufacturing
Although the industrial sector registered high growth rates in the late 1970s and early â80s, Paraguay is one of the least-industrialized countries in South America. Manufacturing is generally small-scale and directed toward processing agricultural products. Those include refined soybean oil, flour, sugar, tinned meat, textiles, leather products, alcohol, beer, and cigarettes. The construction and cement industry boomed in the late 1970s and early â80s because of the ItaipĂș Dam and other hydroelectric projects. A small steel mill, inaugurated in 1986, and a factory that has produced ethyl alcohol (ethanol) from sugarcane since 1980 were sold in the 1990s under a privatization program instituted by the government.
Finance
The main state banks are the Central Bank of Paraguay, which handles all monetary functions, and the National Development Bank, which grants credits to agricultural enterprises and manufacturers. There are also branches of Latin American, European, and U.S. commercial banks. Foreign currency is freely available at banks and exchange houses. In 1992 the government approved laws encouraging foreign investment and the development of a stock market. Dollarization of the economy was pronounced following a series of bank collapses from 1995 to 2002, but depreciation of the U.S. dollar and improved macroeconomic management led to more than three-fifths of deposits in the banking system being held in domestic currency in the mid-2010s. The guaranĂ, Paraguayâs national currency, has been relatively stable by Latin American standards.