Latin America A; The world wants them. But regional governments and their citizens are two spirits on the costs and benefits of subsequent development.
The growing competition between the global powers to ensure the future of their manufacturing and technology supply chains transforms the single critical mineral basin of Latin America and elements of the rare land into a new critical battlefield.
“The region has immense mineral wealth,” explains Henry Ziemer, associated with the Center for Strategic and International Studies (CSIS), “in particular in the form of copper and lithium, which should skyrocket, as well as more custom minerals such as niobium, used in aerospace and steel manufacturing; nickel; and elements of the rare earth.
Global demand for lithium could increase by a factor of 40 over the next 15 years, the projects of the International Energy Agency (IAI), and according to S&P Global Market Intelligence, it could exceed current global production by 2028. The IAI also projects the demand for copper to Soar of 40% in the next five years, exceeding current production by 2030.
Lithium demand seems more vulnerable to the evolution of dynamics on the green energy market, especially since the Trump administration withdraws the United States from the Paris Agreement and reduces carbon emission targets. But the same cannot be said of copper, which is “almost certain to remain at high demand because it will be essential for applications ranging from green energy and electric vehicles to the wiring necessary to supply AI data centers”, maintains Ziemer.
Latin America holds around 60% of the world’s lithium reserves and 40% of copper reserves, according to AIE data, and shelters seven of the most productive copper mines in the world. In addition, most of the most producing countries in the world for the two metals are in the region, with Bolivia, Argentina and Chile spearhead of the Lithium and Chile and Peru list for copper.
Diversify supply chains
While competition is intensifying between China and the United States, in particular in technology, and as global metal supplies still become tense by growing demand, the diversification of mineral supply chains becomes both geopolitical and absolute priority of the company.
According to the UN Research, China holds more than 40% of the global capacity for fusion and refining of copper, lithium, rare land and cobalt. In Latin America, China represented 65% of Chilean mineral exports in 2021, or about 6% of Chile’s GDP, according to the World Bank.
“The domination of the Chinese market allows it to exert a significant influence on world prices,” explains Melissa Sanderson, member of the Rare Earths Board of Directors, “whether by increasing or restoring exports of key products or implementing other restrictions on key materials.”
One of the main reasons for US President Donald Trump expressed the desire to annex Canada is the country’s metal and mineral offer, Prime Minister Justin Trudeau recently said. “This is a strategic vulnerability for the United States vis-à-vis China, as for a large part of the Western world, which has just given control of China on critical minerals around the world,” he observed.
During one of the first actions of his second term, Trump declared a national energy emergency and promised to decline more from the Chinese supply chain. He followed by announcing a global tariff of 10% on Chinese products, to which Beijing responded – among other things – a sidewalk on mineral exports he uses in his supply chain.
The intensification of the risk of trade war also encourages companies to decline from their current mineral supply chains.
“Trump’s first signals have supply chains on the edge, especially in industries based on manufacturing and critical materials,” said Tim Heneveld, director of the Pays de Pergolux in North America. “Businesses think back where they get their supplies, many who seek to secure alternative suppliers or move production in regions with less geopolitical risks.”
However, forging more resilient mineral supply chains will have a cost, explains Laura Dow, sales director at CPG Sourcing, who specializes in the supply of materials and products by emphasizing China. “Companies that hierarchire a well -balanced and test of future supply chain will be best positioned for long -term success.”
Like Wajax, the CEO of Canadian Industrian Products and Services, is: “This dynamic has prompted the United States and Canada to seek stronger partnerships in Latin America and to ensure the diversification of critical mineral supplies.”
Reach full potential
While Latin America holds some of the largest reserves of critical minerals and rare earth elements, a large part of this is still unexploited. Subsequent development could prove to be a key solution for increasingly tense global supply chains.
“The region, with a few exceptions, has so far been unable to achieve its full potential in value chains for critical minerals,” notes an article in writing of Economist Impact and the private banking of JP Morgan, “and therefore, in those of the components of clean and digital energy”.
But developing the sector can prove to be a delicate game, taking into account the competing local and global geopolitical aspirations and increasing environmental concerns. In addition, a historic difference between the production of raw materials and intermediate production in the region continues to limit local interest to develop supply networks.
Over the past two decades, China has established itself as a leading player in the intermediate activities of Latin America for copper and lithium, flourishing in the gap left by a lack of investment from the governments of the region, said Isabel Al-Dhahir, main analyst at Globaldata, parent of mining technology.
“This weakens the geopolitical influence of Latin America, limiting the region to the export of raw minerals to Chinese investors and other foreigners,” she warns.
Economist Impact and JP Morgan Private Bank attribute this gap to “a myriad of factors, in particular an increasingly complex regulatory environment, the lack of critical infrastructure and the low capacity for extraction and treatment, to name only a few.”
A continuous challenge will be to open new mines, said Ziemer, “as global demand should exceed production for key inputs such as lithium and copper by 2030. Since it can take years, even decades, to make a mining claim to first production, new projects must be in development earlier rather than later or risk a global risk of supply for several critical mines.”
Local governments: correct historical imbalances
Given these tensions, local populations are wary of the push of the sector for development in the region, and in particular for the opening of new mines: a key requirement for the expansion of the exit.
“The increase in demand [for critical minerals] came with a price, because many communities in Latin America find themselves bringing the environmental and physical costs of the increase in mining, ”notes Ziemer.
This prompted local governments to intervene with an increase in state financing and more public-private partnerships, the diversification of production and production supply chains.
The greatest economy in the region, Brazil, which holds the third largest nickel reserves in nickel and rare elements, has devoted $ 815 million to a strengthening of projects in the field “in the context of sustainable and technological development”, said last month Aloizio Mercadante, President of Brazil of National Development in Brazil.
The copper operating company by the Government of Chile, Codelco, has concluded a 35 -year agreement with the lithium manufacturer Sociedad Química y minera de Chile to develop the vast lithium resources in the flat of the Atacama flat between 2025 and 2060, aiming to make more domesticate the lithium activities in the middle of the middle.
In Argentina rich in lithium, the latest development came from the government, with the signing of a cooperation agreement with the United States to further diversify the long-term supply of the latter of China.
Movements follow significant reactions against foreign mining projects in countries such as Panama, Chile and Bolivia, leading in particular to the recent closure of the Panama Cobre mine due to environmental concerns and popular disorders.
“The incident also points out that demand alone for critical minerals does not mean that countries, or their citizens, are ready to accept an expansion without restriction of mining,” warns Ziemer.