The Future of Mining in Latin America: Critical Minerals and the Global Energy Transition

This report from the Leveraging Transparency to Reduce Corruption project (LTRC) explores potential scenarios in Latin America for the development of critical minerals, also sometimes referred to as future-facing commodities. It assesses the extent to which each scenario might lead to an end goal of a well-regulated mining sector that increases public goods and spurs socioeconomic development with minimized social and environmental impacts.

Latin America is particularly crucial to meeting global demand for critical minerals, given both existing levels of production and its global share of reserves of copper, lithium, and nickel. Chile, Peru, and Mexico hold an estimated 40% of global copper reserves, with additional reserves found in Argentina, Brazil, Colombia, and Ecuador. Roughly two-thirds of the word’s global lithium reserves are in Latin America. These are primarily in Bolivia, Argentina, and Chile, although Mexico, Peru, and Brazil are home to smaller shares and host some exploration projects. The region also has sizable nickel reserves—Brazil hosts 17% of global nickel reserves, with additional reserves in Colombia and Cuba—as well as small amounts of cobalt.

We believe two main variables will shape the future of mining in Latin America in the context of the global energy transition. First, most countries in the region face persistent conflicts over natural resource governance, including opposition to mining projects based on environmental impacts, insufficient consultation with affected communities, and inequitable distribution of socioeconomic benefits. Governments have struggled to meaningfully respond to civil society and community concerns and reduce conflict as they face competing pressures, fractured legislatures, and a cacophony of views on mining. These challenges are not impossible to solve through sustained effort and good policy, but it is unclear whether or how governments will be able to address them and, by extension, how overall levels of conflict around mining will evolve.

The second major variable is uncertainty about future demand for the four critical minerals. While demand will almost inevitably grow, it is uncertain by how much. Governments will need to remain flexible to avoid overinvestment that does not maximize benefits. Demand trajectories are likely to be affected by four key factors: the pace of the energy transition, technological developments, improvements in recycling, and domestic mineral development in the EU and United States.

A best-case scenario would see critical minerals driving a sustainable development boom in Latin America. Conversely, in a worst-case scenario, protracted conflict around mining could undermine political and economic stability. This would also have negative knock-on implications for the global energy transition, increasing the risks of supply disruptions and exacerbating environmental, social, and governance impacts associated with developing the mineral resources needed for clean energy technologies.

This paper first describes three areas of natural resource governance that have been central to political and social conflict over the region’s mining sector: environmental impacts, consultation with affected communities, and distribution of socioeconomic benefits. It then goes on to explore uncertainties about future demand for critical minerals. Finally, it lays out four potential scenarios for the future of mining in Latin America in the next 10 to 20 years, considering both the level of conflict and the level of demand for critical minerals.

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