Latin America’s Critical Minerals Conundrum
Latin America holds approximately 40% of the world’s copper reserves and 60% of global lithium brine resources, making it a significant player in the critical minerals market. However, regulatory challenges, infrastructure gaps, and financing constraints threaten the region’s ability to become a leading producer of these essential minerals.
Moody’s, a major global credit-rating and financial-risk analysis firm, has issued a warning about the hurdles facing Latin America in its pursuit of becoming a dominant force in the critical minerals market. The agency notes that while the region has significant deposits of nickel, graphite, and rare earth elements, structural bottlenecks, technical challenges, and macroeconomic and regulatory uncertainty continue to hinder the sector’s development.
The report highlights the importance of developing processing and refining capacity, which remains more difficult than expanding mining operations. This limitation limits the region’s ability to capture more value from the supply chain and maintain a competitive edge.
Chile, Peru, Argentina, and Brazil are among the countries in the region with significant potential for critical minerals production. However, each country faces unique challenges. Chile benefits from an experienced workforce and infrastructure that could support expanded lithium refining but faces water shortages, rising energy demand, and stricter environmental requirements.
Argentina has substantial lithium and copper potential but continues to face infrastructure deficiencies and regulatory uncertainty. Peru retains strong advantages in copper production, but social conflicts and political instability have slowed investment. Brazil stands out for its energy matrix and mineral resources but still faces technological gaps and remains heavily dependent on international partnerships to expand its mineral processing capabilities.
China maintains a significant competitive advantage after decades of investment in integrated supply chains, large-scale processing capacity, skilled labor, and close coordination between government and industry. The country accounts for between 60% and 80% of global processing of lithium, cobalt, graphite, and rare earth elements and controls 78% of global cobalt refining, 70% of lithium refining, and 92% of rare earth processing.
Moody’s warns that new entrants in Latin America cannot replicate this ecosystem quickly. Each country in the region has distinct competitive strengths and weaknesses, and the regional market is advancing at two different speeds. Large mining companies, including Chile’s Codelco and SQM and Brazil’s Vale, benefit from their scale, experience, and access to financing. Smaller and newer mining companies, however, face greater challenges securing capital and long-term contracts, even when they control high-quality mineral resources.
