Latin America Positioned to Benefit from Critical Minerals Shift

• The scramble to secure critical mineral supply chains has become a defining feature of Western economic policy, driven by surging artificial intelligence (AI)-related demand and deepening concerns over Mainland China’s dominance across the value chain. In this context, the International Energy Agency’s 2025 report projects potential supply shortfalls of around 30% for copper and 40% for lithium by 2035, while AI-driven demand is pushing up the price of the minerals that power AI infrastructure itself.
• Latin America is already a net beneficiary of current geopolitical trends and stands to gain further by leveraging its position as a major supplier of critical minerals. Limited interstate conflict, improving investment conditions, and large and concentrated mineral endowments position the region as a more reliable and stable source of supply that will support a rising share of global mining investment and capital inflows.
• This strengthening regional supply outlook coincides with a more active US policy focus on LATAM, with the Trump administration moving aggressively to secure supply through bilateral frameworks and agreements with countries such as Argentina, Ecuador, Paraguay and Peru, as part of a broader strategy targeting both raw material supply and processing capacity.
• Against this backdrop, the current environment, where Western governments are actively seeking to develop processing capacity outside China, creates scope for LATAM countries to move up the value chain into processing and refining, thereby allowing producers to leverage competing strategic interests to secure commitments for local processing capacity.
• Notwithstanding, progress remains at an early stage and depends on overcoming regulatory complexity and infrastructure constraints, with early investment trends in countries like Brazil and Argentina indicating gradual progress. Despite Brazil holding roughly a quarter of global rare-earth reserves, it accounts for less than 0.5% of production.
• Moreover, a second channel through which this shift will materialise is through downstream energy and digital infrastructure. LATAM’s abundant renewable energy resources, particularly hydro, attract investment from US hyperscalers, such as Amazon, Microsoft and Google, who are expanding their presence in Brazil and Chile, while Mexico’s nearshoring boom is driving data centre development. However, risks such as environmental opposition, regulatory uncertainty, and the potential for a resource curse could limit the region’s ability to fully capitalise on these trends.

(Source: BMI, A Fitch Solutions Company)