The agreements reached at COP26 will affect the mining industry in Latin America, since the region is a major producer of dozens of minerals necessary for the transition to a low-carbon world. Mexico, considered the world´s largest silver producer, is one of the countries that is bound to benefit from these agreements.
The principal commitments of the Glasgow Climate Pact, signed by almost 200 countries, include reducing coal generation and accelerating plans in the fight against climate change. Latin America, being a key producer of minerals necessary for renewable energy, battery storage and electric vehicles, will be one of the regions that will benefit the most from the increasing demand.
Among the countries that will benefit the most are Chile and Peru, two of the world´s largest copper producers. Argentina and Chile have benefit from being pioneers in global lithium production. Brazil, the world's third largest producer of bauxite and alumina in 2020 and a major supplier of nickel, will also benefit from these agreements, along with the Dominican Republic and Cuba. Moreover, Mexico will play a key role, as it is the world's largest producer of silver, which is used in photovoltaic cells.
The signatories agreed to gradually reduce carbon use and implement a global carbon emissions market, which will raise the cost of using fossil fuels. "The result is that the COP26 agreement establishes a route for the next few years aimed at reducing fossil fuels and towards more expansive carbon pricing mechanisms," added Kieran Clancy, a commodity specialist at Capital Economics.
In addition, the signatories discussed the change in market dynamics since the demand for certain metals such as copper could increase bylimiting global warming to 1.5ºC. "The supply gap represented by the uncommitted share of the potential market through 2030 represents a great investment opportunity, and these associated tonnages are truly transformative when evaluated in the context of the current size of the market," said Julian Kettle, Vice President of Mining and Metals in Wood Mackenzie.
Regarding Mexico´s potential, several experts have agreed that the country has an important role in the decarbonization of the world since it is the world´s largest producer of silver, considered one of the minerals that is mostly used for green technologies. “Silver is essential for a green economy. You cannot have electric vehicles (EVs) without silver coating every electronic circuit, nor can you have solar power without silver coating each photovoltaic cell (PCs). Mexico will benefit as it is the largest silver mining country in the world and continues to have some of the best exploration potential worldwide for the discovery of new silver orebodies and the development of new mine,” said Bradford Cooke, Founder and Executive Chairman of Endeavour Silver.