Latin America’s Metals Are Key for the Global Energy Transition

Worsening climate change, the energy crunch caused by gas shortages in Europe and pressure on companies to meet net zero goals have fast/tracked the need to accelerate the energy transition. Experts see Latin America as a geopolitically strategic region in this environment, owing to its important reserves of key metal required for the transition such as copper and lithium. 

Copper, nickel, graphene and lithium are key for this transition because they are used in the construction of electric cars, as well as other renewable energy technology mainstays. Experts consider Latin America to be in a privileged position since the region holds significant mineral reserves, of which lithium is by far the most relevant. Bolivia, Argentina and Chile hold 64 percent of the global lithium reserves and when considering the Mexican, Brazilian and Peruvian estimated reserves, the percentage increases to over 68 percent. Similarly, Chile, Mexico and Peru are estimated to hold over 40 percent of the global copper reserves. Regarding nickel, 17 percent of the world’s reserves are located in Brazil, which also holds the third-largest graphene reserve of over 70,000t. Mexico trails behind in the ninth place with 3,100t, according to Statista data from 2021. 

According to the Latin American Strategic Center for Geopolitics (CELAG), Latin American and Caribbean countries are key in the new technological cycle and mining companies are aware of this. Chile and Peru have more than 40 copper projects worth US$19.2 billion, for example. MBN reported that by 2050, the copper demand will grow from the current 25 million tons to 53 million tons in 2050. 

Lithium projects have grown in the so-called Lithium Triangle, formed by Argentina, Bolivia and Chile. Argentina currently has 20 lithium projects, of which 18 are set to enter the feasibility studies phase. The two remaining operational projects are the Sales de Jujuy project, owned by Orocobre, Toyota Tsusho and Jemse, and Minera del Altiplano, operated by Linvent. In addition, Gangfeng Lithium, the world's largest lithium producer, is constructing a plant to extract the mineral in the country's northeast. 

In Chile, Albemarle has inaugurated a new lithium plant intending to double its current production. The project required an investment of US$500 million. In Bolivia, a pilot plant of lithium carbonate is under development. The country is constructing a bigger plant that is expected to produce 15,000t/y of lithium. In the case of Peru and Mexico, some companies have been granted lithium concessions, but none of them have started production. 

In Mexico, the recently-approved Mining Law reform has created an uncertain environment for lithium. Under the new legislation, the mineral is now in the state’s hands. President López Obrador said that the state company in charge of exploration and exploitation of the mineral will be announced soon, adding that existing lithium concessions will be maintained as long as they were requested specifically for lithium exploitation.