Mining Across the Americas: Driving the Clean Energy Transition
The world’s growing demand for clean energy technologies will require major investments in the mining sector. Many of the technologies needed to achieve net-zero emissions — from electric vehicles to carbon-capture infrastructure — will require large inputs of strategic minerals and metals. There is increasing competition to secure reliable supplies of these raw materials.
Latin America will be at the forefront of supplying critical minerals for the world’s clean energy transition. Mining has historically accounted for between 13% and 19% of foreign direct investment across the region. Latin America already produces and exports large quantities of lithium and copper. But countries can expand into a range of other materials such as rare earth elements that are required for electric vehicle (EV) motors and wind turbines, as well as nickel, a key component in batteries. Implementing high environmental standards and enforcing compliance will be crucial for protecting the environment, gaining and keeping the support of local communities, and developing resources sustainably to share economic and social benefits of the energy transition.
Here’s how major economies across North, South, and Latin America are positioning themselves to compete for strategic mineral resources.
Argentina
Argentina has 2.7 million certified tons of lithium, the world’s third largest lithium reserves after Chile (9.3 million tons) and Australia (6.2 million tons). Lithium deposits are concentrated in the provinces of Catamarca, Salta and Jujuy. It’s mining industry offers economic security in an otherwise uncertain future as the country prepares for a national election. By 2026, Argentina is seeking to increase minerals export to $10.1 billion per year — double $5 billion dollars forecast for 2023. This would strengthen the country’s foreign currency income.
Argentina has three lithium deposits in full operation, another five under construction and a portfolio that includes 15 more projects. The growth of Argentina’s lithium exports is directly related to the manufacture of batteries for electric vehicles. The country is seeking to not only increase lithium extraction for export but add economic value through batteries manufactured in Argentina.
Brazil
Brazil has abundant mineral resources, including lithium, niobium, graphite, copper, phosphate, potassium, uranium, rare earth elements and more. The nation holds a prominent position in the global mineral commodities market, especially in metallic minerals like iron ore, copper, and gold, as well as niobium, where it is the world’s largest producer. Minas Gerais is Brazil’s most important mining state, home to 40% of the country’s largest operating mines. Substantial investments are anticipated in the mineral sector over the next several years, totaling $50 billion from 2023 to 2027, with $6.5 billion dedicated to socio-environmental initiatives.
The Brazilian government is preparing a National Mining Plan, with objectives related to sustainability and support for the clean energy transition. President Lula has proposed a regional lithium consortium with Argentina and Chile to control and manage regional mineral exploration, as well as influence international prices. Most of Brazil’s s lithium is mined by private companies, including firms from Canada and Australia. The Ministry of Mines and Energy has estimated that by the end of 2023 the volume of investment in lithium production will exceed R$15 billion.
Canada
Canada is recognized as a leading mining nation. The sector includes exploration, mining and related support activities, primary processing, and downstream product manufacturing. Mining is a mainstay of the Canadian economy, contributing about 4% to GDP and providing 22% of exports, while supporting jobs and economic activity in every province and territory. Canadian exploration and mining companies are active across the globe, leveraging their strong environmental, social and good governance credentials, and advanced mining processes.
Canada is positioned to capitalize on the rising global demand for critical minerals and materials that will power advanced manufacturing and the clean energy transition. Canada is a key producer of copper, nickel, aluminum and cobalt and hosts advanced mineral projects for rare earth elements, lithium, graphite and vanadium. In addition, Toronto and Vancouver are recognized as global hubs for mining and mineral exploration, as well as financing and legal services.
Chile
Chile the world’s largest producer of copper. Chile has become an important hub in the lithium sector, boasting the world’s largest reserves. While other minerals are open to private concession, lithium is an exception. The state or state-owned companies can carry out lithium exploration and operations through administrative concessions. Private companies can mine the mineral through special lithium operation contracts. Currently, all Chilean production of lithium is done under the latter system.
The Boric administration has introduced a National Lithium Strategy to capitalize on the growing global demand for this strategic mineral. The primary objective is to establish a state-owned enterprise, the National Lithium Company, that would be responsible for exploration and extraction. However, passing a law in the Chilean Congress is necessary for this plan to be implemented, and the government currently lacks the necessary votes. In response, the administration announced a transition phase where two existing state-owned companies, Codelco and Enami, will create subsidiaries for exploration and operation. These companies will establish public-private partnerships through joint ventures for contracts to pre-existing salt flats.
Mexico
Mexico is one of the main producers of silver, gold, and copper in the world. The government of President Andrés Manuel López Obrador is seeking to safeguard national sovereignty of the country’s natural resources, a policy that has reached the energy, agro-industrial, and mining sectors. Since 2021, Obrador has criticized concessions to exploit mineral deposits held by private companies in the industry. As a result, no new mining concession have been granted.
A mining reform law would reduce the duration of concessions from 50 to 30 years, introduce changes in the national water law, increase environmental requirements, address waste from mining operations, and require compensation to local communities of 5% of a company’s profits. The U.S. and Canadian governments have warned that reforms designed to favor state-owned companies over foreign investors could lead to arbitration under the US, Mexico, and Canada free trade agreement (USMCA).
Peru
Mining is one of the fundamental pillars of the Peruvian economy, accounting for 8% of GDP and 65% of exports. In 2022, Peru was one of the largest producers of minerals in the world, with operations in seven of the most traded minerals (copper, gold, silver, zinc, lead, tin and molybdenum). It is the second largest producer of copper and zinc worldwide, and the first country to produce zinc and tin in Latin America. In addition, Peru has the largest silver reserves in the world and is ranked third in copper and molybdenum reserves.
In January 2023, the Ministry of Energy and Mines (MINEM) presented a new edition of its Mining Investment Portfolio with 47 mining projects totaling $53.7 billion. The projects involve executing investments through the construction of infrastructure to achieve operational start-up for mining activities such as exploitation and/or beneficiation in accordance with current regulations. In addition to exports, the mining sector is an important tax revenue generator, accumulating $4.5 billion in 2022 — a 12.3% increase year over year.
United States
The Biden administration is prioritizing key minerals and materials as essential to the United States economy and national security. The strategy is designed to reestablish U.S. competitiveness in critical mineral and material supply chains, particularly for use in the electric vehicle, semiconductor, advanced manufacturing, and renewable energy sectors. The U.S. has identified 35 mineral commodities as critical to the economy. However, the U.S. lacks domestic production of 14 of these and is more than 50% import-reliant on 31 of these minerals, including lithium, cobalt, copper, nickel, manganese, titanium, and zinc. Industry advocates claim this dependence on imports puts U.S industrial supply chains, companies and end users at risk.
Meeting U.S. climate goals will require significant quantities of critical minerals. For example, to increase electric vehicles to half of national sales by 2030, the United States would require between 500,000 to 1 million tons of lithium carbonate annually. At present, there is only one domestic lithium mine, Lithium Americas in Nevada, in operation. In addition, as the country transitions to clean electricity, it will require large amounts of copper and aluminum to modernize transmission grids.
The United States and several trade partners have formed the Minerals Security Partnership (MSP), a new initiative to bolster critical mineral supply chains. The MSP partners include Australia, Canada, Finland, France, Germany, Japan, South Korea, Sweden, the United Kingdom and the European Commission. The goal is to ensure critical minerals are produced, processed and recycled in a manner that supports the ability of countries to realize the full economic benefit of their geological endowments and utilize the highest environmental, social and governance standards.
This article was co-authored by Powell Tate in Brazil and Washington, and our affiliates MDG Argentina, Extend Chile and Apoyo Peru.
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