Digitalization and clean energy drive demand for Latin America's critical minerals—lithium and copper. But there are rising concerns.
As the world’s biggest economies race to strengthen their critical mineral reserves, the lithium and copper markets face unprecedented demand.
Analysts expect the price of copper to remain high, supported by a production deficit anticipated to reach some 10 million metric tons per year by 2035, compared to today’s output of approximately 28 million metric tons. Copper ended 2023 at $8,491 per metric ton and is currently fluctuating around $13,000, for a 53% increase in just over two years.
Between Argentina, Bolivia, and Chile, there are an estimated 64 million metric tons of lithium reserves, according to the US Geological Survey. A slight dip in production is expected in 2026 from 215,000 metric tons to 209,000 metric tons by year’s end. This is due to a change in Chinese lithium battery demand. Chile’s Comision Chilena del Cobre expects lithium prices to remain in the $11,500-$28,500 per metric ton range this year.
Due to a variety of factors, this is unlikely to change, says Roberto Cuevas, ex-president of the Mining Chamber of Panama.
Natural economic growth and increased demand for electrification are boosting demand for critical minerals. Emerging economies—including India and Southeast Asia, and rising global spending on sophisticated defense technologies, are causing demand to rise even more steeply. The global energy transition—especially electrical-vehicle expansion and industrial decarbonization—are making copper especially sought after: An electric vehicle requires four times more copper than a conventional combustion-engine vehicle.
Digitalization and the rapid growth of AI data centers, meanwhile, require massive energy and new electrical infrastructure. While the future expansion of data centers is unpredictable and copper represents only some 0.5% of their investment costs, their multibillion-dollar scale creates an inelastic demand for the metal.
Latin America is increasingly expected to play a critical role in meeting the demand.
Traditional mining countries like Chile, Brazil, and Peru are receiving significant investments in greenfield and brownfield projects. Countries with untapped mining potential, including Colombia, Ecuador, the Dominican Republic, and Panama, are working to attract mining investment.
Exploration, meanwhile, is picking up again in the region, including a portfolio of mining projects worth over $55 billion in Peru and $70 billion in Chile. Together, the region’s tapped and untapped resources represent an investment road map ready to be implemented; and at current price levels, the trigger point has already been reached for many companies to move into the construction phase.
Currently, over 80% of investment in Peruvian mining is focused on expansion or upgrade at existing mines: what the industry calls brownfield projects. But new or greenfield projects like Tia Maria and Zafranal continue to progress and are encouraging other mining investors to resume their own greenfield projects in Peru. Private mining investment is expected to grow to over $5.5 billion this year according to BBVA Research.
“It seems that we are in the middle of a price super-cycle of several metals such as gold, silver, and copper: commodities with significant production in Latin America,” says Juan Carlos Ortiz, vice president of operations at Buenaventura, one of Peru’s largest mining companies.
Additionally, Ortiz expects an upsurge in financial activity linked to the growth of the Latin American mining industry, ranging from project financing, bond issuance, and mergers and acquisitions to hedging and streams.
Yet, mining has often been a bone of contention.
Competing nations are looking to ramp up activity in or near communities that often are close to 90% opposed to mines. Panama saw the cessation of production in November 2023 at its Cobre Panamá mine. Honduras’ Fénix nickel mine near the town of El Estor has been mired for years in environmental controversy, lawsuits, and occasional violence; and a 2019 referendum on metal mining in Girón, Ecuador produced an overwhelming 87% no vote.
Mining in Latin America therefore must be developed sustainably, Cuevas argues, with clear government policies, legal certainty, and genuine participation from local communities. Establishing technical, social, and environmental performance standards—ideally the same for the entire region—will help create a favorable climate for attracting investment and gaining the acceptance both of communities and of the authorities responsible for mining activity in each country.
Growth Opportunity
Ortiz argues that the price point will remain aggressive. The supply-demand fundamentals indicate that the world faces a shortage of key metals, confirmed by low physical inventories. Additionally, copper is important for countries like Peru and Chile as well as a growth opportunity for Argentina, due to the volume of foreign exchange the metal generates through private investment and production chains.
In the case of lithium, caution is advised. A few years ago, the price of lithium rose rapidly, generating overinvestment in new projects that soon caused the price to fall back.
“Competition from lithium producers with ‘rock’ deposits could be a significant brake on the price of lithium, limiting the development of new projects exploiting salt flats,” Ortiz says. “Furthermore, in some regions, water scarcity can make developing new lithium projects in salt flats very costly.”
When it comes to the impact on Latin American mining, Cuevas regards the current trade battle between the US and China as a double-edged sword. “The uncertainty and shifting stances in the relationship between China and the US are a cause for concern,” he says, “given their implications for international markets, including metals. On the other hand, this uncertainty is driving more investors to buy gold, silver, and other precious metals, resulting in historically high prices with prospects for continued upward movement.”
Predicting the price of gold under normal circumstances is already difficult; and it becomes even more so when an additional geopolitical layer is added, Ortiz observes. In recent months, this layer has driven up not only gold but silver prices, which for decades had behaved similarly to industrial metals.
In the case of Peru, less than 5% of copper production goes to the US. Most Peruvian production is exported as copper concentrates that require smelting and refining. Most of these concentrates go to China to be converted into metallic copper. But US tariffs could eventually alter smelting and refining costs, which are currently at historically low levels.
Cuevas strongly believes Panama’s Minera mine will reopen this year. While the mine once supplied some 2% of global copper production, it was shut down in 2023 when Panama’s Supreme Court struck down the concession contract with Canada’s First Quantum Minerals after years of attacks by environmentalists. The impact on the copper market would be significant, with production projected to grow from 350,000 tons in 2023 to potentially 480,000 tons two years after reopening.
“For the Panamanian economy, this will mean the creation of approximately 7,000 direct and 40,000 indirect jobs,” Cuevas reckons. “Local purchases will reach $900 million annually, increasing GDP by 5%, and benefit more than 2,000 local suppliers. Exports are expected to increase by 80%, in addition to positive impacts on sectors of the economy such as construction, commerce, transportation, housing, and more.”
On the other side of the coin, Cuevas notes that the Panamanian government would be facing demands of roughly $28 billion from all the arbitration cases brought after the mine closed, should it not reopen.
Taking a historical perspective, however, there is nothing much new in such disputes. For many years, mining has been sold as the driving force that will close poverty gaps in Latin America. Some countries, such as Peru and Colombia, offer a government-promoted mechanism called Works for Taxes, whereby companies can finance public infrastructure projects and afterward claim the total amount of their investment as a credit on their corporate income taxes, supporting the government in deploying projects quickly and effectively.
“What often keeps us up at night,” Cuevas says, “is the lack of recognition by governments and the general population of the enormous opportunity we have now in Latin America to combat inequality and poverty by sustainably exploiting our vast mineral resources.”
