Latin America holds the key to relieving global mineral shortages, but community trust and co-prosperity could determine which mines survive
After more than two years offline, Panama’s largest copper mine is edging back into the global supply conversation.
In January, Panamanian President José Raúl Mulino said he expects to announce by June the government’s decision whether or not to reopen Cobre Panama. A full reopening would restore a major source of copper to a constrained market and could revive an asset that once accounted for roughly 5% of the country’s GDP.
The decision also exemplifies the stakes for economies across Latin America as the region balances the economic potential of mineral wealth with social unrest, political uncertainty, and demands for a more inclusive mining model.
“We remain committed to dialogue to achieve an amicable and durable resolution at Cobre Panama for the country and the Panamanian people,” said Tristan Pascall, CEO of mine owner First Quantum Minerals, in a January statement.
When the massive copper mine shut down in 2023, it sent shock waves well beyond Panama, concerning how political risk can derail billions in capital.
“It was a mining operation with very good operational standards; but the social management was not the best, and that is one of the root causes of all situations like this,” says Eduardo Zamanillo, who with sociologist Marta Rivera Muñoz authored the 2025 book Mining is Dead. Long Live Geopolitical Mining.
The possible reopening of Cobre Panamá points to a global mining quandary. As copper and other critical minerals become essential to electrification, AI infrastructure, and military supply chains, the industry faces mounting supply deficits; yet social and political risks may now threaten projects as much as geological challenges. This is especially true in mineral-rich Latin America, where social-license failures can quickly shut down billion-dollar operations.
The Cobre Panama closure foreshadowed a world copper shortage, which has since intensified. A study issued in January by S&P Global warned that the world is heading toward a “substantial shortfall” in copper supply just as demand accelerates. The report forecasts global copper demand rising about 50% by 2040 while supply peaks around 2030. This translates into a potential deficit of 10 million metric tons (about 11 US tons), or about 25% below anticipated demand.
In that context, the shuttering of Cobre Panama—or any similar large mine—provides a glimpse at constraints that may turn critical in the future.
The Risk in Chronic Scarcity
It’s not just copper, says Zamanillo, who is principal mining engineer at SLR Consulting, which assists banks, governments, and mining companies across the world. Global supply chains face a period of chronic scarcity risk, he argues, driven by resource density, processing bottlenecks, and surging demand.
Only a few countries contain high concentrations of critical minerals such as lithium, cobalt, rare earths, and nickel. This creates vulnerabilities and turns minerals into leverage rather than ordinary commodities.
In addition, Zamanillo points out, power has shifted from extraction to control of the full value chain. Countries that export only raw ore remain dependent on those that refine and industrialize it. As a result, mining has become a national security issue and many governments now view mineral supply as a strategic asset.
“Mining is no longer a low-profile technical sector quietly extracting raw materials in the background,” says Zamanillo. “It has moved to center stage as an issue of politics, power, and global strategy.”
As mineral prices rise and demand increases, instability often keeps pace. The Natural Resource Governance Institute is a global nonprofit headquartered in New York. Pedro Zapata, Chile program officer, formerly served in that country’s Ministry of Mining and now focuses on economic and climate justice. Resource booms tend to magnify existing governance weaknesses when strong institutions and clear rules are lacking, he observes.
“In Chile,” he says, “periods of high copper prices—and now, growing attention on lithium—have demonstrated how rapid increases in resource revenues and investment pressure can exacerbate social tensions, territorial disputes, and distrust, if decision-making processes are centralized, opaque, or divorced from local realities.”
One flaw that tends to crop up during boom times is hasty decision-making as interest in short-term revenue capture takes precedence over long-term institutional arrangements. Often, this leads to increased discretion, inflated expectations among stakeholder communities, and deepening perceptions of inequality.
“Even in countries with relatively strong institutions, this dynamic can lead to cycles of conflict and legal disputes,” Zapata says.
Community Consent
Some mining executives and companies are now framing growth in terms not just of output, but of social license and political durability.
BHP, which operates the Escondida and copper mines in Chile, highlights its community involvement in its Economic Contribution Report 2025: “We provide employment; purchase goods and services; pay taxes, royalties, and other payments to governments; and make contributions (such as donations) to the communities where we operate.”
In January, BHP posted a record-setting half year in operational performance at its mines in Chile, despite contract workers staging roadblocks that disrupted access to its Chilean sites.
Canadian mine owner Hudbay Minerals has also faced disruptive protests. At its Peruvian Constancia copper mine last September, blockades resulted in a temporary operations halt. In a prepared statement, Hudbay promised to collaborate with local governments and authorities to engage with protestors.
At the same time, companies such as Pan American Silver have pointed to strong cash generation from mines in Mexico and the Andes as proof that the region remains indispensable to global metals supply—if projects can operate with the consent of local communities, which Pan American’s 2024 annual report calls “collaborators in our operations.”
Taken together, these statements reflect Latin America’s mineral wealth and its centrality to the global energy transition, but also the unsettled question whether governments, communities, and miners can align economic growth with social stability in the region.
“CFOs are comfortable pricing geological risk, but much less so social risk,” says Darren Bahrey, founder and CEO of StrategX Elements, a Canada-based exploration company. “It is harder to fix and critical to mitigate from the beginning.”
Bahrey, a veteran geologist who has taken projects from early exploration into production across Chile, Mexico, and other parts of Latin America, argues that early decisions around community engagement and value distribution often determine whether capital is ultimately preserved.
“Engaging local support and involvement from the start and throughout all stages moving forward is a key part of our exploration strategy,” he says. “Discovery success takes place with everyone involved, sharing the experience together.”
He points to projects where early community backing materially improved timelines and economics, allowing permitting and production to proceed with local support. Without that foundation, Bahrey warns, even technically strong assets can stall.
Many of the tools companies rely on to manage social risk fail when pressure intensifies, warns Clara Segón, standards manager at Cheltenham, UK-based advisory firm TDi Sustainability.
The motivation behind adopting standards is crucial, she argues. If the reason for adoption is simply external communications—to satisfy investors, customers, or regulators—communities and stakeholders may mistrust that they are embedded in decision-making, budgets, or incentives.
Under stress, she notes, “those commitments are the first to be deprioritized, which accelerates distrust.”
By contrast, standards linked to human rights, community relations, and grievance mechanisms, and aligned with frameworks such as OECD due diligence, consistently reduce downside risk, in Segón’s experience. They do not eliminate shocks, she points out, “but they prevent those pressures from triggering protests, legal challenges, or permit instability, which are the fastest ways projects lose value.”
