Can Latin America Lead the Global Critical Minerals Market?

Critical minerals are becoming central to the global economy, underpinning everything from electric vehicles and renewable energy to advanced manufacturing and national security. Latin America possesses some of the world's largest reserves of copper, lithium and other strategic minerals, placing the region at the centre of an increasingly competitive global landscape. 

But resource wealth alone is no guarantee of long-term prosperity. Can Latin American countries strengthen governance, attract investment and capture greater value from the energy transition while managing environmental and social challenges? 

In this episode of The LatinNews Podcast, Richard McColl speaks with Professor Cynthia Sanborn, Director of the Centro de Estudios sobre China y Asia-Pacífico (CECHAP) at the Universidad del Pacífico in Peru. 

Together, they examine the region's critical minerals sector, the governance challenges surrounding resource development, China's growing role in Latin America, and what will determine whether the region can become a global leader in the industries of the future. 

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Transcript

SPEAKER_00 0:00

Welcome to the Latin News Podcast, a fortnightly deep dive into key developments from across Latin America and the Caribbean. Here's your host from Bogota, Colombia, journalist Richard McCall.

SPEAKER_01 0:15

This is the Latin News Podcast. I am your host, Richard McCall, here in Colombia, and this week we're going to be discussing critical minerals. We're going to be discussing this with Professor Cynthia Sanborn, who is Professor at the Department of Social and Political Science, Director at the Center for China, Asia, Pacific Studies at the Universidad del Pacifico in Lima. So I can think of no better person with more than 50 publications to her name to be discussing this topic with us. So, Cynthia, welcome on the Latin News Podcast.

SPEAKER_02 0:49

Well, thank you very much, Richard. This is an honor to be here and certainly topics that are ever more important these days, right?

SPEAKER_01 0:57

Well, that's right. That's right. I mean, there's a there's a sort of a tug of war between influences in Latin America and, of course, talking about critical minerals. We're discussing obviously uh you know copper, iron, gold, and of course lithium. Perhaps you could give us a little bit of an overview of the situation in Peru where you are now.

SPEAKER_02 1:20

Um, well, thank you again. I'd really like to start by taking a step back and saying that although a lot of the discussions today are focused on the geopolitical competition between China and the US around access to minerals, I think that's a very recent and small part of the story. And the most important question here is whether we can take advantage of this new mineral boom in demand. We've been through quite a few of them, um, if we can take better advantage of it this time around. Um, whether it's lithium in much of the southern cone countries, whether it's copper in Peru and Chile, whether it's gold in Colombia too. Um, the question is we have enormous reserves. Uh we have there are reserves that are now essential minerals for clean energy, for electric mobility, for digital technologies. Um, but as history reminds us, often these booms in demand don't produce sustainable development. So I think really it's it's I want to say it's more about less about who invests, um, whether it's China, the United States, European countries, et cetera, but uh how we govern these investments, you know, and how we create value uh this time around, right? So that's sort of my introductory comment because we often get asked about well, China, the US, you know, the demand for these minerals, but it's really about us. It's about how we manage them, you know, whoever's the investor.

SPEAKER_01 2:40

All right, but you okay, you said mentioned China, the US, but of course, there's been you know a long um, I would say, chain of interests in Latin America in the critical minerals. Um, I know that you are studying critical minerals, and you have a group that studies out of Argentina, Chile, Peru, Colombia. What are the what is the greatest demand at this moment?

SPEAKER_02 3:04

Well, you know, right now there's the demand and expectations for lithium. Um, but I think it's important to say that what's critical today wasn't critical yesterday, and it might not be critical tomorrow. And in fact, different from, say, the oil boom or even some of the previous uh booms, these mineral, the technologies are moving very fast. The demand is very fast. Lithium, for example, which Argentina has developed, Chile has really raced to develop. Prices for lithium a few years ago went way up. Right now they've they're pretty they're further down. Um so governments shouldn't be pegging their expectations and dreams around lithium. Look at Bolivia. Bolivia ran out of gas, and now they're hoping that lithium will save them. Um but I think this time around things are moving much faster in terms of what minerals are critical when. The US, China, and others are racing to replace certain minerals so that supply chains are more protected. Um, so it's really more of a balancing act for our governments and and um you know our policymakers. But right now the demand is lithium. However, in my country here in Peru, we have lithium reserves that are not profitable yet. It may not be because they're hard rock, they're not in um salt flats, and they're they're laced with uranium in some cases. So our issue is copper, and copper is more stable. There's always a demand for copper, right?

SPEAKER_01 4:29

You talk quickly about pegging expectations. I would assume as also when we've just had the elections, well, we've just had the election results there in Peru, and Keiko Fujimori is it will be taking over on the 26th of July. Um she's likely to peg expectations on a uh critical mineral boom there as well, I would assume.

SPEAKER_02 4:49

Well, you know, the Fujimori legacy, um, which she grasps onto and is her main campaign capital, is the legacy of her father, was privatizing almost everything in Peru, including privatizing the entire mineral industry and the oil industry and hydrocarbons. Um, and she and her party are very much in favor of encouraging private and foreign investment. Um they have promised to try and overcome some of the obstacles. We have a number of um very strong potential new copper uh concessions that have not gotten off the road because of more social and environmental concerns, and she's going to try and overcome those. Um, but it's also her father's legacy, so we don't expect um much change in terms of favoring foreign investment, private investment in this sector.

SPEAKER_01 5:34

If we're talking about other political leaders, you mentioned quickly uh Rodrigo Paz there, and and of course Bolivia, but let's let's look at again some of the regional powers as well. Miley in Argentina, he has all sorts of deals going on with lithium there, and of course, Cast, who has been very outspoken against Boric's uh previous policy for towards lithium in Chile. Perhaps you could give us an overview there.

SPEAKER_02 5:58

Yeah, well, I'm very familiar with Chile. I I travel there fairly frequently and I followed it. Um, you know, Peru and Chile are friendly rivals in the copper industry. We're number one and two in the world. Um, and I think a number of us were interested when lithium started becoming more in demand in Chile, the efforts of the previous government to add value by demanding that new investors in lithium invest in more value-added activities, right? And, you know, I think most of us are not expecting to be able to produce lithium batteries in this part of the world, but certainly the idea of demanding more investment from newcomers given that lithium is so attractive. Um, and the lithium, the national lithium policy in Chile, I think was of great interest because Chile is a very private sector-oriented country. I mean, Chile is really open to the world, like Peru is. Um, but Chile has a kind of state agencies and backbone to strategize around minerals that I think most of us find quite quite impressive. Um, Kast has come in saying he wants to push more uh investment, less bureaucratic hassles to investors, etc. Um, but I'm not sure that's gonna change things dramatically. I think Chile's always had state institutions that have more of a sense of where they're going strategically, uh, whether it's in copper, whether it's now in lithium. So we'll see. Um again, I guess that goes back to my concern about governments not putting so much expectation on one product, in this case lithium, um, because lithium prices go up and down, they're very variable, and tomorrow there'll be substitutes for lithium.

SPEAKER_01 7:33

But of course, I mean, Chile, Chile, as you say, there's a the government sort of institutions have more of an idea of where they're going. Again, there's great pragmatism. They're not going to sell this off uh rapidly and quickly for quick gain. It's it's a long-term uh bet with Chile, I would assume.

SPEAKER_02 7:51

And Chile has a very strong um environmental regulatory structure and pretty impressive environmental organizations. And as you know, um lithium has a lot of issues. All mining has community relations issues, all mining has environmental impact issues. It's a very um sensitive industry, but lithium in Chile has concerns about water as well and about fragile ecosystems. And I think there's very strong resistance to simply lowering the bar in Chile. And uh Chile has outstanding scientists and environmental um advocates. So I don't think it's as I said, I don't think it's gonna be a radical change. It may be certainly closer to a more private, more open um model than Boric wanted to attain. But um I think you know Chile tends to be more strategic in terms of its mining. Uh, they've got other issues on the agenda as well right now.

SPEAKER_01 8:52

Of course. Of course. But if we were to compare, probably Chile is the most forward-thinking when it comes to that over Argentina, Peru, and and beyond. I mean, there's it's far more of an organized, uh, as you say, environmental um cater of people and institutions there.

SPEAKER_02 9:10

Well, you know, the key can a key concern we all have is that while demand is booming again, we've had too many stories of local communities being um left aside. And you know, most of the major mineral deposits in this region are either in indigenous territories or low-income rural areas or fragile ecosystems. And we've had too much history of trying to lower the bar to accelerate investment only to find profound community resistance that expresses itself in voting results, it expresses itself in protests. Um, and a lot of projects don't get off the ground if that isn't addressed. Um, and that's a role of governments. I mean, I think there's a lot of emphasis on company mining, the mining industry and improving its community relations, but really our governance, our governments have to be out there in front, um, addressing the needs of their communities directly. And I think, again, Chile has experience uh mixed. The lithium developments in Chile uh are not entirely non-controversial. There's a lot of environmentalists, water people who are concerned about the use of water. Um, but again, I think Chile has more of an institutional history there. Peru also does, but as you know, Peru has quite a bit of political instability, so it goes up and down in terms of whether the government, which side the government is on, if it's on at all. Argentina is distinct because Argentina has um sub-national governments, pr provincial governments, that have a lot more say in terms of investment. So it may the Miley government may want to go one way, and local provincial governments may want to do business differently. Um we see that in terms of the Chinese, you know, Millet government may want to back off some from Chinese investment, but look some local provincial governments are welcoming Chinese investment in lithium and copper. Um so Argentina's got different governance challenges than than we do, for example. And again, Bolivia, you know, Bolivia's pegged its expectations on lithium now that unfortunately its gas reserves are seriously declined. Uh Rodrigo Paz promised to open up Bolivia for more uh foreign investment, more Western investment, but he's already facing very strong political challenges.

SPEAKER_01 11:21

Definitely. Yeah, well, uh Rodrigo Paz in in certain unstable moments there in Bolivia, of course, we see uh on our news um daily at the moment. But uh so what are other challenges face the producers, these producing company countries of copper, iron, and and other minerals? What are the other challenges in this period, uh in this desire for critical minerals and essential minerals?

SPEAKER_02 11:48

Well, I would say the challenges are not attracting investment. We don't have much problem attracting investment. Um, you know, Venezuela may be a different story, I don't, but you know, that's a whole other newscast, but podcast, but it's more how we govern and how we strategize vis-a-vis investors. And there's multiple investors interested in all of our minerals. So in that sense, it's a great opportunity. It's a time to be open and a time to be strategic. And I think the challenge for us is to make sure those who make decisions are strategic. Um and a key challenge is it's very cliche to say we need more value-added investment. And as I said, you know, we're not going to be producing electronic vehicles anytime soon in this region, perhaps in Brazil. But um, but certainly adding value in terms of upstream as well as downstream impacts, right? Uh in terms of transfer of technology. And one thing that is interesting in Chile and Peru is that we have some very strong government agencies and scientific agencies in which the idea the need is to understand better, for example, clean lithium processing techniques, direct extraction, you know, how to use less water, the kind of things that perhaps Australians, Chinese and others are learning how to do, know how to do. So the transfer of technology, training of our young professionals in new technologies that are less contaminating, that are less invasive, uh, and that kind of thing. So I think it's a challenge not just to say can we produce more industrial products, but also how can we learn from those who are investing?

SPEAKER_01 13:24

The possibility and the opportunity here is one that shouldn't be missed, as you're saying.

SPEAKER_02 13:30

Yeah, absolutely. And I think um as I said, political instability doesn't help because those who make decisions in government, if they come and go, in our case, we've had, as everybody knows, um we're not alone. I think Great Britain has some of its similar issues of Peru, um, of you know, changing government. But but it means in a case like ours that you reach a certain stage of strategic definition and then it changes with the new government. We have a new government coming in. There may be a lot of concern about where it's going, but one thing is we hope it will be stable and um we'll have some rule of law going on here. Um but I but yes, the challenges are to take advantage of this opportunity without our eyes closed, our eyes wide open, um, knowing that tomorrow the demand could be for something else. So not moving everything into one sector like lithium. Um and as I said, careful engagement with the communities that are always going to be affected by these activities. We have several important copper projects in Peru, including concessions that cannot get off the ground because of social and environmental concerns. And not necessarily in places where people don't want to copper mine, but certainly in places where people want to be consulted, they want to share in benefits, they want to understand what's going to happen to them. And we need some stability and capacity to deal with that. And same, same with with Chile. You have cases of different kinds of investments in Chile in which communities want to participate and get a share in the benefits, feel like the central government has captured too much and they need a piece of it. Um, so those are our challenges. But fortunately, our challenge is not attracting investment. I think Latin America, compared to some parts of the world right now, is a good platform for investing in the variety of minerals.

SPEAKER_00 15:18

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SPEAKER_01 15:34

Do you feel I think we we've mentioned it on a couple of occasions coming in here, and we do have to look towards China's role in the investment in these areas and its desire for critical minerals. What about China's role in in energy transition in these countries?

SPEAKER_02 15:54

Well, that's really important. I mean, as we all know, China got out way ahead, very early, with very strategic industrial policy, and they have cornered the world's market, not just in terms of producing minerals, but in terms of refining, processing, um, developing all of the different manufacturers related to electromobility, solar panel technology. So the Chinese really got out in front and got out in front in terms of accessing the resources needed to do that. And the rest of the world is trying to catch up. China's really in a very strategic position, as we all know. Um and I think one of the things that we're looking at here in the region is to what extent China's interest in our critical minerals, which is very strong, as is everybody else's, can be negotiated around also interest in our own energy transitions, because we cannot just be the very tail end of a supply chain where we produce the carbon and lithium that produces everybody else's electric vehicles somewhere else, right? We really need our own energy transition. Um, much of Latin America still has energy poverty. Um we have large stretches of communities, as you know, in Colombia and Peru as well, that don't have access to clean energy, don't have access to any stable energy, or don't have clean energy. Um we're still too reliant on um hydrocarbons and on types of energy that are not going to last. Um in Colombia, I know there's been was a recent effort by the outgoing government to have a real just energy transition, but we all need it, and we all need to shift to decarbonize to some extent our what we do. Um so one concern is to what extent the Chinese will invest in this. And we're looking at that because the Chinese government also has a very powerful discourse about South-South collaboration, around climate change, around decarbonization, about China being a partner for other developing countries. But what we're seeing in practice is that they're still where our governments are too often are in terms of extracting the raw materials for the rest of the chain. And what we want is to encourage investment in our own capacity to shift our energy matrix in the kind of technology that we also need to deliver different kinds of energy to our population. Um, so this is a challenge, right? The Borg government focused on value added within the lithium sector, um, but we're seeing also Chinese investment in new kinds of energy in this region. Um in Peru, well, in much of the region, it's still, for example, in hydropower, which is called renewable, but it's as renewable as long as we have water. But there's Chinese investment in hydroplants, there's Chinese investment in generation, distribution, and um supply of energy in many cities. But for example, in Colombia, I think we're seeing Chinese investment in renewable energy, right? The same with European. We're actually seeing interesting European investment in solar and wind farms and more of our own use of that technology, but we need more.

SPEAKER_01 19:02

Please. And in China, what will you what will what will the debate be in China when you go there?

SPEAKER_02 19:07

We are heading to China next week to share some findings of a project we have mapping where Chinese investment is across our entire energy value chain in four countries of South America. And I'm going with colleagues from Argentina, Chile, Colombia, and Peru. And we're going to be meeting with colleagues in the academic research field, people in energy industries, including solar and wind industries of China, policymakers, people from the Ministry of the Environment. And we're going to share our findings and very diplomatically discuss this gap between what the Chinese are taking leadership on in at the global level and where their money is still being put in our region. And a lot of that, the responsibility is ours to guide it better and encourage it better. Um, but we want to share this kind of paradox or or gap as well with our Chinese counterparts.

SPEAKER_01 20:05

We were talking about the mapping in uh in China that you're going to be doing across the region.

SPEAKER_02 20:12

Um well, we've been mapping where Chinese investment is going, um, not only amounts, but more like where the projects are, what the Chinese companies are, what sec what part of the energy value chain they're in. And we've mapped Chinese investment from essential critical minerals in our region all across to the generation of different forms of energy, to the distribution of energy as Chinese companies have acquired assets in energy distribution from Westerners who have left the region. Um, and to the what extent the Chinese investors are engaged in clean energy transition and just energy transition in our region, because their discourse from the Chinese government is very much on a just energy transition in the South. But what's happening in our part of the world isn't necessarily there yet. Um, so that's what we're focusing our conversation on.

SPEAKER_01 21:04

And and of course, I imagine you're beginning to be in China. What will be the conversation in China regarding the United States and their policies towards uh critical minerals in the region?

SPEAKER_02 21:16

Um as a Peruvian research center with colleagues in other South American countries, we are not taking sides. No, no, we're not going to China to talk about the United States, we're going to China to talk about us, right? And our country's needs. Um but I think I really believe that for Latin America, as I said, this is an opportunity moment. The fact that there's competition for our minerals is great for us. As long as it's well regulated, well governed, and of course, as long as we take into account the people who are directly affected by this. Um I think it's a win win, as the Chinese like to say. And um the US used to see it that way too. It's all it very recently, I was invited to the United States to talk about China. The United States and Latin America in a constructive type of framework, right? Now it's become um a very hostile and intense framework. But the Peru, like all the countries of South America, I think except Paraguay, continues to have very strong uh normal relations with China and the United States. We've had them for over 50 years, right? So it's not our hostility. It's um the US-China issue. And for the most part, the hostility is coming more from the US. Um, not to say China isn't responding as we've seen in the region and elsewhere, but we're seeing more concern from the US because they're the ones having to catch up, right? They're playing catch-up, they've been displaced, or they feel they've been displaced. And I think it behooves us to say, great, come, bring your technology, bring your education, bring your great universities, bring your companies with very strong social responsibility, um, business cultures. We need them.

SPEAKER_01 23:04

So, Cynthia, what I'm what I'm hearing is like, again, this this uh Center for China and Asia Pacific Studies that to which you are the uh of which you are the director there at the Universidad del Pacifico is doing some very, I would say, upbeat and important work about revealing the opportunities available for countries in the region with this new demand for critical minerals.

SPEAKER_02 23:31

Yes, um, and as we said earlier, um, and I'd stress, China may be the elephant in the room because of its enormous advantage in terms of being out in front in terms of refining, processing critical minerals in terms of clean energy technology, electromobility. But in our region, the question is not about who invests, whether it's China, the United States, or Europe. It's about how we manage this demand better than in the past, how we use this new demand to have better opportunities. That's really what it's about for us.

SPEAKER_01 24:06

Again, we can we come back to this key word of challenges, but of course, political stability is key. Uh, you're being there in Peru, and I mean, famously long uh period between the elections and the actual final vote count, uh, and of course, some instability that we can expect around the region. We've have we've just had elections in Colombia, and of course, uh, Venezuela is another story altogether. We've got elections coming up in in Brazil. How do you see this all sort of the patterns developing in coming months?

SPEAKER_02 24:41

Well, I think that energy issues and energy transition and the relationship between global energy transition and our minerals are key issues for our countries, but not necessarily frontline first-level issues for our election campaigns. Um, in each country, there's been efforts at energy transition, efforts at taking better advantage of our minerals to move up the supply chain. But I think, as you know, the political demands here are the more concerns about crime and instability and economic needs. So we need to keep energy on the agenda, recognizing that the voters have other issues as well. But these the world is demanding the resources that Latin America has in abundance. And it's our turn to really manage them well this time and use them to our advantage.

SPEAKER_01 25:26

Well, I can think of no better place than to bring this to a close. Uh thank you so much to Professor Cynthia Sanborn, who's uh professor at the Department of Social and Political Science and the Director at the Center for China and Asia Pacific Studies at the Universidad del Pacifico in Lima. It has been an absolute pleasure. Remember, of course, you can subscribe to the Latin News Podcast wherever you get your podcasts, YouTube, Spotify, iTunes, SoundCloud, and beyond. Let me take this moment to say Cynthia Samborn, Professor Cynthia Samborn, thank you so much for your time and expertise.

SPEAKER_02 26:00

Thank you, and thank you for reaching out from Colombia. We need to talk more often about our countries, and this is great. Thank you so much for sharing with the rest of the world.

SPEAKER_01 26:08

That's uh that's a it's a great pleasure. Of course, I've been Richard McCall here in Colombia. This has been the Latin News Podcast. We'll be back in a fortnight's time discussing further issues from the region. Thank you, and goodbye.

SPEAKER_00 26:22

You've been listening to the Latin News Podcast. For more news and analysis on Latin America and the Caribbean, visit www.latinnews.com.