Latin America’s Critical Minerals Boom: A Fresh Geopolitical Battleground
The race for critical minerals is reshaping Latin America, transforming the region into a focal point for global energy security. No longer simply about the energy transition, access to these resources – lithium, rare earths, and copper – is now a matter of national strategic interests, particularly for the United States.
The US Strategy: Friendshoring and Investment
Under the current administration, the US is taking a markedly proactive approach to securing its supply of critical minerals. Direct investment, loans, and strategic offtake agreements are flowing into projects in Brazil and Argentina, aligning Latin American supply chains with US objectives. Since January 2025, over US$1 billion has been invested in acquiring stakes in critical mineral companies globally, with the Pentagon actively stockpiling resources for military applications.
The Inter-American Development Bank is playing a key role, providing a US$100 million loan for a US$2.5 billion lithium project in Argentina. In Brazil, the Development Finance Corporation is considering a US$465 million investment to expand Serra Verde’s operations in Goiás. These investments prioritize ensuring minerals flow into “friendly” supply chains, supporting US manufacturing and defense.
Brazil’s Rare Earth Potential and “Lithium Valley”
Brazil, possessing the world’s second-largest rare earth reserves after China, is experiencing a surge of interest. Minas Gerais is rapidly becoming a hub for critical minerals, earning the nickname “Lithium Valley” due to the concentration of lithium projects in the region. Despite holding 23.3 percent of global rare earth reserves, Brazil currently represents only 0.02 percent of global production, highlighting the immense growth potential.
Chinese companies, like BYD, are already making significant investments, securing lithium plots through subsidiaries. However, the US is actively seeking to counterbalance this influence through strategic partnerships and financial support.
Argentina’s RIGI Program and Regulatory Reforms
Argentina is attracting large-scale foreign investment through its RIGI program, launched in July 2024. This incentive regime offers tax benefits, customs advantages, and foreign exchange stability for projects exceeding US$200 million. Rio Tinto was the first company approved under RIGI, committing US$2.5 billion to a project in Salta.
Argentina’s lithium production capacity has already grown significantly, from 75,500 tons per year in 2023 to approximately 186,000 tons in 2025, with projections reaching 658,000 tons by 2035.
Navigating Geopolitical Tensions: Balancing US and Chinese Investment
Latin American governments face a delicate balancing act, navigating investments from both the US and China. While Chinese capital dominates rare earth processing, the region remains pragmatic, welcoming investment from all sources. Ilan Goldfajn, president of the Inter-American Development Bank, noted a regional focus on building out regional supply chains to reduce reliance on Asia.
The US is actively signaling the benefits of closer alignment, particularly for projects critical to defense and emerging technology sectors. Here’s creating a complex investment landscape where geopolitical considerations are as important as resource evaluation.
Beyond Lithium: The Importance of Copper
While lithium dominates headlines, copper remains the cornerstone of Latin American mining. Chile, with some of the world’s largest copper reserves, continues to be a critical supplier. Argentina is also expanding its copper portfolio under supportive policy frameworks. Copper demand is projected to nearly double by 2035, driven by its indispensable role in power grids, defense systems, and electrification.
Although US-backed financing for copper projects is currently less prominent than for lithium, the strategic importance of copper ensures its continued prominence in regional investment pipelines.
Regulatory and Political Risks
Political risk and community engagement remain critical factors. Resource nationalism, environmental considerations, and bureaucratic hurdles continue to shape project timelines. Regulatory approvals, merger control processes, and broader geopolitical tensions directly influence the pace and structure of projects. Even transactions seemingly straightforward in Brazil can face unexpected scrutiny, such as MMG’s acquisition of Anglo American’s nickel business, now under EU review.
Frequently Asked Questions
Q: What are critical minerals?
A: Critical minerals are elements essential for manufacturing technologies and are subject to supply chain vulnerabilities.
Q: Why is Latin America important for critical minerals?
A: Latin America holds significant reserves of lithium, rare earths, and copper, making it a key region for securing global supply chains.
Q: What is the US doing to secure access to these minerals?
A: The US is investing directly in projects, providing loans, and establishing strategic offtake agreements with companies in the region.
Q: What role does China play in Latin American mining?
A: China is a major investor, particularly in processing capacity for rare earths, and Latin American governments are balancing investments from both the US and China.
Did you know? Brazil holds the world’s second-largest reserves of all rare earths, after China.
Pro Tip: Understanding the geopolitical landscape is crucial for investors considering projects in Latin America’s critical minerals sector.
Explore our other articles on global mining trends and geopolitical risk analysis to stay informed about the evolving landscape of critical mineral supply chains.
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