Latin America faces a historic turning point in capitalizing on its massive reserves of critical minerals like copper and lithium, according to a recent analysis by UBS Global Wealth Management. While the region holds a dominant position in natural resources essential for artificial intelligence, energy, and defense, processing capacity remains heavily concentrated in industrial powers like China.
The Global Processing Gap in Copper and Lithium
The primary challenge for Latin American economies lies in moving beyond raw material extraction to build domestic value chains with higher technological content, according to Alejo Czerwonko, Chief Investment Officer for Emerging Markets at UBS Global Wealth Management. William Husband, global head of metals and mining at Citi, noted that the operational gap between mining output and regional refining capacity remains immense.
According to figures cited by Citi, Chile refines approximately 1,7 million metric tons of copper annually, whereas China processes nearly 14 Mt. Despite this processing deficit, Latin America led global mining exploration investments in 2025. Projections from Citi estimate the regional mineral market will reach US$130.000 millones en minería y US$24.000 millones en refinación by 2040.
Infrastructure and Regulatory Bottlenecks Impacting Supply
Market demand for copper and lithium is outpacing current project pipelines. Data from the International Energy Agency, cited by Citi, indicates that currently announced projects will cover just 76% of global copper demand and 68% of lithium demand by 2035. Husband emphasized that this looming deficit stems from execution bottlenecks—including infrastructure limits, regulatory delays, and financial structuring challenges—rather than a lack of physical reserves.
To overcome these hurdles, financial institutions and policymakers point to several regulatory frameworks designed to attract long-term private capital:
- Argentina: The Large-Scale Investment Incentive Regime (RIGI) guarantees fiscal, customs, and currency stability for up to 30 years.
- Brazil: Proposed licensing reforms aim to slash approval windows to approximately 12 months, avoiding bureaucratic blocks.
- Colombia: Fast-track decrees for prior consultations and environmental licenses seek to streamline project execution.
Expanding Local Value Chains and Export Routes
Regional financial institutions argue that expanding local smelting and refining capacity is essential to capturing higher margins. Katherine Salazar Uriarte, senior economic studies analyst at Scotiabank in Peru, noted that Southern Peru Copper Corporation operates the country’s sole major copper smelting and refining center in Ilo.
“A greater availability of refined copper could spur the development of manufactures such as wires, copper cables, and electrical components, allowing the country to enter new markets,” Salazar Uriarte said.
However, moving downstream into semi-finished goods exposes producers to potential international tariffs. While the United States has historically excluded raw concentrates and refined metal from certain tariffs, proposed trade measures could target refined copper. To mitigate this risk, Scotiabank highlights alternative trade routes, such as utilizing the Port of Chancay in Peru to direct shipments toward Asian markets.
Geopolitical Strategies and Multilateral Diplomacy
In a fragmented global economy, Latin American nations are increasingly utilizing multilateral diplomacy to avoid unilateral economic dependencies, according to Citi’s analysis. Brazil has pursued supply diversification by signing memorandums of understanding with India and South Korea while simultaneously negotiating the Mercosur-European Union trade agreement. At the same time, the Brazilian government declined a bilateral proposal from the United States that imposed restrictions on foreign investments, including Chinese capital.
Chile maintains an open-market approach, balancing a heavy export relationship with China—the destination for 65% of its lithium exports—with the strict environmental and governance standards demanded by the United States and the European Union. Furthermore, regional frameworks like the FORGE initiative provide collective bargaining platforms for nations seeking to safeguard their resource autonomy.
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