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The mining industry in Latin America and its role in the global energy transition

The mining industry in Latin America and its role in the global energy transition

The global demand for critical minerals is increasing significantly as a result of the need to transition energy use and supply to facilitate a low-carbon global economy.

Copper, lithium, manganese, lead and zinc, are of critical importance for technology required in solar panels, batteries, electric vehicles and aerogenerators, which help drive the intelligent electrical and renewable energy systems being developed worldwide.

A recent Inter-American Development Bank (IDB) study "Latin America and the Caribbean 2050: On the way to becoming a global hub for metals and low-carbon solutions” estimates, by the year 2026, the demand for these critical minerals will be more than double 2015.

The study also concludes that Latin America, with an abundance of these mineral resources, has a great opportunity to become a worldwide supplier of critical minerals to assist the world lower carbon emissions.

This has the potential of providing huge economic benefits for the region, including generation of new jobs, an acceleration of the demand for local services and an improvement in technological capacity.

At the same time, this opportunity imposes an implied responsibility on the mining sector. The region must continue to build a mining sector that minimises the environmental footprint, prioritises the efficient use of resources, effectively manages emissions, promotes biodiversity and protects the environment.

In addition, it can and must investigate opportunities which exist in the circular economy – that is, a production and consumption model that includes sharing, renting, reusing, repairing, renewing and recycling existing materials and products as many times as possible.

This study and research assessed the growth of the demand of different minerals critical to the objectives around energy transition and considered goals currently established by different countries.   In doing so, it assessed the economic, environmental and social opportunities, and challenges, implied by the increase of mining production in Latin American countries.

Currently the IDB, has contributed and helped to promote the transition to a cleaner energy future as part of the action plan to align the intention of the Paris Agreement for 2023, such as fighting climate change, and the creation of a road map to promote the sustainable growth and recovery in the region.

The study also recognises Latin American countries are very vulnerable to the effects of climate change and the impact natural threats, both in the form of physical damage and of environmental, social and economic losses usually have on the most vulnerable populations.

Mining presents an important investment opportunity for the region.  It has a dynamic relationship with helping to manage the transition to a cleaner energy future, due to the abundance of critical minerals, global demand and production advantages.

The flipside to this is the management of the investment and production process.  Not only do projects need to navigate the ever-increasing demands of a sound ESG approach, they require large amounts of capital, and are perceived as carrying a greater risk than other jurisdictions.  Many companies, especially in the small to mid-cap space, are fearful of investing in the region.

Moore Global network firms have extensive experience in the mining industry and have considerable knowledge of investment attraction policies in Latin America.  As a result, we are able to offer our clients advice around their strategic approach and identification of the advantages in each country.  This knowledge and experience also allow us to help evaluate projects to provide the security, confidence and due diligence around investment decisions.