Trump pressure fuels Latin America’s critical minerals push

[Ben Graham]

Latin America is stepping up efforts to build critical mineral supply chains as the Inter-American Development Bank (IDB) says governments want to add more value at home while the Trump administration pushes for production closer to the US.

IDB president Ilan Goldfajn said countries across the region are working on increasing their refining and processing capabilities for lithium, copper and other key minerals instead of exporting raw material to Asia. 

Together with the European Union, the IBD launched last year a joint initiative to boost responsible investment and develop value chains for critical minerals in Latin America and the Caribbean. Under this program the EU provided a grant of nearly €6.3 million ($7.3m), which is expected to unlock about €120 ($140m) million of IDB funding for mineral-related projects in countries including Argentina, Bolivia, Brazil, Chile and Ecuador.

With data from the Inter-American Development Bank.

The funding is especially aimed at supporting  downstream activities like processing, refining, and building value chains.

Through a project called Mining for the Energy Transition (MET), the IDB is also providing technical assistance to Latin American nations, with the objective of Strengthening regulatory and investment frameworks, Improving geological knowledge and data, Supporting low-carbon, sustainable mining and production practices, and enhancing infrastructure.

In an interview with the Financial Times, Goldfajn said Washington has signalled it prefers sourcing and processing within the hemisphere and that governments across the political spectrum see a rare opening to capture more value.

Latin America holds about 60% of the world’s identified lithium reserves and produces roughly 46% of its copper, leading production of the red metal alongside Peru.

Brazil has the world’s second largest rare earths reserves, though its output remains modest because of technical and commercial hurdles. China dominates global processing and its low prices have long undercut efforts by resource countries to move beyond extraction.

Argentina exports 70% of its lithium to China, only to import it back at prices eight or nine times higher after processing. 

Long-term supply contracts are key to closing the cost gap with Asia, Goldfajn said, pointing to a 20-year deal for Chile to sell green hydrogen to Germany that helped unlock IDB financing for the sector.

Extraction too

The bank is also backing extraction and processing projects directly. In Argentina, it is making a $100-million loan toward Rio Tinto’s (ASX: RIO) $2.5 billion plan to produce battery-grade lithium in Salta province.

By: MINING.COM.

Goldfajn noted the political divides between the Trump administration and major leftwing governments in Brazil, Mexico and Colombia, but said Washington’s renewed focus on the region was constructive. 

Rising demand for financing tied to critical minerals is part of why the IDB group expects to mobilize more than $30 billion this year, up from $23 billion last year. Nearly $20 billion will come from its public-sector arm, while IDB Invest and IDB Lab will finance more than $11 billion for companies.