The geopolitics of Latin America’s critical minerals

For decades, hydrocarbons defined the geopolitics of energy. Oil shocks, pipeline routes, and the strategies of major producers shaped global affairs. In the 2020s, that map is being redrawn. Decarbonization goals and the shift to electrification promise to make copper, lithium, nickel, and rare earth elements as vital as hydrocarbons are today in the global economy. These resources are not interchangeable, and shortages cannot be papered over. They form the backbone of batteries, electric grids, renewable generation, and defense technologies, necessary for a new age of energy application, technology, and military capabilities.

China’s head start

China’s place in the critical minerals story is unavoidable. Through long-term planning and heavy state backing, it built dominance across much of the supply chain. China not only controls significant reserves but also established processing capacity that Western countries allowed to atrophy, and were happy to outsource in an age of globalization. Today, Beijing is responsible for most rare earth refining, holds a commanding position in solar and wind generation and equipment manufacturing, and is home to the majority of global electric vehicle sales.

China has already shown how this leverage can be used. Its brief 2010 suspension of rare earth exports to Japan during a territorial dispute marked the first warning shot. And while actual exports to Japan barely moved during that period, the ability of China to restrict mineral flows, even theoretically, rattled Western military thinkers. Its more recent export restrictions on rare earths to the United States reinforced how vulnerable import-dependent countries have become. What were once inputs for manufacturing have become integral to national security, and are wielded as tools of statecraft. China’s combination of resources, processing, and end-use industries has made it the most formidable player in the mineral economy.

The US and its shifting approach

Washington has become steadily more alert to these vulnerabilities. The Biden administration leaned on industrial policy, using the Inflation Reduction Act and the CHIPS and Science Act to promote domestic processing and diversify supply chains. The second Trump administration has emphasized a more direct approach, focusing on foreign investment in mineral deposits, without the environmental or climate-related framing.

The tone may differ, but the conclusion is the same: critical minerals are not just commodities. They are strategic assets, and control over them helps define national power. This is evident in the Trump administration’s approach to brokering peace between Ukraine and Russia, and amongst various factions in the Democratic Republic of Congo. In both instances, President Trump has sought to put US private mineral investment on advanced footing, and position US economic interests as a guarantor against future conflict.

Critical minerals and AI

It hasn’t been much more than a hundred years since the UK and Germany engaged in a naval arms race that ultimately culminated in the first world war. Today, rather than steel and mortars, the race to develop artificial general intelligence has become the 21st century’s version of the arms race, and the US and China are the leading players.

The two inputs underpinning both sides’ push to develop progressively faster and more powerful computing power are energy consumption and mineral supply. AI electricity consumption has increased 12 percent per year since 2017, and is predicted by the IEA to continue expanding at up to 20 percent annually through 2030. By that year, AI-specific data centers will account for roughly 3 percent of global energy consumption, concentrated in just a few geographic hotspots, mostly in the US and China.

This means that two of the biggest energy-consuming countries on the planet will quickly need to develop even more power generation, which is likely to come, at least in the short to medium term, from gas-fired power plants given the load variability of renewables. As that electricity comes online, massive amounts of copper and other related critical minerals will be needed for transmission infrastructure. Additionally, several critical minerals, and a select few rare earths in particular, are crucial inputs to build the microprocessors that provide the computer power to fuel AI.

Why Latin American matters

Nowhere is the US-China rivalry more visible than in Latin America, in part because of the region’s mineral richness. Latin America holds some of the world’s largest reserves of lithium, copper, and rare earths. Chile and Peru anchor global copper production, while Argentina and Bolivia contain some of the world’s largest lithium deposits. Mining has long been central to the region’s economies, leaving behind infrastructure, expertise, and regulatory systems that place Latin America at the center of the global minerals debate.

China moved quickly to capitalize. Supported by state development banks and state-owned enterprises, Chinese companies expanded into mining projects across the region, often in places where Western firms were more cautious. The US approach, more reliant on private investment, has tended to be less aggressive. The result: Chinese firms now have strong positions not only in extraction but also in infrastructure and processing.

For Latin American governments, this competition offers both opportunity and pressure. Most countries seek to avoid choosing sides, but the zero-sum lens through which Washington and Beijing view the region makes balance difficult.

Upcoming elections in Argentina, Bolivia, Brazil, Chile, and Peru have the potential to dramatically alter Latin America’s mining landscape. The contours of Bolivia’s post-election landscape are clearer; the country held a federal election in August 2025 that ended the 20-year rule of the Movement for Socialism, and two candidates – neither avowedly left-wing – are set to face off in the October run-off election. In the other three, however, electoral outcomes could herald significantly different mining environments. Nowhere is this more true than in Chile, where a member of the communist party and a far-right lawmaker are the primary combatants for the country’s presidency. At stake is the nature of Chile’s state influence in the mining sector. Jeannette Jara, the communist candidate, is in favor of increasing the role of Codelco, though walked back comments stating she was in favor of nationalizing the country’s lithium resources. The right-wing candidate, José Antonio Kast, on the other hand, favors a less statist approach, with a wider pathway for private investment and ownership of mining assets.

Key risks for companies and investors

Engagement in Latin American mining carries rewards but also exposes operators to fundamental political, legal, and social risks: 

• Political and regulatory volatility: Politics in much of the region is polarized between left and ringwing factions, and policy swing is common. Elections can reshape mining policy, with governments oscillating between resource nationalism and liberalization. Nationalization, contract revisions, and abrupt regulatory changes are active risks in many Latin American countries.
• Governance and compliance: Complex permitting and frequent government interaction heighten the potential for bribery and corruption. For companies with US or European ties, compliance with evolving anti-corruption frameworks and enforcement landscapes is a challenge. 
• Cartels as foreign terrorist organizations: The Trump administration’s move to designate a series of organized criminal groups throughout Latin America as Foreign Terrorist Organizations creates an additional layer of compliance risk for private companies doing business in the region. Companies need to make sure they intimately understand their supply chains and partners in the region.
• Social license to operate: Community engagement is not optional. Local resistance tied to environmental impact, water rights, or distribution of revenues has already stalled or halted large projects.
• Geopolitical exposure: Companies can find themselves judged not only on their performance but also on their nationality. In an environment where the US and China see influence as zero-sum, Latin American governments have little choice but to consider mining companies through a geopolitical lens.

Looking ahead

Global demand for minerals will remain intense. Artificial intelligence, with its energy-hungry data centers, requires enormous volumes of copper for wiring and as battery systems improve, lithium for storage. Renewable generation, modernized grids, and defense systems also depend on secure mineral supply. However, while the structural drivers point upward, commodity price cycles will continue. How the US and China navigate these cycles will be important for consolidating influence during lean periods. 

As US-China competition deepens, Latin America will remain a strategic battleground. For Latin American governments, the challenge is to maximize gains while safeguarding sovereignty. For companies, success will hinge on anticipating volatility, managing compliance risks, and cultivating durable local relationships.

Critical minerals are no longer peripheral to global affairs. They stand at the center of a new geopolitical contest—one in which Latin America holds a decisive role.

At Risk Advisory, we have more than 25 years of experience helping organisations in the metals & mining industry to navigate above-ground risks. We combine on-the-ground human intelligence with deep regulatory insight to map procurement processes, vet counterparties and flag issues before they compromise a transaction.