Moody's warns Latin America faces hurdles in critical minerals boom
· UPISANTIAGO, Chile, Aug. 4 (UPI) -- Latin America holds about 40% of the world's copper reserves and 60% of global lithium brine resources, but regulatory challenges, infrastructure gaps and financing constraints threaten the region's ability to become a leading producer of critical minerals in the coming years, credit rating agency Moody's said.
The region, particularly Chile, Peru, Argentina and Brazil, also has significant deposits of nickel, graphite and rare earth elements. Despite that potential, Moody's said structural bottlenecks, technical challenges and macroeconomic and regulatory uncertainty continue to hinder the sector's development.
Moody's is a major global credit‑rating and financial‑risk analysis firm that evaluates the creditworthiness of countries, companies and sectors, issuing assessments that influence how easily they can attract investment and borrow money.
While demand for critical minerals is expected to keep rising, Moody's said developing processing and refining capacity remains more difficult than expanding mining operations, limiting the region's ability to capture more value from the supply chain.
"Policy and regulatory uncertainty remains one of the main risks, threatening delays even for projects that would otherwise be attractive," Moody's said.
The agency noted that Chile benefits from an experienced workforce and infrastructure that could support expanded lithium refining. However, it also faces water shortages, rising energy demand and stricter environmental requirements.
Argentina has substantial lithium and copper potential, but continues to face infrastructure deficiencies and regulatory uncertainty.
Peru retains strong advantages in copper production, although social conflicts and political instability have slowed investment.
Brazil stands out for its energy matrix and mineral resources but still faces technological gaps and remains heavily dependent on international partnerships to expand its mineral processing capabilities.
Moody's said China maintains a significant competitive advantage after decades of investment in integrated supply chains, large-scale processing capacity, skilled labor and close coordination between government and industry.
China accounts for between 60% and 80% of global processing of lithium, cobalt, graphite and rare earth elements. It also controls 78% of global cobalt refining, 70% of lithium refining and 92% of rare earth processing.
"New entrants in Latin America cannot replicate this ecosystem quickly. Chile, Argentina, Brazil and Peru each have distinct competitive strengths and weaknesses," the report said, according to Chilean newspaper La Tercera.
Moody's also said the regional market is advancing at two different speeds. Large mining companies, including Chile's Codelco and SQM and Brazil's Vale, benefit from their scale, experience and access to financing.
Smaller and newer mining companies, however, face greater challenges securing capital and long-term contracts, even when they control high-quality mineral resources.
Patrick Hall, Deloitte's Energy, Resources and Industrials leader in Chile, told UPI that Latin America has the conditions to become one of the world's leading suppliers of critical minerals, but cautioned that the opportunity should be viewed realistically.
"The combination of large copper and lithium reserves, together with growing demand driven by the energy transition, electrification, digitalization and, more recently, national security concerns, positions the region as a strategic supplier for global markets," Hall said.
However, he said competition now extends beyond mineral deposits to entire jurisdictions, meaning regulatory or operational obstacles can become decisive barriers to investment.
"We see shorter timelines between discovery and production becoming a strategic priority for governments because of growing pressure to secure critical mineral supplies," Hall said.
As a result, investors are placing increasing importance on evaluating resource quality alongside infrastructure access, regulatory stability, permitting timelines, capital availability and legal certainty.
"These are critical challenges and could become the main factor determining who captures this opportunity and who misses it," he said.
Hall identified four major constraints facing the region: permitting and regulation, infrastructure, financing, and productivity and technology.
He said modern mining requires reliable energy, water, transportation, ports, digital connectivity and processing capacity, while future competitiveness will increasingly depend on digitalization, automation and artificial intelligence.
"Critical minerals require large-scale investments and long development timelines. Regulatory certainty and institutional stability will be key advantages in attracting foreign capital," Hall said.
Manuel Reyes, a mining engineering professor at Andrés Bello University, said large mineral reserves alone do not guarantee market leadership.
"Latin America consistently confuses the concentration of geological reserves with actual market dominance. Holding 40% of the world's copper and 60% of its lithium does not provide any real leadership if control of the value chain remains concentrated in Asia," Reyes told UPI.
He said the region continues to operate primarily as a raw materials exporter and lacks sufficient water, energy and technological infrastructure to process a larger share of its mineral production domestically.
"While a greenfield project in the region can take up to 18 years to reach production, the energy transition requires these minerals within a five-year horizon. That gap does not slow global demand. It simply shifts investment toward more agile jurisdictions or accelerates the search for technological alternatives," Reyes said.